One main thing in participating in ICOs and presales, is to have an exit strategy. In fact, the only thing more important is your ability to actually pick decent ICO’s in the first place.
Without a decent idea what you’re going to do, you could end up diluting your investments so much that they’re almost worthless.
To successfully invest in an ICO, you have to put a lot of effort into the initial research. You need to do a fair amount of reading, gauge market sentiment, figure out whether the hard cap is good or ridiculous, and also analyze the team.
Some ICOs result in a x10 gain in a short period of time. While they might not all do that, you’re going to be looking at at least x2-5 for the majority of them, if you do your due diligence correctly.
Do you look for x5 or hold on in the hope of x1 000? You need a solid strategy to make a profit from your investings depending on your purpose.
There are two main strategies when it comes to ICO investing:
And while some coins are clearly more suited to flipping and others to holding, very few ICOs can be considered 100% flip or 100% hold. In fact, the best idea incorporates both.
A quick flip is selling anywhere from 80-100% of your tokens within a short time of them being tradeable. As soon as they reach something like x3-5, we’ll sell them and move on. We may not even wait for them to reach a major exchange. It depends on the token, what we think about its likely short term/long-term prospects, and how much it has risen.
- Great to receive profits early (both for mindset and cashflow purposes).
- A lot of tokens make their biggest short-term gains right after the ICO.
- Holding onto fewer tokens makes tracking a lot easier.
- You can cycle the profits back into more ICOs and/or safer coins and have your investing pay for itself.
- Taking out the initial amount and letting the rest ride essentially gives you free tokens.
- Can buy back in later after the coin dips.
- Can massively reduce the upside of your investments. Much harder to ride a mooning coin.
- Can make you more likely to “gamble” on ICOs or skip due diligence.
- Psychologically can be stressful if you cash out shortly before the coin starts a huge run.
On the other end of the scale is the hold (or hodl) strategy, whereby you try to invest in a coin when it is as cheap as possible, allowing you to have massive profits if it explodes in price.
- You don’t need to worry about trying to time your exit.
- Some tokens will explode in value and you’ll make massive profit. Almost unlimited upside.
- We’re still so early in the cryptocurrency game that virtually any investment in these initial stages could become huge later.
- There’s only so much FIAT you can put into ICOs before you need to realize some profit or stop investing in them.
- On a long enough timeline, most tokens historically have lost value.
- You either need to back a ton of different tokens in the hope one or two of them will moon, or you need to be very good at picking winners and only invest in a few.
- 80% of ICOs are likely to be duds in the long term.
- Holding too many coins can get confusing.
So, we’ve looked through two main investing strategies. Which of them to choose – you should decide depending on your purposes: a quick profit or long-term investment.