Crypto Investors Dream of 100x Gains
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While some crypto investors are just happy to see their coins appreciate by 10x, there are others out there hoping to hit 100x or even 1,000x gains on their investments down the road. But what does this term really mean? And how likely is it that such an event will occur? Let’s take a look at exactly what 100x gain means in the world of crypto investing, and how likely it really is that you’ll experience this sort of return on your investment in this space…

The right expectation

Some investors in crypto are hoping for 100x gains – that is, you invest $1 and get $100 back. However, that isn’t likely going to happen. But neither is zero return – so what should your expectation be? The right expectation is a solid return on investment (ROI). The idea with every investment is to make more money than you put in – so any returns over that baseline should be considered a success. For example, if you bought 1 Bitcoin at $10,000 and sold it at $20,000, your ROI would be 50%. That’s not bad! Hopefully, though it goes much higher than that; otherwise your bet was wrong and someone else got lucky.

The best-case scenario: 100x gains

In a perfect scenario, your investment will perform to 100x its initial value. Here’s how that might look: You invest $1,000 and see a return of $100,000 overtime. That return would be considered as having generated 100x your initial investment—or an excellent 1,000% gain.

The worst-case scenario: -100% losses

Buying a stock with a -100% loss means that you’d have to pay back $1 for every dollar you initially invested. In other words, it would be like losing twice your money and buying nothing in return. That’s…not ideal! And while most stocks aren’t likely to fall by more than 50%, some do; Enron Corp., for example, lost 90% during its last six months as a public company (!). When you invest in crypto, huge gains are entirely possible—but so are huge losses. Like I said: it’s risky business.

Don’t invest more than you can afford to lose

Cryptocurrencies like bitcoin have exploded in value over just a few short years. A $1,000 investment in 2010 would be worth over $30 million today (as of writing), but remember that cryptocurrencies are an incredibly risky asset and can easily plummet in value. That doesn’t mean you shouldn’t invest—there is always room for growth—but you should invest only what you can afford to lose. And don’t put your entire net worth into cryptocurrency; instead, diversify across different coins and tokens to reduce your risk. If that isn’t enough advice on how to stay safe from a potentially disastrous investment, here are some things you should never do with any money. You have been warned!

Investing and trading are two different things

When you invest in an asset, you’re buying a piece of that company or organization. You become part owner. When you trade an asset, whether crypto or otherwise, you’re simply buying and selling with the hope that it will increase in value by some percentage before your holding period is up. You can think of investing as being long on an investment (i.e., I own some Facebook stock so I hope Facebook does well) while trading would be shorting something (I’m hoping for a Facebook crash). There are benefits to both approaches but investors tend to like their returns more guaranteed while traders prefer higher risk/reward scenarios.

Understand your risk tolerance, then trade accordingly

There are three main factors that go into determining your investment risk tolerance: (1) how quickly you want to accumulate wealth; (2) how quickly you need to liquidate investments in case of an emergency; and (3) how much you can afford to lose. Obviously, if you want a sizable investment portfolio within a few years, there’s more risk associated with investing than if you plan on making small but steady gains over time. Similarly, if you don’t have much in savings or other liquid assets, it makes sense not to invest too heavily because any losses would have a large impact on your lifestyle.

Review your performance over time before making significant decisions

Before making any significant investment, it’s important to understand your performance over time. Setting an average gain and average loss can help you determine whether or not you’re doing okay, and if you should adjust how much money you put into crypto. If in April 2018, your investments lost 15% while they were on a 5-month winning streak before that point, then it might be wise to stop putting as much money into crypto while volatility is high. The same thing could be said about positive trends, where if cryptocurrency prices have been steadily increasing over a longer period of time (3+ months), then perhaps it would make sense to pull out some profits and invest in other opportunities for a bit.

Watch out for scams, noobs, FUD, and fear of missing out

The cryptocurrency market is a very risky place to invest in, but also a very exciting one. With so many hyped-up opportunities for investors (especially new ones), it’s easy to become swept up in the hype. Don’t buy into FOMO or fear of missing out on massive gains — consider that you could have invested your money elsewhere and simply watch it grow by watching our favorite cryptocurrencies’ live prices in real-time. Hold for longer-term gains: Investing long-term offers investors an opportunity to potentially lock in huge returns over time as opposed to trying to play short-term moves.

Conclusion

nvesting in cryptocurrencies is like investing in a very volatile stock. The real question, then, is whether we should be investing in cryptocurrency at all. There are three good reasons to think that cryptocurrencies are worth betting on: 1) they can disrupt current industries; 2) they’re wildly popular; and 3) regulation could drive big money into crypto and cause big gains. However, there are also two very big reasons not to bet on crypto: 1) it’s easy to lose money; and 2) there may not be enough new converts to justify such major gains. With that said, I hope everyone reading has learned a lot from my simple guide on what does 100x mean in crypto?

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