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The world of cryptocurrency trading is a diverse one, with manifold strategies available depending on a trader’s risk appetite, market awareness, and investment goals. Some prefer the lightning-paced world of day trading, while others opt for the speculative gamble of ICOs.
Yet amongst these varying approaches, value investing stands as a strategy with potential appeal across varying trading styles. Not only for its potential stability amidst the erratic nature of the crypto market, but also for its focus on intrinsic value that can weather short-term market storms.
This guide will walk you through the ins and outs of value investing in the crypto space, and how certain tools can help.
What is Value Investing?
Value investing, at its core, is a strategy that involves selecting stocks that are trading for less than their intrinsic value. This is where it differs from growth investing, where investors seek out companies which they believe have high growth potential, disregarding their current intrinsic value.
In the crypto market, the practice of value investing can be both more challenging and, potentially, much more rewarding. The inherent volatility of the digital currency market lays out a fertile ground for value investors, assuming they know where and how to look.
How can you do Value Investing?
Value investing in crypto requires both patience and due diligence. Here’s a step-by-step guide:
- Understand the Technology: Understand the underlying technology of the cryptocurrency. Whether it’s Bitcoin’s peer-to-peer asset transfer protocol, or Ethereum’s smart contract system, having a solid grasp on how the coin operates can offer insight into its potential future value.
- Evaluate the Tokenomics: This involves looking at factors like the total supply of tokens, the number of tokens in circulation, and the token distribution method.
- Community Engagement: Evaluate the coin’s community. A thriving, active community may indicate a high potential value.
- Future Roadmap: Always keep an eye on the project’s future plans and how realistic they are.
How can you Predict Future Growth?
Predicting future growth in the crypto market comes with considerable uncertainty. However, some factors can serve as indicators:
- Technical Analysis: Charts often leave clues which can help predict future price action. Look out for patterns and trends.
- Fundamental Analysis: This involves evaluating the project’s team, its technology, future roadmap, etc.
- Sentiment Analysis: How does the wider crypto community perceive the coin’s future prospects?
Read: Do I need to declare crypto in the UK
What is Growth Investment?
Growth investing is another strategy where investors seek out companies (or in our case, cryptocurrencies) they believe will outperform other investments due to their potential high growth rate, which is typically measured in terms of revenue or earnings. It’s much more future-oriented than value investing.
What Tools do you Need for Value Investing?
- Knowledge of the Crypto Space: You need to remain in regular touch with news and updates in the crypto space.
- Analytical Tools: Platforms such as TradingView can be of immense use.
- Portfolio Trackers: Tools such as Vestinda.com can help manage and track your investments.
Best Practice Tips for Value Investing in Crypto
- Don’t Rush: Crypto is a marathon, not a sprint.
- Diversify: Don’t put all your eggs in one basket, no matter how promising a project may seem.
- Regularly Reevaluate: Circumstances change fast in crypto, and so can the fundamentals of a project.
- Avoid FOMO and FUD: Avoid emotional decisions based on Fear Of Missing Out (FOMO) or Fear, Uncertainty, and Doubt (FUD).
Harnessing Vestinda for Value Investing in Crypto
Venturing into the complex and ever-evolving realm of cryptocurrency investment requires not just an astute understanding of value investing principles but also the right tools to execute a long-term strategy effectively.
One such tool that stands out for merchants aimed at embracing value investing within the crypto domain is Vestinda— a trading and investing automation platform.
Built with the ethos of automating and scaling investment portfolios using sophisticated hedge-fund-like algorithms, Vestinda offers a suite of features and resources tailored to aid traders in their quest for value investing. The service positions itself as a bridge, granting retail traders the capabilities that, until late, were reserved for Wall Street elites.
Utilizing Vestinda’s Ecosystem
Let’s unravel how Vestinda’s features translate into actionable steps for traders looking to adopt value investing strategies:
- Portfolio Tracking: Vestinda simplifies the process of portfolio tracking, offering an integrated view across different exchanges and investment strategies. Value investors can track the real-time performance of their positions, giving them a holistic view of their assets and allowing for informed decision-making.
- Strategy Library: A prime jewel in Vestinda’s crown is its strategy library. It presents a curated selection of investment strategies, including those tailored for value investing, provided by top traders. For a value investor looking to navigate the volatility of crypto markets, these pre-built strategies can be replicated and tested.
- Strategy Builder: A true game-changer is Vestinda’s no-code strategy builder. Traders can build their own personalized trading strategies without writing a single line of code, iterating on the principles of value investing. This can include strategies that focus on historical performance, intrinsic value calculations, or integrate the long-term viability of a currency, all completed with a few clicks.
- Backtesting: Any value-oriented investment strategy requires testing against historical data. Vestinda offers a robust backtesting engine, allowing traders to validate their investment hypotheses over varied time periods and market conditions. This critical analysis helps in fine-tuning strategies for better risk-adjusted returns.
- Demo Trading: Before putting real money to work, Vestinda enables traders to engage in paper trading, test investment strategies, and learn the ropes of the platform risk-free. This feature aligns with the value investing ethos of being cautious and making informed bets.
- Live Trading: When strategies are set and tested, investors can switch to live trading, automating the execution of their value investing strategy on various integrated exchanges. The automation aspect ensures that emotional trading is taken out of the equation and strategies are executed precisely and consistently.
Making the Most of Vestinda for Value Investing
For traders new to Vestinda and value investing, here’s a streamlined process to get started:
- Connect Your Crypto Exchanges: Begin by linking your existing accounts with major crypto exchanges to Vestinda. This centralizes your investment operations and offers a consolidated view of your portfolios.
- Explore the Strategy Library: Dive into Vestinda’s library of crypto investment strategies. Look for those with a track record of success and which align with value investing principles.
- Test and Choose Strategies: Use the backtesting feature to evaluate how these investing strategies would have performed historically. This will provide confidence in your selected strategies’ efficacy over time.
- Customize: If pre-built strategies don’t quite fit your vision of value investing, use the strategy builder to tailor strategies based on fundamental analysis or other value-centric indicators.
- Paper Trade: Engage in demo trading to get a sense of how your selected or custom strategies perform in real-time without financial risk.
- Go Live: Once satisfied with the strategy’s potential and risk management, transition to live trading, and automate your value investment approach in the real market.
Summing Up
Vestinda.com empowers traders with a platform designed to diminish the complexity of automation, making algorithmic trading accessible to a broader audience. For the value investor in the crypto market, it offers a structured ecosystem not only for strategy implementation and backtesting but also for continuous education and strategy evolution.
By leveraging Vestinda’s feature-rich platform, value investors can navigate the often turbulent waters of the crypto marketplace with a steadier, methodical, and informed course—the essence of value investing.
Value investing is just another investment method, but is a relatively easy trading strategy.
