Investing in Cryptocurrency: Hodling, Portfolios, and Earning Crypto Income

Book: Cryptocurrency QuickStart Guide
Author: Jonathan Reichental
ISBN: 978-1-63610-041-8

“I AM HODLING” and the Long Game

In 2013, a drunk forum poster on BitcoinTalk.org meant to type “I AM HOLDING” and accidentally created a crypto legend. “Hodl” now means “hold on for dear life,” and it describes the long-term investing mindset that Chapter 10 is all about.

While traders chase daily price swings, investors identify assets with long-term potential and sit on them. Sometimes for decades. Peter Forrest takes this approach. His son Alan wants to trade. Different philosophies, and Reichental treats investing as the more accessible path for most readers.

The Reality Check Up Front

Before diving into strategies, Reichental drops some sobering numbers. Bitcoin’s rise from pennies to tens of thousands was a black swan event. Not every coin followed.

A 2018 writer predicted over 90% of cryptocurrencies would be worthless within five years. By 2022, about 76% of coins active in 2018 had failed. Close to Malone’s prediction, and the number could still climb. Many ICOs from 2017-2018 were scams. Investors watched their holdings vanish.

The lesson: hodling works best for “blue chip” cryptos like Bitcoin and ether. Altcoins are a different gamble entirely.

What Kind of Asset Is Crypto?

Reichental tries to fit crypto into traditional investing categories. It’s messy, but useful:

Growth asset: High potential appreciation, high risk. Like small-cap tech stocks. Bitcoin’s decade-long rocket ride fits here, but so do coins that go to zero.

Store of value: Assets that hedge inflation. Gold, treasury bonds. Bitcoin fans call it “digital gold” with its 21 million cap. But crypto hasn’t proven inflation-hedging properties yet.

Income investment: Assets that generate regular returns. Rental property, dividend stocks. Crypto can do this through staking and yield farming, which Reichental covers later in the chapter.

The risks are real and specific to crypto: hard to exit during panic selling, exchange bankruptcies with unclear customer rights, no government insurance, immutable transactions, pump-and-dump schemes, no standardized security for custodians, limited legal recourse, and human error (wrong address, lost hardware wallet, coffee on your cold storage device).

Ways to Invest Beyond Buying Coins

Direct purchase: Buy on an exchange, secure your keys. Most common approach.

Crypto company stocks: Coinbase (COIN), PayPal (PYPL), Block (SQ), Mastercard (MA). The NASDAQ Blockchain Economy Index (RSBLCN) tracks 62 companies investing in blockchain.

ETFs: For years, the SEC blocked crypto ETFs. In 2021, ProShares Bitcoin Strategy ETF (BITO) launched using Bitcoin futures contracts, not direct BTC holdings. Expense ratio around 1%, roughly double the average ETF. You lose anonymity and can’t stake your holdings, but you can buy through a normal brokerage and even ask HR about adding it to your 401(k).

Mutual funds and trusts: Similar futures-based workarounds. Grayscale Bitcoin Trust charges 2-2.5% annually. Trust shares start with institutional/accredited investors, then hit secondary markets after 12 months.

Reichental is clear throughout: he’s an educator, not a financial advisor.

Building Your Portfolio

Conventional wisdom says diversify. Many advisors now suggest up to 5% crypto allocation in a traditional portfolio. Peter’s advisor Mariana recommends exactly that. It’s not magic. It’s a rule of thumb for a volatile, risky asset class you shouldn’t bet the farm on.

Within your crypto slice, ask yourself:

• What do I want? Growth? Store of value? Income?
• How long will I hold?
• Coins directly or related stocks?
• Do I want passive income from staking?
• Any specific projects I believe in?

One sample allocation from the book puts 40% in BTC, 30% in ETH, and spreads the rest across six other top market cap coins. The idea: established reputation, reduced downside risk, overweight on the two biggest players.

Rebalancing means periodically resetting your allocations. If XRP rockets to 20% of your portfolio when it should be 5%, sell some and buy what dropped. Peter Lynch famously said selling winners and holding losers is like cutting flowers and watering weeds. Reichental acknowledges both views have merit depending on your goals.

Portfolio trackers help when your crypto is scattered across wallets, exchanges, and brokerages. Look for tax reporting, exchange integration, and optional trading bot support.

Lynn Forrest and the MANA Bet

Lynn Forrest discovers Decentraland, a 3D virtual world running on the MANA token. She builds a virtual counseling office in the clouds and starts wondering if MANA is a serious investment.

Peter warns it’s a lesser-known altcoin that Meta could crush. Lynn sees something special in a DAO-governed metaverse on Ethereum. After debate, Mariana suggests keeping most exposure in BTC and ETH but allowing a small overweight in MANA among their altcoin positions. A reasonable compromise between conviction and caution.

Fundamental Analysis: How to Evaluate a Coin

Investors care about long-term viability, not tomorrow’s price. Reichental walks through fundamental analysis:

Qualitative factors (from Chapter 8’s valuation section): team strength, applications, longevity, competition, community, media attention, exchange presence.

Quantitative metrics:

• Market capitalization
• Average transaction values (big trades vs. active micro-transaction ecosystem)
• Active addresses
• Hash rates (transaction speed)
• Supply mechanisms (deflationary, inflationary, burn schedules)
• Liquidity and trading volume

Start with the white paper. Then diversify your research sources. Compare to technical analysis (chart patterns), which is more for traders.

A celebrity chef hyping a new coin on social media? Weak analysis. A two-year-old coin with qualified developers building real dapps? Stronger case.

Riding Out Volatility

Crypto drops 25% in a day? Normal for hodlers. Bitcoin’s limited supply means demand drives price more than supply can respond. That creates wild swings. Criminals exploit this with spoofing: fake buy/sell orders designed to move prices, then profit from the chaos.

Stablecoins help. Pegged to fiat or gold, they let you lock in profits without cashing out to dollars. Set target prices, convert to stablecoins when hit, use stop-loss mechanisms. Limit and stop orders from Chapter 9 work for investors too.

Earning Income From Your Holdings

Yield farming: Lend crypto to liquidity pools and earn interest. Higher returns than savings accounts, much higher risk. Your funds aren’t federally insured. Locked-up crypto can drop in value while you wait. Pools can be fraudulent or hacked. It’s DeFi in action.

Staking: Deposit crypto as collateral to validate transactions on proof-of-stake blockchains (Ethereum, Cardano, Solana, Polkadot). Validators earn rewards. Your crypto is locked for a set period. Price risk while it’s tied up.

Both strategies fit the hodler mindset: hold for growth while generating passive income in the meantime.

My Take

Chapter 10 is the book’s investing backbone. Reichental doesn’t promise easy money. He gives frameworks for thinking about crypto as part of a broader portfolio, tools for evaluating individual coins, and honest talk about failure rates and risks.

The 5% allocation guideline, the fundamental analysis checklist, and the income strategies are the most actionable parts. The Lynn/MANA story adds a human element: even in a thoughtful family, altcoin conviction creates tension.

If Chapter 9 warned you away from trading, this chapter shows you what the alternative looks like. Buy, hold, diversify, analyze, and maybe earn some yield while you wait. Not glamorous. But for most people, probably smarter.

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