There are dozens of trading strategies, and choosing the right one that fits the individual’s circumstances is the most consistent way of building wealth.
Choosing the right approach that fits your situation can only emerge if you know your options. At the end of this article, you can pick the strategy that matches your abilities and expectations for the crypto market.
Here are the 15 crypto investor types:
1) Maximalists
A particular coin’s maximalists are mostly fixated on one token. The biggest maximalist base consists of Bitcoin maximalists, and the second comes from Ethereum, which is not very surprising. These coins have the biggest investor base and network built around them.
Other cryptocurrencies have maximalist fanbases, too, but it is mostly irrational attachment, so if you are going to become a maximalist of a crypto token, you only have two best options: Bitcoin and Ethereum.
This strategy is best for people who are not very deep in cryptocurrencies and want cryptocurrency exposure to partially opt out of the traditional financial system.
Bitcoin maximalism is for people who don’t like the government controlling the money supply and changing it arbitrarily to fit their narratives and values; Ethereum maximalism is for people who don’t like the big tech monopoly and invest in decentralized smart contracts that constitute decentralized applications(Dapps).
2) Seed Round Investors
Being a seed round investor requires one to be in an inner circle to get exposure to good projects to invest in. Seed rounds of startups and crypto projects have the best risk/profit ratio, especially for people who spend time learning about the projects and the industry deeply.
Although the risk/profit ratio is high, 95% of the projects fail. When a seed round investor finds a gem, they look at 10x, 50x, 100x, and sometimes 1000x profits. Realizing these types of profits requires seed investors to financially expose themselves to dozens of good projects to hit the jackpot once in a while that covers all of their losses. This requires active research, networking, investing, and studying.
This strategy fits people who consider becoming an educated long-term players in the industry they invest in to get good deals consistently from their network. They improve their judgment over time to make better capital allocation throughout their investing career.
3) ICO/IDO Investors
ICO stands for Initial Coin Offering, and IDO stands for Initial Dex Offering. These investors are very similar to seed round investors, although seed round investors are mostly a small set of individuals where ICO/IDO investors are public participants, like retailers.
These deals are much more reachable for the average person, and since the investor base of the project is coming from the public that consists of many people, not one institution or an individual has a big portion of the tokens, which helps these projects to be more decentralized in terms of its circulating tokens.
4) Microcap Hunters
Microcap crypto hunters are individuals who don’t want to risk investing in a project as the first comers and looking for some track record before getting in while the project is still small.
When a project is in its seed round or an ICO/IDO round, it is mostly below the 1 million market cap, which is pretty low. Microcap hunters are interested in the $50 to $1 million range that prefers to gather information about the projects regarding how they had executed their roadmap when they came into the market. More data means a more maneuver chance for a person to judge the project’s future success while retaining the ability to make a big upside since their market caps are relatively low.
5) Narrative / Meta Traders
Narrative traders have zero attachment to any projects and mostly focus on changing narratives in the market and trying to sense its pulse to make short to mid-term trading decisions on any trending token in their respective period.
Trading narratives are a bit easier than investing in projects for the long term because the judgment to take the trade doesn’t require too much technical and fundamental knowledge. The human element is the driving force of the rationale behind this strategy. Rather than what the project is doing or its future potentiality, narrative traders/investors judge the projects by their public perception and ride the waves of euphoria or, if they are short sellers, the waves of depression in the market.
6) Fork Hunters
Fork hunters are people who missed out on big projects and are looking for another team to fork the project into their network and create their version so they can invest in them early on. This investing type of people are bullish on protocols but don’t want to invest in a bubbled protocol’s coin that already had a lot of traction, so they are looking for fresh and strong teams that create their version of the already successful protocols. The new team forks the protocol for investors to fund them as a competitor to the bubbled coin of the original project.
Uniswap forks and tomb forks can be examples. EVM chains like Binance Smart Chain and Cronos Chain are also a form of Ethereum works using the same infrastructure of Ethereum Virtual Machine.
7) On-chain / Whale Wallet Watchers
Whale wallet watchers are the laziest kind of all investor types. They look at what other players are doing and copy-trade them in all instances. This can work well in bull markets when everybody is doing it, creating a self-fulfilling prophecy; whales have completely different circumstances than regular investors meaning they have more money to lose which means they can afford to lose and make it big to cover all of their losses from their highly diversified fat portfolio.
A retail investor has a 1-2 chance of making it big because of the lack of capital, unlike a whale that can lose 30 bets they have made and make it big at just one to cover all of their losses plus profits.
