How to Become Fully Invested in Crypto & How this DeFi Basket Asset Platform Can Help
Whether you’re a novice or a pro trader, no step is too small to help you on the journey of crypto education. Today’s topic will cover a recent article on bitcoin.com, where Steve Cohen does a deep dive into crypto.
For those of you unfamiliar with who Steve Cohen is, he’s the CEO of Point72, which is an asset management fund. He is also the majority owner of the New York Mets.
Interestingly enough, there were a number of points that Steve raised, which are relevant to anyone new coming into crypto.
“How do you get invested without fundamentally losing too much?”
Anyone would be foolish to think that if you’re coming into crypto it’s all about gains. It’s not. There are wins and losses, which you have to take in stride. If you’re new to crypto though and see those volatile upswings, there are also equally volatile downswings. You can be 30% up one day and 50% down the other, which can be daunting from a newcomer's perspective and can also be a put-off to a certain extent.
If you don’t have much to invest with, or you’re thinking of ‘pushing the boat out’ a little bit. Or maybe you have a bit in savings that you would like to try and get exposure in the crypto markets, what you don’t want to do is lose those savings.
This is where a lot of these questions come in and when people hear someone like Steve Cohen is fully converted to crypto they probably laugh.
If you want to look at crypto beyond the monetary sense though and look at the space as a whole it’s transformational. What’s happening with blockchain today is light years ahead in terms of moving forward, so when anyone comes in they can always see, where the future lies. Crypto isn’t going anywhere and blockchain technology is here to stay whatever way you look at it.
The next bit around this is timing. How do you time yourself in getting into the market?
We are in a bit of range at the moment when it comes to getting into Bitcoin, which unfortunately usually drags the rest of the market with it.
If you pick a project or a coin you really like, how do you know when the right time is to get in?
The problem here is if you pick a coin, have you done enough research to know what it is that you’re investing in? Along with other questions like whether the price point you’re coming in at is beneficial or whether there’s going to be further downturns.
All of these types of questions go through every investor’s mind when they choose to jump in on crypto.
When people look at Bitcoin at the outset, they might be interested instead in altcoins. That’s fine since when you look at bitcoin, any newcomer or new investor will think Bitcoin at $30k, $40k, $50k is too much and they could never afford it. Though you still can own a fraction of it and enjoy the upswings or price appreciations that come from it.
The other side of the market is looking at altcoins within the DeFi space, which generally tend to perform well. You don’t really need to go into Bitcoin. Some people will look at Bitcoin and say they’re not interested because it’s too expensive.
So there is the altcoin market, which most can invest in but people must be aware that the price can get dragged down if Bitcoin takes a massive tumble, which we’ve seen over the past few weeks.
It will probably come to a point in time where the alternative crypto market will be decoupled from Bitcoin. When that happens upswings or massive swings in Bitcoin, shouldn’t have too much of an impact on altcoins.
Some people also feel that it’s too late. They look at where Bitcoin is now vs. where it was ten years ago. That type of hindsight thinking doesn’t really help at all. In fact, as Steve Cohen states in the article, we’re still early in the space.
Just because some people bought Bitcoin when it was $100 doesn’t make a difference, because you don’t have to buy Bitcoin. The space is so big that there are plenty of other investment opportunities. Though this is also where the problem lies in understanding the investment opportunities.
How do you know what you’re investing in is not going to fundamentally drain your initial investment?
One of the strategies you can always take is to diversify your portfolio. When you have a diversified portfolio, generally when there are huge market swings, it doesn’t quite impact your portfolio as much as it would’ve been if you were ‘all in’ on a couple of coins.
The issue here also lies in knowing what coins to invest in. Do you have enough time to do your own research? At the end of the day never take anybody’s word for it on the internet, because you have no idea what their ulterior motives are.
This is where projects like Ydragon come into play for everyday investors who want to invest in high-performing projects, but might not necessarily know enough about them.
Ydragon has baskets of assets that are spread over various chains such as Binance Smart Chain (BSC), Ethereum, or Polkadot. So you can look at this similar to index funds in the traditional stock market.
An example would be the B5 index fund, whereby investing in the Ydragon token what you’re ultimately doing is investing in the underlying assets that form that index fund. Here it’s the top 5 performing projects on BSC.
This can be quite important for new investors who are not familiar with DeFi, or the crypto space and it can be daunting to ‘get up to speed.’ If your main focus is trying to invest and earn some passive income and you don’t necessarily want to be exposed to the volatility of a single asset, then being spread across a basket of assets is a great strategy and an opportunity not to get burnt.
When we look at Ydragon, they’re fundamentally tackling this in a couple of different areas.
High Costs- When we had the peak of DeFi this year with many coins hitting all-time highs (ATH), the issue you had is that if you wanted to get involved in DeFi Ethereum blockchain there were high costs. For small investors with a few hundred to invest, if they were investing in multiple different projects, and had three different assets they wanted to purchase independently, the transaction fees alone would have taken a significant chunk of that investment. Those assets obviously had to perform well enough to give a profit, and also cover those transaction fees.
Time Consuming- It can take time before your actual transaction gets put through.
Portfolio Management- If you’re new to investing and crypto and have seen a number of projects, managing all of these across the board can be time-consuming. You also don’t want to make any errors when it comes to buying and selling.
Technical Difficulty- If you’re tech-savvy and have got the time to understand how DeFi and yield farming work then it’s all well and good. However, if you don’t it can be a daunting task and you will need to become aware of issues surrounding elements like an impermanent loss.
High Risk- If you are spread out on a few assets individually then there is the aspect of volatility and price swings.
The idea with Ydragon is that you’re investing in the token, which then has an underlying basket of assets of the top-performing assets per platform. So you’re minimizing the need to have individual costs across those tokens and you don’t have to manage any assets that you have underneath. Since you’re exposed through a single token, it doesn’t matter as much how the assets are performing.
This is quite key when it comes to investing in DeFi. Having a platform for you to do all of that in one go, for the everyday investor is definitely worth taking into consideration.
Some of the other features of Ydragon include:
Cross-chain- When you’re working across multiple chains there are different chains and fee structures you need to integrate with. Having a basket of assets lets you do this all in one go.
Yield generation- This is one of the key pieces in DeFi, because a lot of it comes to depositing your assets in a farm somewhere. What that also does, is as the actual assets appreciate in value by themselves as they naturally do through various market swings that we have, there’s also the opportunity to earn yield from that, which is passive income. So you can hold on to your assets and earn additional income.
Risk Diversification- You’re exposed across multiple assets, which can prevent against downswings.
Utility and Governance- It provides a reason for having the tokens in the first place. So you have exposure to the asset. As we see more projects come to light, what they want to do is also provide the opportunity not to just be invested through the token, but have a say in which way the project should fundamentally go. So there will be a number of proposals and you’ll be able to shape the roadmap. It also provides a reason to hold on to those tokens.
YDragon is a fantastic solution for DeFi, truly simplifying the process and thus enabling all newcomers to earn passive income rather easily.
Stay up to date with YDragon by following its social media channels linked below:
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And check out my channel Decentralised Chain for additional market insight.
Till next time.