Investing in cryptocurrency has changed countless lives over the past decade. I know it changed mine.
From almost nothing, my crypto portfolio has grown to be worth more than $1 million. That’s life-changing wealth that’s allowed me to be semi-retired at the ripe age of 59.
It all started when I discovered Bitcoin (BTC) in 2011 while looking for investing-related story ideas. I was fascinated by the idea of a digital currency that could be sent over the internet without the need for a third-party middle man, like a bank.
But I was more fascinated by the idea that a person could mine this digital currency on a PC, as long as it had a reasonably powerful graphics card.
After I wrote the story (which you can read here), I spent $300 on a graphics card upgrade for my Mac Pro. I downloaded the required software, joined a (since defunct) mining pool, and started mining. I overclocked the graphics card and let it run 24 hours a day.
After about four months, I came home from work one day to find a bizarre pattern on my Mac’s monitor. I had burned out the graphics card.
I decided to quit right there because the Bitcoin price had fallen to the $5 range – a drop of about 75% from where it was when I started. The few bitcoins I had mined weren’t even worth what I had spent on the graphics card.
But rather than selling my Bitcoin, I kept it – just in case.
You know what happens next. That modest number of bitcoins grew into the biggest part of a portfolio that has made me a crypto millionaire.
Now, I know what you’re thinking – “That was 10 years ago! It’s too late for anyone to get those kinds of gains today.” But I wouldn’t be so sure of that.
Lesson No. 1: It’s Not Too Late to Buy Bitcoin
I admit the size of those Bitcoin gains are no longer possible. But it’s still relatively early.
Bitcoin is only now starting to get serious traction in the traditional financial world. And there are still multiple catalysts that will drive the price higher in the years ahead.
ARK Invest CEO Cathie Wood, known for her focus on tech and innovation, has said she expects the price of Bitcoin to exceed $1 million by 2030 – just eight years away.
If she’s right, that’s a gain of more than 30X from the current Bitcoin price of $32,641. Even if Bitcoin falls far short of that – say, $400,000 – that’s a 12X-plus gain.
Admittedly, that’s not as good as a 10,000X gain, but it’s still extraordinary compared to the gains you’re likely to get putting your money in any other asset class, such as stocks.
But Bitcoin wasn’t the only way I got to crypto millionaire status. As the years passed and new cryptocurrencies appeared, I invested in some of them as well.
Along the way, I got some things right – and some things wrong…
Lesson No. 2: Evaluate before You Buy
Opportunities in crypto come along all the time. The hard part is figuring out which cryptos have potential and which ones are dead ends.
One lesson I learned is that you need to have a way to evaluate a crypto project before you buy it. A while back, I talked to Chief Crypto Strategist Nick Black about a method that works really well called the “Five Ts.”
Lesson No. 3: Play with House Money
Another lesson is more like a rule of thumb. If one of your crypto investments skyrockets, take some money off the table, and pull profits – ideally an amount a bit more than what you originally invested.
Doing that means you’re playing with “house money.” If your remaining investment tanks, you’re still ahead because you’ve already pocketed a profit. And if it soars, your gains are that much bigger.
Nick’s rule of thumb for always coming out on top is easy to remember:
Anything that does a 10X, take 20% off the table; and anything that does a 2X, take 10%.
I did this with Solana (SOL), which I discovered in March of last year while researching a story. I used a portion of my stimulus money to buy some SOL at $14.62.
By fall, Solana was skyrocketing, and I was up 1,000%. So, I sold about a third of my SOL and took a 4X gain on my original investment. I kept the rest. While the Solana network has had issues, the team is working on fixes.
I plan on holding the rest of my SOL for a long time because of the last and most important lesson I’ve learned…
Lesson No. 4: The Key to Successful Crypto Investing Is Patience
After a decade of mining, trading, and writing about crypto, I’ve concluded that the number-one lesson of crypto investing is patience. Crypto is notoriously volatile, but you can’t let that push you into making rash and short-sighted decisions.
Several times, I’ve bought cryptocurrencies that I was convinced were strong investments but went through long periods of decline. Yet, my research showed the projects were solid, so I hung on.
In most cases, I was rewarded for doing so – and handsomely.
I first bought some Ethereum (ETH) in August 2017 for about $277. That may have seemed a steep price given that you could get Ethereum for less than $1 in 2015, less than $10 in 2016, and less than $20 as late as March 2017.
The next year brought forth “crypto winter.” By December 2018, Ethereum had sunk below $100, and my investment was down 67%. But I didn’t sell. In fact, I never seriously considered selling at any point along the way.
My patience certainly paid off here. Now, Ethereum is trading at about $2,360, putting me up 750%. I was up more when ETH peaked last fall – 1,646%.
As Ethereum is the backbone for much of DeFi (decentralized finance), I believe it will recapture those highs and keep going higher. I have no plans to sell. More patience will yield more profits.
I had a similar experience with Cardano (ADA), which I initially bought in February 2018. At one point, I was down more than 90%. But I held on – Cardano remains one of my favorite crypto projects – and now, I’m up about 140%.
Meanwhile, instances when I was impatient have cost me. In September 2020, I received 400 free Uniswap (UNI) because I had used the Uniswap decentralized exchange earlier that year. UNI started trading at about $4, then slid down to about $2 before rebounding.
When the price again reached $4 in December, I sold all my UNI. I was pleased to have scored a nice $1,600 windfall. But the UNI price kept going up…and up…and up. It hit its all-time high of $44.97 the following May.
Had I exercised just a bit more patience, I could have made between 5X and 10X more profit, depending on when I pulled the trigger.
So, you see, building wealth with crypto is really rather simple.
Make wise choices, take some profits when you get a windfall, and above all – be patient.
Do these things, and you will raise your odds of success as a crypto investor. Someday you may even become a crypto millionaire.
People are buzzing over this new class of crypto that’s beating the pants off Bitcoin. Experts say $10 trillion will soon be up for grabs to those who act now… We’ve got the full story here.
Advisory Board Member, American Institute for Crypto Investors
Follow me on Twitter @DavidGZeiler.