As the anonymous internet hive of crypto investors likes to put it, it’s typically wiser to be the 0.01% of the world’s population that own cryptocurrencies rather than trying to be the top 1% of traders who actually consistently win at the markets.
In fact, a buy and hold strategy is much easier to grasp than any part of quantitative trading or even advanced technical analysis.
Nevertheless, a straightforward plan on paper doesn’t make you immune to panic, FOMO, fear, and bad decisions made in the heat of the moment.
In markets as volatile as cryptocurrencies, you can be sure the emotional element will appear sooner or later. It will have you hovering over your cold storage, in a state of mind unfit for good decisions.
There are altcoin trading strategies and there are “hodl” strategies
As we’ve outlined in articles on crypto trading strategies, you benefit from having at least rudimentary strategic steps in mind—even if you just plan to hold for the long run.
Investment is a trade as well:
- Investment starts when you enter the market
- It continues while you hold your cryptoasset
- It ends when you sell your cryptoasset
For a good crypto investor, none of these actions are arbitrary.
A clear investment strategy prepares you in advance for drawdowns—periods when your investment value drops below your initial cost. If executed correctly, it helps you avoid panic-selling your crypto out of fear it will go to zero.
Let’s examine what goes into buying and holding cryptocurrency the right way.
1. Enter the Crypto Market
Let’s assume you’ve done your homework and found a cryptoasset you believe has strong potential. You want to hold it long-term.
But what’s “long-term”?
Make it specific: Is that 6 months to you? Two years? Ten years? You need a time horizon in mind. Then divide that period into smaller intervals—typically quarterly or monthly.
At the end of each interval, dedicate time to market research. Sit down and reevaluate your investment with a clear head and current information.
Once you have your time horizon, you can start thinking about when to buy.
Long-Term Holders Benefit from DCA Strategy
If you want to be a long-term crypto holder with no interest in active trading, dollar cost averaging (DCA) works to your advantage.
DCA removes the problem of timing your market entry.
- You won’t waste time trying to predict irrational market moves
- You’ll inevitably buy before some dumps, but only small amounts
- It psychologically prepares you for crypto’s wild swings
Here’s how to execute DCA:
- Decide on a small amount to set aside from each paycheck—only what you can comfortably miss
- Get verified on a cryptocurrency exchange with a fiat onramp (Coinbase [finance:Coinbase Global, Inc.], Kraken, Gemini, or Binance [finance:Binance Holdings Ltd.] depending on your jurisdiction)
- Set up automatic recurring purchases if available, or manually buy at regular intervals
- As soon as funds arrive, convert to crypto immediately—no hesitation, no second-guessing
If you find yourself anxiously checking prices around your DCA purchase dates, lower the amount. The point of DCA is that you don’t think about timing at all.
Entry Timing for Shorter Holds
DCA works brilliantly for multi-year horizons. But if you’re holding for just one market cycle (6-18 months), that’s closer to swing trading.
Picking entries for shorter timeframes requires some chart reading and market awareness:
- Established cryptocurrencies (BTC, ETH) tend to form ranges. Unless there’s been a prolonged bull run, ranges often provide good entry zones
- Small-cap altcoins typically pump on hype, rumors, or speculation—not sustainable ranges
- Halving events (Bitcoin, Litecoin) create predictable patterns that patient traders can exploit
For crypto charting, platforms like TradingView offer free and pro accounts with robust tools.
2. Get Crypto Storage or Earn Yield
Investing in cryptocurrencies doesn’t end when you hit ‘buy’. Since blockchain makes you your own bank, investing never ends with simply buying and leaving assets on an exchange.
If you treat exchanges like banks, you’ll likely learn an expensive lesson within a year.
Your Personal Crypto Custody
First priority after buying crypto: where will you store it?
Trading platforms can hold your assets, but won’t be insured against hacks. And hacks happen regularly.
While poorly managed individual wallets can also be compromised, exchanges are higher-value targets because they concentrate massive amounts of funds.
The only case where leaving crypto on an exchange makes sense is if you’re actively lending it for yield or trading frequently.
Earning Yield on Crypto Holdings
Some platforms let you earn interest on idle crypto:
DeFi Lending (Non-Custodial)
- Protocols: Aave, Compound, Morpho
- Pros: You control keys via smart contracts, transparent on-chain
- Cons: Smart contract risk, gas fees, rate volatility
- Returns: 2-20% APY depending on asset and utilization
CeFi Lending (Custodial)
- Platforms: Nexo, Ledn, YouHodler (after the Celsius/BlockFi collapses, vet carefully)
- Pros: User-friendly, often predictable rates
- Cons: Custody risk, counterparty risk, regulatory risk
- Returns: 4-12% APY typically
Critical: Lending is not risk-free passive income. You’re taking on:
- Platform insolvency risk
- Smart contract exploit risk
- Regulatory seizure risk
Only lend if the yield meaningfully compensates for these risks. A 3% APY on a centralized platform holding your Bitcoin [finance:Bitcoin]? Not worth it. A 15% APY on stablecoins in a battle-tested DeFi protocol? Possibly reasonable for a portion of your holdings.
See our dedicated crypto lending strategy article for detailed risk calculations.
Your Cryptocurrency Cold Storage Options
For holdings you’re not actively using, cold storage is the gold standard.
