I heard this story about how someone lost $1.3 in cryptocurrencies and I thought, given all the hype and craziness going on right now with bitcoin going ballistic, that I should tell you what happened.
Before I get to the story… If you haven’t yet watched the FREE crypto briefing – Crypto Wonders and Warnings – you still have a few hours to do so.
Go here to watch the Crypto Wonders and Warnings Webinar.
Back to Alison and how she lost a bucket load…
Alison looked down at her crypto portfolio. Six weeks earlier, it stood at 632 bitcoins. Now it was the equivalent of just 215 bitcoins.
Her loss at the time was equivalent to a staggering $1.3 million. (As of this writing this with the crazy increase in the price of bitcoin her loss is around $6.1 million.)
This wasn’t from a fall in prices. But rather one ignorant and greed based trading mistake after another.
You might be surprised it’s even possible. Bitcoin is up 1,900% year-to-date. And the entire cryptocurrency market is up 2,1750%.
So how did she manage to lose so much?
According to Alison (name changed due to protect her privacy):
“It was pure greed and getting caught up in the mania.”
As I’ll explain, Alison made every mistake in the rapidly expanding crypto-foolery book.
Each mistake compounded the previous one.
And in the end, Alison’s portfolio dropped by two-thirds in just a few short weeks.
I’m telling you her story so that it doesn’t happen to you.
I’ll go over what Alison did wrong. And I’ll show you what we do in Crypto Boom Riders to avoid those mistakes.
The Mistakes Add Up
The story starts in May of last year. That’s when Alison started buying bitcoin.
She continued to buy into June this year ending up with 632 bitcoins worth roughly $1.7 million. Not too shabby!
Her plan was to hold these forever.
But then, Alison let herself get sucked into the mania that was building and decided to give “altcoins” a try. An altcoin is a cryptocurrency other than bitcoin. I expand on this in the Crypto Wonders and Warnings Webinar.
With no research and no plan (especially as it had seemed so easy to make so much with bitcoin), Alison started buying.
Her first couple of investments went up right away. So, Alison kept buying.
By the end of June, every last bitcoin she had, had been exchanged (invested) into this slapdash array of altcoins.
The problem: It wasn’t the greatest portfolio in the world!
Some of the coins I’ve never even heard of and if you do even the tiniest bit of research and due diligence you can quickly see they are scams.
The truth is 95% of all altcoins out there are scams and Alison’s, so-called, portfolio had loads of these scams in it.
To make matters worse, Alison’s portfolio was also totally off balance with just three of these coins making up 80% of the value of her portfolio.
So, when the crypto market crashed in July, Alison got crushed.
Yes, the crypto market does crash and we can expect to see a lot more crashes and volatility.
And by mid-July, she had lost 66% of her portfolio. That is about $1.3 million at the time. If she had kept to her original strategy and kept her bitcoins as she had planned, her loss in terms of the bitcoin she had is now worth $6.1 million.
Let’s see what Alison did wrong. And how do I teach you to do it differently in Crypto Boom Riders?
Randomly Buying Is Not Enough
If you watched the Crypto Wonders and Warnings webinar you’ll likely have identified all the mistakes. But let’s go over them just to make sure.
Let’s start with Alison’s plan.
That was to buy and hold bitcoin – Strategy #1.
But it quickly went out the window once Alison got a taste of altcoin trading. That was her first mistake.
Alison’s next mistake was not doing any research and naively/greedily jumping into stuff she had no information on.
How can you make an effective decision when you don’t understand what you own? You can’t.
She didn’t go through the 5 point crypto principles that form the base of altcoin selection in Crypto Boom Riders and she didn’t ensure the crypto’s she bought followed two key criteria:
- It is designed with the 5 core cryptocurrency principles
- It solves a real and valued problem which bitcoin or etherium do not.
The mistakes compounded from there. She kept buying more of the altcoins she owned, chasing the prices as they went up.
And three of her positions accounted for 80% of her portfolio.
Let’s see how we do it differently
The Rational Way to Invest in Cryptocurrencies
In Crypto Boom Riders, my goal is to teach you how to build a diversified portfolio of cryptocurrencies. This principle applies to both Strategy #2 – the long term buy and hold portfolio and the Strategy #3 – the short term trade portfolio
When you buy, you don’t throw a dart at a board or listen to some hype on social media. You use the 5 point principles to check the crypto out, you get to understand what it’s about and you ensure it isn’t a scam.
Further, in Crypto Boom Riders you learn NOT TO chase a price and instead set a “buy up to” price for each altcoin you are considering.
Finally I teach you how to create “investment chunks” which you use to ensure you end up with a balance of your funds across your different selections. In other words, we invest the same amount into each altcoin. That way one bad position can’t ruin our portfolio. This is how you ensure an asymmetrical risk strategy is in place to protect you.
Alison’s story can be summed up in one word: irrational. She got caught up in the hype and then made one mistake after another.
Her story is a good lesson in how not to invest in cryptocurrencies (or any other asset class for that matter). We see this lunacy happening in every boom. It happened in the housing boom in the 2000’s and it’s happening now but just on a larger scale.
I don’t want you to make the same mistakes.
That’s why I go to great lengths to help you manage risk and maximise your returns and that is exactly what Crypto Boom Riders is all about. Ensuring you have the training, and skills to create the life changing wealth you desire without taking stupid life risking actions.
So, if you don’t want to end up like Alison, do the following:
- Have a plan and stick to it.
- Do your research.
- Don’t chase prices.
- Build a diversified portfolio.
- Use uniform position sizes
Get informed by joining Crypto Boom Riders.
Keep living that wealthy life