Learn crypto with Jenn | Part 3 – How do I manage my portfolio?

I’m Jennifer, and I’m a crypto newbie who’s decided to take the plunge and learn crypto, and I hope some of you out there will help me on my journey. If you’re just joining my journey–welcome! You can check out the previous post in the series here, where I discuss which exchange to use.

It’s been a couple of weeks since I began my journey to learn crypto. So far:

1. I’ve chosen a cryptocurrency exchange (Coinbase)
2. And now I’ve bought my very first cryptocurrency!

I purchased $40 worth of Solana on Coinbase, and an additional $10 of Bitcoin, which gives me $15 total of the popular crypto. 

My crypto investment goal was to “HODL,” or hang on to my crypto over the long term. And while that is still my goal, I can’t help but open up my Coinbase app and check in on my investments every day (or multiple times a day!) Is this normal? Ha.

Naturally, seeing the daily fluctuations of my crypto portfolio has given me some second thoughts!

Do I have doubts about my investments?

So, how do I feel about managing my new crypto portfolio? Am I having doubts or regrets about what I’ve invested in? Overall, I don’t regret my crypto investments. In fact, I’m even considering investing in some other cryptos! 

But what I am uncertain about is how long, exactly, I can hold on to this investment. I knew going into my journey to learn crypto that the crypto market is notorious for its volatility.

When I first received $5 of free Bitcoin for verifying my identity on Coinbase, Bitcoin was sitting high at $69,000. Currently, it’s at $58,000.

And as I check in on my Solana investment, in the space of a week, it hit a high of $242, went as low as $186, and then went back up to $223.

Of course, when I look at both these cryptos’ all-time growth, or even their growth over just a year, it’s clear to me that these fluctuations won’t mean anything over the long term.

But just how long can I hold on to these investments? Five years, a decade, several decades? How often do I need to be checking on my crypto investments? How closely do I need to be following these companies in the news?

My concern comes from the fact that the cryptocurrency market is highly innovative. So while the technology of one company might propel it to the top for a while, a competitor may come out with a new idea that outperforms it. 

However, it seems like it takes a lot to really unseat the top cryptos. For example, there have been many great challengers to Bitcoin, but it remains the most popular crypto by market cap. When I consider that it doesn’t seem like Bitcoin is going anywhere anytime soon, it seems like a great long-term investment for me. 

Another thing I want to be careful of on my journey to learn crypto is hype. How can a new investor tell what’s hype versus what’s a stable investment? 

For example, the more I read about Avalanche and its technology, the more it seems like a great investment. But how can I truly be sure? 

Similar to any other investment, cryptocurrency or traditional, it seems like the best way is to simply do my research and invest in a company if I like what they’re doing and believe in their potential to solve a real-world problem. And of course, only invest what I can afford to lose!

Tracking my investments and my user experience with Coinbase

To track whether my investments have been going well or not, I’ve been checking the graphs in the “Portfolio” tab on Coinbase, and also monitoring Solana’s and Bitcoin’s price graphs in the “Watchlist” section.

So far, I’ve only used the Coinbase mobile app, but I find it very easy to navigate and make transactions. 

I particularly like the “Trade” tab where it shows the top cryptos, and I also like the “Top movers” and “New on Coinbase” sections. There are so many cryptocurrencies out there, and I like seeing all the options that the Coinbase exchange has to offer.

I especially find it helpful how I can click on any crypto and find a quick “About” section, as well as links to its whitepaper and official website. Coinbase also provides relevant metrics like its performance over the past year, market stats, and stories about that crypto in the news.

One other feature I like is the “Learn and Earn” section, which allows me to take short lessons about different cryptos in exchange for free rewards in that crypto. This seems like a great way for smaller crypto companies to advertise and get people to invest, and I definitely plan to take some of these lessons to help me learn crypto even more.

Tips I’m using to manage my crypto portfolio

I have learned so much over the past few weeks about the importance of being clear and intentional about setting my personal goals and the importance of research to make sure that I have a good understanding of the company I’m seeking to invest in and how secure the investment may be. I’ve also learned a lot more about the cryptocurrency investment community and how tight nit – and helpful – they can be. There’s still a lot of hype and risk, and I’ve worked to be mindful of that.

So, what are the primary tips a new investor like me keep in mind for managing a crypto portfolio? Here are a few tips I’m using to manage my personal crypto portfolio.

#1 Hodling and having an exit strategy

First up, I’m learning that it’s a good idea to have a strategy for entering and exiting your investment. This will help me stay on track when it comes to making sure I can get a profitable return. 

This also goes for hodling. Hodling has its advantages for new crypto investors who are just starting to learn crypto and don’t know enough to make the right short-term investment moves. Plus, I get the added benefit of not having to pay taxes until I sell.

Hodling can pay off through long bear markets and help me avoid all the volatility of the crypto markets. But at a certain point, if I hold too long I will be missing out on potential gains and could see my investment begin to fall. 

An alternative hodling strategy that could pay off for some investors, depending on their investment, is to hold during bull markets, and then sell at the onset of a bear market. If I decide to stick through the bear market, I need to be prepared to face some pretty big losses, even as much as over half my investment.

Of course, if I stick it out and the cryptocurrency goes back up, then I will have been rewarded for toughing it out. 

So how long, exactly, should I hold? How do I know when it’s a good time to sell? How do I stay patient enough to hodl cryptos that are worth the long-term investment? 

There is no right or wrong answer when it comes to how long to hodl and when a good time to sell is. For me, it depends on what my personal financial goals are and my exit strategy. I’ll probably continually be asking myself when I’ll need the money, and what I plan to use it for!

Then, I want to make sure I choose a reasonable price target to sell my crypto at to help me reach that goal. One strategy for selling crypto that could work for me is to sell through a staggered approach, for example, selling 10% each month.

#2 Diversification

What what I understand, typically, it’s best to diversify my crypto portfolio and keep it balanced. Even beginner investors like me know that you shouldn’t put all your eggs in one basket. It’s not wise to simply buy some Bitcoin and be done with it. 

Instead, it’s best to research and invest in at least several good cryptos. This way, you have less risk in case one of your investments ends up underperforming. That’s why I’m putting so much effort into doing proper research and choosing myinvestments wisely. 

Related to this is keeping my portfolio balanced. This is something that is very important to me. For example, if you have two cryptos and your goal is to keep one at 60% of your portfolio and the other at 40%, it can be a good idea to maintain this ratio so that you don’t become overly invested in one coin over the other. Using this strategy can help decrease risk as well.

One way I can do this is, if I start seeing profits in one cryptocurrency over the other, I can sell some of that profit to invest more in my other crypto to keep the balance between the two.

#3 Avoiding scams

Lastly, an important point in managing my crypto portfolio, especially since I’m just starting to learn crypto, is avoiding scams. What can you do to get out of a crypto scam?

If you suspect that there is a crypto scam going on, you can report it to the FTC, Commodity Futures Trading Commission, U.S. Securities and Exchange Commission, Internet Crime and Complaint Center, and the crypto exchange you bought the cryptocurrency at. I know I certainly will!

I’ve also learned that you can also report it to your local law enforcement, so they can take steps towards recovering your stolen investment.

There are also services that help victims of crypto scams, such as CipherTrace, which can help victims gather the relevant information that law enforcement will need to help recover lost funds