Investing is circumstantial. The best strategy changes from situation to situation and any form of copying is not a consistent way to accumulate wealth.
8) Airdrop Hunters
Hunting airdrops is the best solution for people who don’t have money but have plenty of time, especially the younger generation. It generally goes as signing up for beta-testing, educational programs, or some giveaway.
A capital-requiring version could be collecting tokens that provide airdrops as utilities. This strategy has been used in NFT collections, and it worked for both NFT owners and the airdrop hunters, creating a mass demand and distribution for the token, which increased its popularity resulting in a price increase.
Other than these, there is not much to it.
9) DeFi Yield Farmers
Yield farming seems simple, but being profitable is not as it seems. The emissions provided for yield farmers sometimes start with 1,000,000% APY, but it dries very quickly because people flock to them. Becoming a consistent profiteer of yield farming requires a constant chase and quick navigation of new pools and protocols to get an edge over others.
10) NFT Flippers
NFTs are altcoins with pictures but much more illiquid, meaning they can astronomically raise in price or drop in price without providing an easy exit point for people who hold them. NFT flippers share common skills with narrative traders because of their perception of graphical and cultural nature. There are few tokenomics for NFT flippers to judge. Rather there is the market’s interest in quantifiable data in the culture of Non-Fungible Tokens provide. People who understand the psychology of communities, especially pop culture, do very well with this strategy.
11) Dollar Cost Averaging
Dollar-cost average is for safe players who have built conviction towards the project they invested in, so they consider themselves lucky when the project they have invested in goes down because it is an opportunity for them to buy more.
There is a common but prevailing saying in the financial markets:
“time in the markets > timing the markets.”
This saying suggests that it is near impossible to time when the markets will go down or go up into a new paradigm of bear or bull market. Rather investing in assets throughout time to accumulate more is the best possible way of winning in the long run.
This basic strategy has created many millionaires that accumulated Bitcoin and Ethereum during the bear markets at ridiculously low prices relative to the present.
12) Value Investors
Value investors are one of the most sophisticated investor types. They think of projects in long-term and multi-variant projections by studying the macroeconomic environment, the industry size they are investing in, fundamental properties of the project they are investing in, the feasibility of product-market-fit, and so on.
Value investors are full-time investors focused on finances and the financial industry. Value investors spend most of their days searching data and reading anything related to their judgment about the markets and projects they are investing in. These people look at hundreds of projects until finding the one they are confident with, so they can invest in it for 10+ years.
13) Influencer Watchers
Influencer watchers are another lazy type of investors who let their financial responsibilities into some dude on the internet who makes YouTube videos or tweets to a large following.
This is not the best way to consistently build wealth because, first, the circumstances of those influencers are not the same as yours. Second, their incentives are to make money for themselves, so if they are mentioning a project, they may have been paid that nothing in the best interests of their followers; and third, these influencers use their follower base to exit the projects and use them as liquidity. As you can see, the incentive structure is crooked and does not favor followers at all.
This strategy is even worse than following whale wallets because at least those whales have some skin in the game by holding the token in their wallets where they bought them. An influencer can shill a project and doesn’t ever buy it and get paid by the project to say positive things about them. We have seen this a lot and will continue to do so.
14) Technical Analysis Traders
Technical analysis is astrology for some people, and some think it works. If it works, it may be because it is a self-fulfilling prophecy where if enough people believe in the same rules of technical analysis, they act according to it, and it works. People buy and sell at resistance points, and sometimes trading charts reflect that behavior but other than that, there is no credible proof that technical analysis is an established way to make consistent profits other than deciding on a personal trading choice on a graphical chart and managing risks through stop-loss points and targets to take profits off of.
15) Day Traders
Lastly, day trading is a pure form of gambling because of its extreme volatility, especially in crypto markets. However, gambling makes it sound like day traders are random dice rollers; this is not the case. Still, there are gambling games, just like poker, where sophistication raises the winning rate when applied through a structural framework. Some parameters can be studied to form a pattern recognition around market movements on daily charts to create a profitable structure that approximates making money over time.
Day trading isn’t a way to build large amounts of wealth; however, many people pay their bills by day trading, just like a day job.
Which trading style(s) are most compatible with your situation?
As you have been exposed to dozens of investing types, one or more can be more suitable for your situation. All investing types have their trade-offs, risks, and requirements. You can choose to implement the most appropriate to your tendencies and circumstances.
Determining your strategy other than using other people’s maps of investing and life is much more rewarding in the long run because you are in control, and you can improve your ability to leverage your strategy without depending on anybody.
You can put your mind to it and pick the ones speaking to you, the ones you will consistently improve upon.