It’s never completely safe:
- DIY cold storage requires technical expertise
- Commercial hardware wallets are black boxes with potential vulnerabilities
- Any hardware can theoretically have backdoors
Hardware Wallets (Most Practical for Most Users)
- Ledger (Nano S Plus, Nano X, Stax): Market leader, secure element chip, wide asset support, mobile connectivity
- Trezor (Safe 3, Safe 5): Open-source transparency, secure element in newer models, strong community
Both have had disclosed vulnerabilities over the years, but active security research and updates make them far safer than leaving funds on exchanges.
Multi-Wallet Strategy
If you hold significant value, consider dividing across:
- Hardware wallet (bulk of holdings)
- Mobile wallet (small amounts for convenience) - Trust Wallet, MetaMask Mobile
- Exchange account (active trading stack only)
Never keep all funds in one place, but also don’t over-complicate with too many wallets.
3. Maintenance Work: Stay Informed and Reevaluate
Once custody is sorted, begin the maintenance work that good crypto investing requires.
Stay current on news about your holdings and crypto markets generally. During bull runs, there can be huge gaps between leaders and followers, but overall, markets move together. A single crypto pumping alone for days is a short-term anomaly, not a multi-year bull trend.
Efficient Information Diet:
- Set aside weekly review time - Go through official subreddits, Discord servers, or X/Twitter follows where important news gets posted
- Google Alerts - Set alerts for key personalities, companies, and technology terms relevant to your investments
- News Aggregators - Use CoinDesk, The Block, Decrypt, or crypto-focused newsletters for headline scanning
Stay informed, but always make decisions with a cool head.
What to Focus On When Skimming News
Separating signal from noise requires judgment.
Safely ignore: Sensationalism, fear-mongering, appeals to emotion, clickbait price predictions.
For short-term trading or speculation, riding waves of hype can work. But for long-term investment, focus on fundamentals:
Bitcoin/Monero/Litecoin - Actual usage by public, businesses, and investors. Regulatory news spurs speculation, but on-chain metrics (active addresses, transaction volume, hash rate) serve as fundamentals.
Ethereum/Solana/Avalanche - Platforms for decentralized applications. Track developer activity, total value locked (TVL) in ecosystem, major dApp launches.
Newer L1s/L2s - Often in experimental stages. Business strategy and execution by founding teams matters enormously. Think of these more like early-stage tech startups.
Altcoins and tokens - Most promise ambitious visions with minimal execution. Some will succeed hugely, most will fail, many will linger in mediocrity. Heavy due diligence required.
Plan Reevaluation Sessions
Reevaluation is when you decide your next move.
Why regular reevaluation matters:
- Looking at numbers keeps you grounded in reality, not hopes
- Planning sessions in advance prevents reactionary decisions during volatility
Note: You don’t need arbitrary price targets like “I want to 10x my money.” Obviously you want gains, but how much an asset grows isn’t your decision. Instead, prepare in advance for scenarios—what will you do if it doubles? Triples? Crashes 50%?
Reevaluation Process:
Get current data ready:
- Your asset’s market performance
- Crypto markets generally
- Major news since last review
- Fiat value of your position (use portfolio tracker: CoinGecko, CoinMarketCap, Delta)
Then answer:
- Is it still worth holding this asset? Did it appreciate so much it’s now too risky a concentration? Did you find better opportunities?
- Do you still believe the asset is undervalued? Would it make sense to add to your position?
- Is it time to take some profits or cut losses? Full exit? Partial exit? Rebalance into other assets?
Frequency: For 1+ year holdings, reevaluate every 3 months. For 3-6 month holdings, monthly reevaluation makes sense.
Reevaluate even when underwater. If you’re down 60%, that’s when discipline matters most—reassess whether the thesis still holds or it’s time to cut losses.
4. Market Exit: Selling or Rebalancing
Crypto valuations swing wildly. What started as 5% of your portfolio might suddenly become 60%. Are you comfortable with that concentration? If not, consider rebalancing.
- Rebalancing ≠ equal distribution across all assets
- Rebalancing = adjusting to match your risk tolerance and current market conditions
- You can rebalance on a schedule (each reevaluation) or opportunistically (during extreme moves)
Eventually, your reevaluation will conclude it’s time to fully exit an investment.
This decision should factor in:
- Your time horizon (is it up?)
- Market conditions
- Better opportunities elsewhere
- Risk tolerance
- Tax implications
Two Common Long-Term Approaches:
-
Partial profit-taking on pumps - Take some gains whenever price spikes dramatically in short periods. May buy back later. Otherwise, don’t touch the investment for 5-10 years.
-
Diamond hands - Never touch holdings, ignore all drawdowns. In 10 years, either significant wealth or the investment becomes negligible.
Neither is “right”—it depends on your psychology and financial situation.
Summary
This article covered all vital parts of a sound cryptocurrency investment strategy.
The process:
- Set a time horizon - Define how long you’re holding (6 months? 5 years?)
- Choose entry method - DCA for long holds, tactical entries for shorter timeframes
- Secure custody - Hardware wallet for holdings, possibly earn yield on portions you’re comfortable risking
- Stay informed - Regular but disciplined news monitoring, ignore noise
- Reevaluate regularly - Scheduled reviews with clear frameworks for decisions
- Exit strategically - Rebalance as positions grow, take profits methodically, or hold through cycles based on your strategy
What separates successful long-term crypto investors from the majority:
- They have a plan before emotions kick in
- They adjust position sizes based on conviction and market conditions
- They distinguish between temporary volatility and fundamental thesis changes
- They make decisions with updated information and clear heads, not fear or greed
Crypto investing isn’t about perfect market timing or genius stock-picking. It’s about disciplined strategy execution over months and years, through multiple cycles of euphoria and despair.
If you can maintain that discipline, you’re already ahead of most market participants.