Cryptocurrency books aimed at beginners or non-users tend to follow a very similar pattern. Almost all of them start with a mandatory “money story” and explain why Fiat is “flawed”, for example – to be polite. Then Bitcoin (BTC) was introduced and has a handful of shiny new technologies that can fix some of these problems.
The books cover mining, wallets, exchanges, Ethereum and smart contracts, altcoins, and decentralized finance – also known as DeFi. As soon as the authors are sure that the reader is convinced of the idea of buying in crypto, they conclude it with a (made-up) conclusion and smugly settle down again.
Even if the reader has the desire (and the know-how) to buy their first cryptocurrency, they may still feel that there is an obstacle to the next step. Once the purchase decision has been made, a whole host of new questions arise that an accomplished cryptoconverter would like to answer.
How much should i spend? What strategies are available to me? Should I Invest or Consider Trading? How can I maximize profits while minimizing risk? Few books delve deep enough into this field to give the reader the confidence to enter the market with at least half an idea of what they are doing.
Break the mold?
Digital Assets: Your Guide to Investing and Trading in the New Crypto Market aims to fill this gap. The book was written by Jonathan Hobbs, an investment industry veteran who became an independent advisor. It consists of two parts.
Granted, the first part starts, as expected, with cash bashing. But in fairness it would be difficult to leave this out of a crypto book aimed at beginners. And let’s face it, it never gets old to hear how bad the traditional financial system really is.
Hobbs then provides an overview of Bitcoin, but only enough to make it trustworthy, that it is a hedge against inflation, and that there is a reason to appreciate in value over the long term.
Ethereum and DeFi are similarly discussed from an investor’s point of view, e.g. B. how money can be earned by placing tokens on credit platforms, trading derivatives or providing stock market liquidity.
Part 1 is rounded off by a few chapters on how the reach and accessibility of crypto products has improved significantly for both institutional and private investors. The development of custody solutions at the institutional level as well as crypto-exposed funds and trusts has finally opened the floodgates for more and more institutional and corporate funds.
Improvements in the security and functionality of retail exchanges and wallet solutions, as well as the rise of DeFi, are meeting the needs of individual investors like never before, and this brings us to the point where we are excluded from most other books.
Save up for a rainy day
Fortunately, this is the place Digital assets is just getting started. The longer second part covers everything to do with trading and investing, starting with how much of your assets should be kept in crypto.
Hobbs explains the importance of a diverse investment portfolio and compares the historical returns of various shares with a share of up to 10% in Bitcoin. Some readers may be dismayed to hear that due to the volatility of crypto, he does not recommend putting too much of his nest egg in it.
Digital assets It also provides examples of the impact that portfolio realignment can have on reducing risk and volatility.
The book continues to delve into crypto investment strategies that cover the popular HODLing, averaging the dollar cost, and the more aggressive averaging of value. The possible results are illustrated by means of examples using real historical data over different periods of time.
And then it starts with the big children’s stuff …
Make the trade
If you are the average enthusiast, technical analysis will be a confusing source of confusion. Of course, some can understand what a “falling wedge” is, what “turning resistance to support” means, and the importance of the “20 week moving average”.
But you will have no idea why these things are affecting the price of Bitcoin the way they do, and therefore you will not really believe that you can use them to predict future action. Correction: By this point, you should have an idea.
Hobbs’ introduction to chart reading, spotting trends, moving averages, trading volume, and Fibonacci retracements creates the impression that technical analysis can actually be done, or at least learned over time.
Digital assets goes on to explain how to take advantage of Bitcoin’s volatility by taking short or long positions in futures contracts. It shows how to read candlestick charts and describes a number of trading styles as well as their associated trading time frames.
Of course, reducing risk is just as important as taking profit. It does this by using techniques that employ stop losses, position sizing strategies, and the different types of orders that can be placed on exchanges. Hobbs also explains when to use leverage, when to enter and exit a trade, and when to take profits.
A good investment?
The final sections of Digital assets Examine the potential of adding altcoins to a crypto portfolio, explain the basics of options trading, and provide guidance on how to incorporate all of this into a personal investment strategy.
The book is in an accessible style, with numerous graphs and real-world examples to illustrate the pros and cons, as well as the potential risks and returns, of the various investment and trading methods. Some of the concepts around stopping losses and hedging Bitcoin options took some reading to fully understand, but they could too.
If you’re really digging for criticism, it’s the examples Trader A through Trader D use to compare the different strategies, which has been confusing at times. This wasn’t half as confusing as it was when Hobbs decided to get creative with his character names – by the end of the options chapter, it was hard to keep track of who was who among Lagertha, Ragnar, and Uthred.
In conclusion, it may not offer that much for those who are already pro traders. Digital assets is pretty important read for those who have been tempted to try their hand at trading but never quite had the confidence. You may find yourself shorting out short term futures while hedging yourself with a protection call option in no time … and I may only see you there.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.