Buy and hold has long been one of the most popular strategies used in the financial markets, especially in the cryptocurrency space. This strategy is ideal for beginner investors looking for a way to invest effectively without having to follow the daily market fluctuations. The basic idea behind buy and hold is very simple: buy specific cryptocurrencies with strong future potential, hold them for a long time, and benefit from their price appreciation over time.

Why is a buy and hold strategy attractive?

Despite the market volatility, bull markets offer tremendous opportunities for investors with a long-term view. For example, Bitcoin or Ethereum investors who have adopted this strategy in recent years have seen significant growth in their investments over the long term. While cryptocurrency markets are highly volatile, rapid swings can bring the opportunity for huge returns, provided that one is patient and does not panic during a sudden drop.

How to Get Started: Buy and Hold Plan

1. Planning and periodic investment:

It is recommended to allocate a specific amount to invest monthly, such as $100 per month, so that cryptocurrencies are purchased periodically. This process is called “Dollar-Cost Averaging,” as regular investment helps reduce the impact of market fluctuations.

2. Identifying currencies with promising potential:

It is preferable to choose leading currencies such as Bitcoin (BTC) and Ethereum (ETH), along with some currencies that show strong potential in innovative areas such as decentralized finance (DeFi) or artificial intelligence (such as FET and AGIX).

3. Market analysis and trend tracking:

Although the strategy requires minimal daily interaction with the market, it is preferable to review currency developments from time to time, and follow technical and economic news about it.

4. Set a long time horizon:

It is advisable to set a long time frame, ranging from 3 to 5 years, with the option of extension depending on the market situation. In case the market reaches significantly high levels (strong upward momentum), part of the portfolio can be sold to make some profits before the possible decline.

Portfolio Segmentation: Balanced Diversification Strategy

Many experts agree on the importance of diversifying the portfolio to reduce the risks associated with each currency. According to this strategy, the portfolio can be divided into three main sections:

1. 50% Major Currencies:

It is preferable to allocate half of the portfolio to leading cryptocurrencies such as Bitcoin and Ethereum, due to their relative stability and strength in the market.

2. 30% Promising Coins:

It is recommended to allocate 30% of the portfolio to new and promising coins with strong potential, such as decentralized finance (DeFi) projects and coins related to artificial intelligence (AI) technologies.

3. 20% small coins or “memes”:

A small percentage can be allocated to small currencies that may be high risk but may yield high rewards. This percentage is distributed equally over 3-5 currencies.

Rebalancing the portfolio

From time to time, it is advisable to re-evaluate the portfolio to ensure its balance and stability. For example, a percentage of the profits (10%) can be allocated to boosting small currencies, which allows you to benefit from the high growth potential of these currencies while reducing the risks. The portfolio can also be adjusted based on the actual performance of each currency, so that investments in currencies that prove efficient are increased and investments in less efficient currencies are decreased.

Buy and Hold as a Beginner's Option

The buy-and-hold strategy is not only a simple option, but it is also a smart choice for beginner investors who want to avoid worrying about daily market fluctuations. Focusing on a long-term view, proper diversification, and periodic portfolio rebalancing are all elements that contribute to increasing the chances of success and reducing risks in the cryptocurrency market.