Find your Crypto Investment Plan | Bitcoin, DeFi and NFTs
DeFi, Investing - March 15, 2021
Every investment requires an understanding. Bitcoin, DeFi, and even NFTs are no different. But so often, many of us don’t have an investment thesis when jumping into crypto. In this video, we explain what a crypto-investment thesis is, and why it’s important.
An investment thesis is planning out your investment in the present for the future. In the cryptocurrency world, the OG investment thesis was around Bitcoin. This could mean buying Bitcoin and holding onto it until its price grew. Or dollar-cost- averaging by buying a little bit each week, month or year. Whatever the plan is, you should not deviate from it.
Deviation, whether increasing or decreasing the investment, shifts the goal post. You end up disrupting the flow of your investment. More often than not this is for an extraordinary reason. Either chasing an outsized gain or for immediate liquidity. If circumstances force you to deviate from the thesis, go ahead. Or, if not, sticking with the thesis will prove worthwhile.
If you think Bitcoin isn’t for you, your thesis can revolve around DeFi or decentralized finance. However, there is a technology risk associated with this. This means the risk to understand the technology of DeFi and the various coins it has. Understanding this technology is essential to building your thesis. This should be applied to investing in individual DeFi coins as well as DeFi protocols.
DeFi also has index funds which allow you to invest in a combination of DeFi tokens. This you can venture into if you do not want to take the time to understand the technology but want to include it in your investment thesis.
Even yield can be earned as part of your thesis. But, you have to understand the various models of – lending, staking, mining and more. All of these have a particular part in your investment thesis, one that cannot be ignored.
A thesis helps in many ways. It helps you understand what gains are outsized and what are just building up. It helps you differentiate between noise and news. Most importantly, it helps you make steady and sustainable returns over long periods of time.
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