Cameron Chell here again.
The crypto market is surging, and as an angel investor you may find yourself thinking about playing within this fresh and lucrative space.
But before you take a dive into the crypto waters, it is crucial to understand a few things first…
First and foremost is the why. Why are you investing in crypto? What is it about crypto that attracts you?
We have discussed this in past posts, but I bring this up once again because discovering your why is key. It’s important that you understand why you want to invest in crypto. Take a step back, ask yourself all the questions and try find the deeper meaning that goes beyond “I want to make money.”
Once you have done that, you can determine which investments you want to look at within this space and what the return expectations are. You can allow yourself to ask better and more specific questions about the potential investments you are looking into.
Another key question that you should ask yourself is whether crypto has a future.
Does crypto have a future as a trade that you want to get into just because of the euphoria and the rush? Do you think it has a future as a payment mechanism? Does it represent a piece of financial structure that’s going to be around for the next 20 years and more?
Be thorough in your research so that you can decide whether crypto indeed has a future in terms what you are looking for. With that understanding, then you will know how to play the momentum in the market as an angel investor.
There are hundreds and hundreds of cryptocurrencies, but only a couple are truly liquid. We all know the most famous one, Bitcoin, but even Bitcoin has several derivatives. There is Bitcoin, Bitcoin Cash, and Litecoin just to name a few.
Determining the cryptocurrency that poses the greatest upside for you is your next step. With this, you also have to take into consideration the companies themselves, and what particular problem they solve.
Investing in a company that does mining is very different from investing in a company that does blockchain development for payment based around Bitcoin, which is different from a company that produces NFTs built around Ethereum blockchain.
I’m not trying to confuse you, but instead illustrate the complexity at play here and the importance of doing as much research as you can. You have to understand and think about the problem crypto solves the most. Some problems are short-term, some are longer-term, but once you know how both the cryptocurrency and the company solve these problems, you can feel more confident about investing.
The last point to keep in mind is whether the company you are looking into has short-term cash flow or if they are a long term build-up.
This surging euphoria in the crypto market could be considered somewhat of a bubble. As such, you need to be prepared to stick it out for a longer term, because as an angel investor you do not have access to instant liquidation, unless you are looking into participating in a company that is already public.
Playing momentum as an angel investor for a short time frame is tough. Valuations in private companies tend to go up depending on what’s happening in the public market, which is where the liquidity is. It is a tricky balance to play in.
That is why it is absolutely important to keep all these points I’ve mentioned here in mind. Research and self-reflection will help you determine and understand you investment thesis, and also whether you think or feel crypto has a long term future.
That’s all from me today. I’ll be back soon to dive deeper into the crypto world… and more specifically, exactly what every angel investor should know about how to play Bitcoin.
Talk soon,
Cameron Chell.
The crypto market is surging, and as an angel investor you may find yourself thinking about playing within this fresh and lucrative space.
But before you take a dive into the crypto waters, it is crucial to understand a few things first…
First and foremost is the why. Why are you investing in crypto? What is it about crypto that attracts you?
We have discussed this in past posts, but I bring this up once again because discovering your why is key. It’s important that you understand why you want to invest in crypto. Take a step back, ask yourself all the questions and try find the deeper meaning that goes beyond “I want to make money.”
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Once you have done that, you can determine which investments you want to look at within this space and what the return expectations are. You can allow yourself to ask better and more specific questions about the potential investments you are looking into.
Another key question that you should ask yourself is whether crypto has a future.
Does crypto have a future as a trade that you want to get into just because of the euphoria and the rush? Do you think it has a future as a payment mechanism? Does it represent a piece of financial structure that’s going to be around for the next 20 years and more?
Be thorough in your research so that you can decide whether crypto indeed has a future in terms what you are looking for. With that understanding, then you will know how to play the momentum in the market as an angel investor.
There are hundreds and hundreds of cryptocurrencies, but only a couple are truly liquid. We all know the most famous one, Bitcoin, but even Bitcoin has several derivatives. There is Bitcoin, Bitcoin Cash, and Litecoin just to name a few.
Determining the cryptocurrency that poses the greatest upside for you is your next step. With this, you also have to take into consideration the companies themselves, and what particular problem they solve.
Investing in a company that does mining is very different from investing in a company that does blockchain development for payment based around Bitcoin, which is different from a company that produces NFTs built around Ethereum blockchain.
I’m not trying to confuse you, but instead illustrate the complexity at play here and the importance of doing as much research as you can. You have to understand and think about the problem crypto solves the most. Some problems are short-term, some are longer-term, but once you know how both the cryptocurrency and the company solve these problems, you can feel more confident about investing.
The last point to keep in mind is whether the company you are looking into has short-term cash flow or if they are a long term build-up.
This surging euphoria in the crypto market could be considered somewhat of a bubble. As such, you need to be prepared to stick it out for a longer term, because as an angel investor you do not have access to instant liquidation, unless you are looking into participating in a company that is already public.
Playing momentum as an angel investor for a short time frame is tough. Valuations in private companies tend to go up depending on what’s happening in the public market, which is where the liquidity is. It is a tricky balance to play in.
That is why it is absolutely important to keep all these points I’ve mentioned here in mind. Research and self-reflection will help you determine and understand you investment thesis, and also whether you think or feel crypto has a long term future.
That’s all from me today. I’ll be back soon to dive deeper into the crypto world… and more specifically, exactly what every angel investor should know about how to play Bitcoin.
Talk soon,
Cameron Chell.
Follow @angelsandentrepreneurs
Thank you Cameron,
My wife Leah and I have invested some in Crypto and we truly haven’t done our homework. With your basic explanation of things to keep in mind helps alot!
Godbless you and we want to here more from you.
Sincerely,
Michael and Leah Miller