It’s no secret that investing in cryptocurrency can be a great way to build wealth, even if it requires a lot of risk tolerance and the ability to ride out periods of considerable volatility. For instance, if you invested $2,000 in Solana (CRYPTO: SOL) in February 2021, you would be sitting on about $75,500 today.
There’s absolutely no guarantee that a similarly sized investment could attain such an impressive multiple if made today. But it’s very possible that investors might attain a return of 10 times their original stake, provided they’re patient and follow a careful strategy that’s closer to running a marathon than getting rich quick. Here’s how you might do it.
First, let’s get some expectations straight: A multiple of 10 on your Solana investment is going to require a lot of things to consistently go right over time. Some of those things will be under your control, and many will not. We’re going to focus on the parts you can control.
With that being said, understand that if the core investment thesis for the coin is invalidated somehow within the next four to six years — which is almost certainly the amount of time you’ll need to steadfastly hold your tokens for your investment of $2,000 to become $20,000 — all bets are off.
As a reminder, the main thesis for buying Solana is that it’s a fast, cheap, easy-to-use chain that’s well equipped for doing everything including trading meme coins, minting non-fungible tokens (NFTs), executing and issuing smart contracts, and building out the infrastructure necessary for artificial intelligence (AI) agents to transact with one another on the blockchain.
All of those factors drive investors to buy it both for its utility and for its value as something that is likely to experience higher demand in the future. Plus, it could also see considerable integration with the mainstream financial sector via exchange-traded funds (ETFs) and perhaps even a national cryptocurrency reserve.
Assuming these capabilities and trends continue to play in Solana’s favor, the next handful of years will see the coin continue to grow. There will probably be major dips along the way, and it will then take quite a while before the coin’s price returns to the place it is now — and perhaps go even higher.
If you want your investment in Solana to be as successful as it can be, it’s important to commit your capital on a regular basis via dollar-cost averaging and buy on deep dips in the price.
In other words, it makes sense to commit your $2,000 investment in 10 different purchases rather than investing it all at once. That way, when the coin experiences volatility, you won’t always be buying when it’s the most expensive. Nor will you need to worry about properly timing your purchases in the moment of the greatest bargain, when the price is at its nadir.
If you’re willing to pay attention to the price of Solana every once in a while, there’s also an opportunity that goes beyond what’s possible with simple dollar-cost averaging.
Like many cryptocurrencies, Solana’s price is at least partly determined by the four-year cryptocurrency cycle, as led by Bitcoin and as a result of its halvings, which cut the rewards for Bitcoin miners in half. In a nutshell, the price of Solana is highly correlated to that of Bitcoin, at least in terms of whether the price is more likely to be rising or falling at any given moment.
Knowing this does not imply that it is possible to perfectly time your investments in Solana when prices are lowest.
What it does is give you a measure of confidence that if you invest more of your money when prices are at rock bottom — after major declines across the cryptocurrency sector that last for at least nine months or so — you are more likely to get a good bargain than not.
With that conviction, you can then nibble on buying tokens that you would otherwise find to be too unpalatable owing to their recent declines, which despite being scary, do not predict the coin’s future value. Typically those bear markets are the periods when people are put off by the entire sector, believing it to be dead or in a state of permanent decline.
So consider keeping a few hundred dollars of your $2,000 in reserve for those times when nobody else is buying, because that’s when your money can grow the most. When paired with a drumbeat of diligent small purchases regardless of the price, and holding on to your tokens for enough time, your money will have the best chance of experiencing outsized growth. Just remember that an ounce of courage with your purchasing behaviors can go a long way, but it’s no substitute for consistency.
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Alex Carchidi has positions in Bitcoin and Solana. The Motley Fool has positions in and recommends Bitcoin and Solana. The Motley Fool has a disclosure policy.
Here’s How to Turn $2,000 Into $20,000 With Solana was originally published by The Motley Fool
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