Travis Fauque recently discussed how to start investing in cryptocurrency.
LANDER, WY / DEC. 10, 2021 / Cryptocurrency is one of the hottest topics discussed in the investment world. The currency is creating new millionaires weekly while providing investors an opportunity to further diversify their portfolios.
Travis Fauque explains that many people are further looking into this currency and searching for a basic understanding as well as how to get started investing.
Bitcoin and the Creation of Cryptocurrencies
Bitcoin was created at the heels of the 2009 economic recession to be a virtual peer-to-peer decentralized network. This network was created using blockchain technology and the protocol cannot be changed or altered in any way by any sole person or entity, including governments or even Satoshi Nakamoto himself.
When cryptocurrencies are released, the inventor(s) set the currency’s parameters (how much there is, rules for buying and selling, as well as how many new coins will be added to the marketplace, etc..), on a protocol before launching the coin. With bitcoin’s protocol reflecting a max supply of 21 million coins, many investors see this as deflationary and a store of value.
“Governments can print more money when they want, but no one can issue more bitcoins," Fauque said. "This results in scarcity, and ultimately proving a financial hedge against deflationary assets, specifically fiat currency.
The change from Bitcoins' first appearance in the marketplace to where the current market sits today provides evidence of the vast amounts of opportunities for ordinary people to create substantial wealth. The speed and size of a wealthy investor experience, makes many people wonder how to get started.
Fauque explained that the cryptocurrency market, as of the date of writing, is just under 3 trillion dollars in total market cap, with bitcoin dominating the market by 35 percent.
“Bitcoin is the north star for current cryptocurrencies, ultimately paving the path for other currencies to follow," Fauque said.
Fauque believes other competing currencies will someday overtake Bitcoins' dominance, however, Fauque suggests investors stay current with the dominating cryptocurrencies trend and trade in favor of their trend.
"The trend is your friend. It's essential to never go against the trend," Fauque said.
Fauque advises to never invest blindly in cryptocurrencies, rather seek to understand the currency before investing.
“Investors must understand technical analysis, as well as how to utilize this analysis," Fauque said.
Technical analysis is not a guarantee for future market movements, technical analysis provides the investor with a competitive advantage, inevitably increasing profits while strategically minimizing your losses.
“People lie, but charts don’t lie,” Fauque said. “Technical analysis lowers risk long-term but maintain a solid risk management plan is the foundation of any successful investor."
"You are only one trade away from losing profits if you don’t value risk management," he added.
Fauque experienced losses exceeding tens of thousands of dollars his first few months investing in cryptocurrencies. He attributes the losses to not following a proper risk management plan, as well as investing in opinions rather than on facts.
The loss really wasn’t a loss in hind site, more of an invaluable lesson on risk management,” Fauque said.
He expressed the importance of risk managing and the need for investors to obtain proper financial education before making any financial decisions.
Tips for Beginners from Travis Fauque
As a beginner in the crypto space, Fauque suggests that investors perform their own analysis and not blindly follow the crowd.
The crowd is broken and easily manipulated. He warns new investors to stay cautious when investing in new coins and to fully understand the fundamentals in the coin before investing.
Fauque suggests the 40-30-30 percent diversification strategy inside your crypt portfolio, with 40 percent allocated in large market capitalization cryptocurrencies, 30 percent in mid-cap, and the remaining 30 percent in low cap cryptocurrencies.
"Buy the investment before the crowd buys it. That’s where the substantial returns are made,” Fauque said.
Smaller financial capital invested into one currency tends to elevate the financial risk of the asset and experiences major price movements. However, traditional investors advise investing up to ten percent of your total portfolio into cryptocurrencies, specifically the top ten by the size of market capitalization.
Fauque does not follow traditional investor advice, while currently holding nearly 50 percent of his total portfolio in cryptocurrencies alone, while the remaining diversified in other asset classes.
“You’re not late to the crypto game, as long as you show up," Fauque said.
Starting small and becoming a long-term student of the asset is key. Fauque suggests utilizing the D-C-A investment strategy for beginner cryptocurrency investors. DCA refers to dollar-cost-averaging.
Fauque explained this method tends to smooth out the price volatility for the given currency while decreasing the risk of emotionally trading. He suggests finding a trustworthy platform that provides this option, such as crypto.com.
Fauque utilizes crypto.com for the enhanced security the platform provides, as well as its reward programs. A user has the option for the platform to withdraw funds from their bank account as frequently and often as the user specifies.
“You can treat the automatic withdrawal like a tax, only this tax will create wealth for upcoming years," he explained.
In conclusion, Fauque suggests, getting started in crypto, regardless of current market conditions. Many new investors attempt to successfully time price tops and bottoms resulting in inaction, or even worse emotionally trading.
This makes the DCA strategy more appealing for the new investor. Fauque explained this strategy is a good start but maintains his stance in expanding to the strategy, as the investor's financial education increases.
Travis Fauque’ holds firm to the 40-30-30 rule for diversification and emphasizes he is not a financial advisor and does not provide any financial advice. He simply shares his personal successes as well as previous learning experiences with others.