5 Best Cardano Investment Strategies

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Cardano (CRYPTO: ADA), aka The ‘Ethereum Killer,’ is, as of July 2021, the fifth-largest cryptocurrency by market cap. It came into existence in 2017 as an ‘Ouroboros Proof-of-Stake’ cryptocurrency having more of an academic and research-based outlook. Cardano is the result of capacious experimentation and peer-reviewed research of the Cardano team. The team wrote around 90 research papers on blockchain tech on various topics. This research forms the backbone of Cardano and makes it stand out from amongst its Proof-of-Stake peers.

This was a formal introduction. Let’s talk next about some juicier bits about the 5th largest cryptocurrency as a highly-favored investment catching the fancy of many in the crypto circle:  

  • Cardano’s Ouroboros blockchain is a dual blockchain where the first blockchain manages ordinary transactions while the other blockchain manages smart contracts and provides access to developers. The dual setup makes Cardano highly efficient, fast, and scalable. 
  • Its Proof-of-Stake mechanism makes it more energy-efficient, cost-effective, and faster in terms of the number of transactions it can process in one second. 
  • Cardano was built on the premise of supporting decentralized finance that is one of the hottest topics in both the blockchain and fintech industry. 
  • Cardano employs Haskell programming language that provides it with a high degree of formal verification when it comes to smart contracts. Cardano is, as such, one of the safest blockchains for programmers. 
  • Most of the new crypto projects are backed by anonymous teams and founders, which proves a red flag for investors. With Cardano, this isn’t the case. It was co-founded by Charles Hoskinson, an ex-team member of Ethereum and a trusted name in crypto circles. 
  • Being a peer-reviewed project based on extensive research from academics, Cardano speaks trust and credence.
  • Several ventures and projects currently run on the Cardano blockchain including the commercial arm of Cardano, Emurgo. Cardano recently partnered with the Ethiopian government for a blockchain-based student ID program concerning 5 million students. 

If reading the above-mentioned USPs have enticed you enough to invest in Cardano, here are a few strategies for you to begin with, in, your ADA investment journey: 

The Basics: Be Aware of the Fundamentals

Before you begin investing in any cryptocurrency, it is important that you learn the fundamentals of each project. For once, cryptocurrency markets are volatile, and secondly, cryptocurrencies are more than just digital coins designed solely to transact. Each crypto has an underlying idea and fundamentals for which it came into existence. If you strongly believe in the fundamentals of a particular coin, you would never deter from your set investment plan for that particular crypto. Bitcoin is the most relevant example of this. A recent Bitcoin Price Prediction Report had 62% of the panelists favoring BTC as a viable investment, based on its fundamentals and relevance, despite it reaching an 8-month low.   

As already discussed above, Cardano boasts of longevity and consistency despite thriving in the volatile crypto markets, based on its superior real-world use cases and solid fundamentals. 

Keep yourself informed and updated. Give preference to stats and not the opinion of the consensus while you invest. 

Diversify your portfolios within the cryptos and outside the crypto markets to provide a hedge to your investments. 

Make your ADA investment via a trusted crypto exchange and hold your investment in a secure crypto wallet- either hot or cold, based on your preference. 

The Investment Plan: Prefer a Long-term Vision

It is best to treat your crypto investment as long-term. In the short run, cryptos are highly volatile and may change several times during the day. You might lose more than you gain if you lose your focus and begin selling your investment at a single price nudge. Cardano is a relatively new crypto as compared to Bitcoin and Ethereum. Its market cap is bound to increase in the coming years per se. Also, being a limited supply token whose demand is rising, Cardano’s prices will keep gaming momentum. 

If still confused,  ask yourself a few questions: 

  • What will be the frequency of your ADA purchases?
  • How much investment do you intend to make?
  • What mode of investment do you prefer- coins or futures?
  • What will be the timeframe of your investment?

Once you decide on the answers to the above questions, you can plan out your strategy in advance and stick to it without wondering what to do with your ADA coins each time its prices rise or fall. 

Dollar-Cost Averaging: A Readymade Investment Strategy for You

Dollar-Cost Averaging(DCA) is a very popular investment strategy in the stock market, but this strategy is rarely applied in the crypto market. DCA is a process whereby an investor purchases a fixed amount of any particular asset in terms of the dollar value on a regular basis. In practice, this may be purchasing 500 dollars worth of ADA or any other crypto each week or each month. Actually, this particular investment strategy can prove beneficial, especially for cryptos such as Cardano that have real-world use cases and economic characteristics. 

DCA strategy allows the investor to begin with a thought-out and well-planned approach. The plan can work pretty well for investors who have started anew in the crypto sphere.

 The strategy begins with the investor identifying an asset that has good long-term prospects, in our case, Cardano. Next, you need to determine the amount you want to invest and the investment frequency you prefer. 

These steps form the basis of the Dollar Cost Averaging strategy. For instance, you may decide to purchase 100 dollars worth of ADA at the beginning of every month. The DCA method would help you think carefully about the asset you are investing in, the plan of which being a regular and long-term one. Consequently, you will be able to adopt a calculated approach instead of being affected by the changing opinion of the consensus, which could be detrimental to the performance of your long-term investment. 

For any investment strategy to be fool-proof, there must be a history of the asset’s performance for at least 5 years. This isn’t the case with Cardano. The investor sentiment regarding ADA is all upbeat and optimistic, but gauging that out could prove to be a back-breaking task for amateur investors wanting to invest in Cardano. 

Either you can opt for the strategies discussed above, or you can simply imitate the investment patterns of the popular and successful members of the ADA community. Clone the portfolios of the popular investors to manage your basket of cryptocurrencies, including ADA. In case you need expert opinion or advice, don’t hesitate. Begin with a small amount and keep learning slowly as you grow your investments. 

Cardano Staking: Your Source of Passive Income

Staking is one of the most rewarding features of Cardano, by which investors can earn a steady passive income on their investments. But what is Staking? Just as Miners earn rewards by mining bitcoins, ADA holders can earn returns on their investment without using any expensive equipment. You, as an ADA holder, can assist the network by holding and staking your ADA tokens to help in validating the blocks on the network. 

But Solo staking isn’t an option with Cardano. You can do it in two ways. Either you can delegate your tokens to someone else’s pool, or you can start your own staking pool, which other participants can join. The rewards are paid out on a cyclical basis- every five days or every ‘epoch.’ 

These were our five strategies to help you sail through the difficult waters of investing. Cardano can surely be a great addition to your crypto kitty. All you need is to be focused and play by your set goals! 

Begin small. Go slow!

Watch out for signs, be regular!

And you will surely chart your success graph as a Cardano investor raking in the moolah. 

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