Crypto Basics for Beginners

Dear Subscriber,

Welcome to the wild world of crypto investments!

This new and still developing financial sector is rife with opportunities.

While assets like memecoins tend to make headlines, a quick look beyond reveals a robust and thriving market …

If you know what to look for and how to get it.

That means crypto can also be confusing to someone set in their TradFi — or traditional finance — ways.

But institutional crypto adoption is on the rise.

Companies like MicroStrategy (MSTR), Tesla, Block, Inc. and more were quick to add crypto to their balance sheets.

We’re not talking pennies, here. MicroStrategy is the largest corporate holder of Bitcoin with a reported 447,470 BTC worth about $43.7 billion as of Jan. 7, 2025.

And even more companies have begun to adopt blockchain technology and specific crypto projects to improve their operations.

Why is this important?

Because it spells out clearly that crypto is here to stay.

As an investor, you have a choice: Hop on board … or get left behind.

Now, I do not want you to be left behind.

Not when institutional investments have the potential to drive crypto adoption and valuation into overdrive.

So today, we’re going back to the basics to cover the difference between TradFi and crypto investing and how you can start your crypto journey.

TradFi vs. Crypto Investing

Despite seeming like polar opposites, the principles of investing remain the same in both TradFi and crypto.

Due diligence, portfolio diversification and risk management are all important steps for any investor interested in any asset.

The execution of these steps is where you’ll find the difference.

See, in TradFi, a lot of the investing processes have been made beginner friendly.

Managed accounts, trusts, brokerages … all exist to help make investing easier for the average person.

For a fee, of course. And you are expected to place a lot of trust in those institutions. They are, after all, in control of your money.

And that’s the crypto difference. Crypto markets cut out the middleman so that you, and only you, have access to and control over your assets.

This means crypto investors are responsible for executing their own trades, maintaining custody of their own assets, managing their own portfolios and compiling their own tax information.

This shift to a more hands-on approach can be difficult. And new investors may struggle to keep up with all the moving parts.

But it can also be freeing. By removing the middlemen, you get to keep more of your hard-earned profits.

The key to a successful transition is to hold tight to those familiar principles — research, position sizing and patience — while you adapt to crypto’s unique landscape.

Crypto In Your Portfolio

What if all this sounds a bit too much for you right now? No worries!

Just last year, the SEC approved new spot Bitcoin (BTC, “A”) ETFs. They rely on the convenience of TradFi investing to give you crypto exposure.

These funds allow investors to trade Bitcoin through traditional exchanges like the NYSE and NASDAQ and, in many cases, through your TradFi broker of choice.

This is a much more convenient route for many. With them, you don't need to handle swaps, set up your self-custody wallet or manage your keys. And it can even make tax reporting simpler.

Related story: 5 Crypto Tax Tips That Can’t Wait Till April

However, the trade-off is that you do have to pay a fee for these ETFs. And because they trade through TradFi markets, you may miss opportunities to act in off-hours.

Remember, the crypto markets never sleep. They stay open 24/7, even when the TradFi markets are closed.

Size Up Your Crypto Allocations

BlackRock (BLK), the largest asset manager in the world — and incidentally the manager of the iShares Bitcoin Trust ETF (IBIT) — recently recommended an allocation of up to 2% of a portfolio into Bitcoin.

This, coming from a TradFi institution, is incredible for Bitcoin investors and the crypto space in general.

It shows the changing sentiment toward the asset class … and potentially marks the start of a new wave of adoption and inflows into the space.

And there are many benefits of having Bitcoin in your portfolio, including …

Increased security: Because it’s decentralized, the risk of manipulation by governments and financial institutions is lower than with centralized assets.

And, if you choose to invest and own your crypto yourself, you reduce the risk of government seizure or hacks against your holdings.

With this information, it’s no wonder most investors who want exposure to crypto start with Bitcoin.

But for crypto enthusiasts or those able to take on more risk, that 2% can be pushed higher.

And it should likely include more than just Bitcoin.

Other crypto blue-chips, like Ethereum (ETH, “B+”) and Solana (SOL, “B”),offer additional exposure to the wider crypto economy thanks to their smart-contract designs and the decentralized financial applications built on their networks.

But if you have more tolerance for risk ...

Are willing to take on the challenge of trading crypto yourself …

And want to target the outsized gains the wild world of crypto is known for, then you may want to consider adding a smaller coin or two to your portfolio.

Bitcoin may be catching all the institutional attention. But its size means it’s unlikely to see the incredible returns it was able to achieve in years past.

Select smaller projects, however, have not only not outperformed Bitcoin in a bull market…

They made even Bitcoin’s impressive growth look microscopic.

And the last time we saw market conditions like today’s, these crypto wonders produced returns of:

This is just a small sample of the 96 crypto wonders our crypto cycles expert Juan Villaverde researched that climbed a minimum of 10,000%.

No one can ever guarantee future returns. But Juan has noticed a key pattern here. And he believes the impressive gains we’ve seen recently in smaller coins are just the opening act …

And a much larger explosion of growth may be ahead.

Juan recorded his findings to share with you in his latest urgent briefing, 245x Better Than Bitcoin.

It’ll be taken offline later this week, so if you’re interested in learning more, I suggest you watch it now.

Best,

Beth Canova
Crypto Managing Editor