By Marcus de Maria, CEO of Investment Mastery.
2021 seems to be the year where Decentralised Finance (DEFI) lending evolved and few in adoption, but it was Non-Fungible Tokens (NFTs) that had the most growth.
Everyone is tokenising everything it seems. This is the process of digitalising a unique piece of art or collectibles like football cards which are then stored, and ownership of this digital asset can be proved via the blockchain.
NFTs and gaming are melting together, and some games, like Axie Infinity, which allows you to play by breeding NFTs to make new unique NFTs, has made people millionaires. The price of Axie is still climbing after going up 106 000% since November 2020.
Where is all this going? Well, a milestone seems to have been hit when Social Media giant, Facebook, announced that they were renaming their brand to META. This is likely to be the next big trend – namely, the Metaverse. Gaming, NFTs and potentially Virtual Reality (VR) will all meld together to create a digital reality where everyone and anyone can be who they want to, look like they want to and play out their fantasy in a digital Metaverse world, while staying safe at home. For those of you who have seen films like Ready Player One, or Free Guy will know what I’m talking about. Ready player one especially is the film I would recommend watching.
While DeFi is in early adoption, NFT is still in its innovation stage. Metaverse is even earlier – it’s just at the beginning of being conceptualised. We are looking at investing in cryptocurrency platforms that are building the Metaverse. Since it is very early stage, it is high risk. Even higher risk would be to invest in the NFTs that will be featured in the Metaverse itself. Surprisingly, there is even an Exchange Traded Fund (ETF) on the American stock market which has in it big companies that are taking advantage of this trend, Ticker META. This might be less risky as it exposes you to companies such as Microsoft (MSFT) and NVDIA.
So, what do you do if you have found a crypto you want to invest into? There are two main ways of doing it. You either wait for a pull-back or wait for a break-out. The pull-back is where you wait for the crypto to drop a certain % before you get in, say 10% from a recent high price. This ensures you never get in at the top and always buy at a discount.
When Bitcoin reached its all-time high (ATH) of $64,000 earlier this year, it fell 10%, which would have been a good first entry point. It then continued falling until $29,000, so falling more than 50% from its ATH allowing us 5 different entry points. Each time we entered it lowered our average price to the point that as it started going back up, we were not only in profit faster but we made a lot more % gains than someone who put all their money in just at one price-point. It has retraced back up to $67,000, giving us more than 100% gains in just over 2 months.
What if it doesn’t pull-back, I hear you say? Well, trading it for the last 4 years, I know that it always pulls back at some stage. But just in case it doesn’t, that’s where the other strategy, the Break-Out, comes in. Here, instead of waiting for a pull-back, we are waiting for it to go above a recent peak. Rather than just jump in and it immediately comes back down, we are looking for the price to close above its recent high. This increases the probability of it continuing further. If it is still above its high by the end of the week, it is very likely to go up further.
Our target for bitcoin is $78,000 even $100,000 or more before we start taking any profits. If it goes above a nice round number like $100,000 and close above it, then it could go to $150,000. I have heard $200 – $250,000 in this bull cycle but you never know with cryptos. In 2017 it shot up in the last 2 months of the year and then fell dramatically end of December and didn’t recover until years later. So, we are taking profit all along the way, a general rule of thumb is every 50% with bitcoin. Some of the smaller Altcoins we take profits every 100%.
If you are looking for short term gains, then you really need to know what you are doing. Try to avoid any kind of leverage as it can easily go against you and wipe out your entire portfolio. But if you aren’t in a rush or looking to get rich quick then this is a great time to invest. NFTs are likely to go wide – there will be more and more of them but it’s unlikely that we will see something go from $100 to $millions as we saw with NFT Crypto punks. However, in the newer Metaverse this might still be possible for those who are willing to be patient and wait. 1000% is nothing in cryptos. I am looking at my portfolio right now and I count more than 60 of my positions have gained more than 1000% with the right strategy and a sprinkle of patience.
Renowned stock market and wealth educator, investor, and entrepreneur Marcus de Maria is the founder of Investment Mastery, one of the world’s leading investment and trading education companies.
A sought-after keynote speaker on wealth creation who has shared the stage with some of the world’s leaders in business, success and philanthropy, Marcus has gained mutual respect from many high profiled individuals including Richard Branson, Robert Kiyosaki, Tony Robbins and Brian Tracy.
Marcus is also the author of three books including The Lunchtime Trader, a guide on how to build indestructible wealth by trading stocks for just 20 minutes a day.
After experiencing financial difficulties, Marcus went from being £100,000 in bad debt and sleeping on his brother’s floor to taking control of his financial future and learning strategies to become financially fit, building multiple pillars of wealth for security. He now uses all he has learnt to help others follow this path of wealth creation.