Crypto lives up to volatile expectations

Although entering the crypto space as an Australian investor is challenging, it is worth the journey.

“While the speed and volume of information can seem overwhelming, it is a journey worth taking as this is a historic opportunity to invest in a whole new asset class,” says Zhou.

“Recently, it has been correlated with technology-based equity-driven indices such as the Nasdaq due to speculation by venture capitalists, but it will eventually decouple as its core features become better understood – namely as a scarce, desirable asset with a hard-limited supply of 21 million coins.

“Increasing numbers of private and institutional investors are realizing this, which is why BTC and Ether (ETH) are holding up remarkably well given the macro headwinds that have hit many assets this year.”

Digital goods

So how should someone getting started in crypto put together a successful portfolio?

“The top two cryptocurrencies by market cap – BTC and ETH – are essentially indices of the broader crypto market, and an investor can get decent exposure by just holding one or both of these assets,” he says.

“Bitcoin is the original and largest cryptocurrency, while Ethereum is like a business that sells space on its blockchain, and last year earned over $10 billion in revenue – it issues ETH to run its network.

“These two assets account for roughly 60 percent of crypto’s $1 trillion market cap (roughly), so understanding and investing in these two will be the first port of call for new investors.”

“ETH has recently increased its market dominance compared to other assets, and has even stolen market value from Bitcoin due to The Merge – a much-anticipated upgrade that will make the network many times more efficient,” says Zhou. “This has led many to speculate that ETH could surpass, and one day even overtake BTC as the largest crypto asset.”

“Therefore, given current market conditions, a conservative crypto portfolio will be heavy on both BTC and ETH,” Zhou says.

“You can also hedge your Ether and Bitcoin exposure by using derivatives, especially options contracts,” says Zhou. “Our first-to-market USDC options have proven to be very popular because users can buy and sell options on BTC, ETH and SOL using the stablecoin USDC, which is pegged to the USD. This helps the more cautious investors to navigating the volatility associated with cryptoassets.”

Cody Harmon, director of financial planners Cruz Money, says people at the beginning of their crypto journey and veteran traders have one thing in common – they are both overweight the big two in their portfolios.

It is only people in the middle who “think they are experts” who stray into the no man’s land of “fertilizer” coins.

“The Hall of Fame for timing the market is empty — and there’s a reason for that — it’s because nobody knows,” says Harmon.

“It doesn’t matter how good you are and what you get right, eventually you’re not going to get the conversation right. So from that point of view, people should take a long-term view.”

Zhou agrees that timing the market is more important than picking winners.

“Patience is the key to long-term value creation,” says Zhou.

“Invest in high-quality assets with a long-term time frame. Once you have that sorted, take a portion of your net worth and set it aside for trading and launching new products.”

Beware of “fake news”

Zhou also issued a strong warning about cowboys in the industry, and about the need to get information from credible sources.

“Cryptocurrencies and blockchain technology are complex topics, and much of the mainstream reporting lacks a deeper understanding of the subtleties of the technology and what developers in the space are trying to achieve,” says Zhou. “Current company excepted, of course.”

But going to alternative media sources is also “dangerous” due to the abundance of fraudsters who post fake news to pump up the price of a crypto.

“Look for trusted sources. Ask friends with expertise in the field. I like to think of Bybit as such a friend,” says Zhou.

“We have an extensive library of articles and videos covering topics from beginner to advanced, and we have world-class customer support online 24/7. We also know all the tokens and projects we allow on our platform before we offer them to our users.

“New users can buy BTC, ETH and these assets can be stored in your Bybit account or elsewhere. Experienced traders have access to advanced trading and hedging instruments on Bybit to manage their portfolios in a way that best suits their needs, given current market uncertainty and volatility, including options and other derivative contracts.”

The exchange is currently seeing a lot of sideways price action from BTC and other leading cryptocurrencies, says Zhou.

“So this is a great opportunity to use our revamped online trading robots that offer automated trading and programmable dollar cost averaging strategies. In times of uncertainty, new and experienced traders will need luck, resilience and a powerful trading tool at their disposal.”