CNBC just held “Crypto Class” with its anchor Brian Kelly, CEO of BKCM LLC — a digital currency investment firm. The segment offered tips about cryptocurrency investing as Kelly formulated the fundamentals of his “Crypto Trader’s Rulebook.” However, he noted the rules of crypto trading are similar to that of traditional trading rules.
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Three Fundamental Rules
Crypto mania is starting to reach a fever pitch in traditional financial sectors, which is why Wall Street types like Brian Kelly and Mike Novogratz are pivoting, and helping others pivot, into the cryptocurrency space.
With that said, the crypto ecosystem can be incredibly dense — especially in its lexicon, politics, and tech. So, in a new CNBC segment called “Crypto Class,” Brian Kelly gave a brief and playful lecture on his three golden rules that newcomers to cryptocurrency trading should keep in mind.
— CNBC's Fast Money (@CNBCFastMoney) January 23, 2018
1: Bet 1 Percent to 5 percent
“Bitcoin is still a nascent currency compared to fiat currencies. Things can go wrong at any moment, therefore, it is best to risk no more than 5 percent of [your] investable assets,” Kelly started. “This is a new technology, things break. This is the internet in 1995.”
If cryptocurrencies experience a similar trajectory to the internet boom, digital asset investments could easily multiply 10 to 20 times or beyond in the future. However, if the entire space fails for some reason, all you’d lose is up to five percent of your net worth.
2: HODL, or Don’t Sell Early
The investment expert also advises investors not to sell a crypto asset too early:
“So if something’s up 20 or 30 percent, you want to hold onto that. It’s what the crypto kids call hodling … and that comes from a misspelling a long time ago. But the hardest thing I had to learn about this market going from global macro to this, is one things start moving, once things gain momentum, you hold on.”
3: “Don’t Get Rekt”
Lastly, Kelly cautioned new investors in cryptocurrencies to not panic sell upon experiencing a major market dip:
“Do not panic when [prices] come down … when you sell on the lows, that’s what the crypto kids call ‘getting rekt.’ When you want to puke on your shoes in the morning, you buy.”
What’s your take on Kelly’s three golden rules for crypto investors? Let us know your thoughts in the comments section.
Images via CNBC, Reddit; video via CNBC