Can crypto trading and investing be taught in just one book?

Cryptocurrency books aimed at novice users or non-users tend to follow a very similar pattern. Almost all start with an obligatory “history of money” and explain why fiat is, let's say, "flawed," — to be polite. Then Bitcoin (BTC) in introduced, wielding a fistful of shiny new tech that can address some of these issues.

The books go into mining, wallets, exchanges, Ethereum and smart contracts, altcoins and decentralized finance — also known as DeFi. Once the authors are sure that the reader is sold on the idea of buying into crypto, they wrap it nicely up with a (foregone) conclusion and settle smugly back down.

However, even equipped with the desire (and know-how) to buy their first cryptocurrency, the reader may still feel there is a barrier to taking the next step. In fact, once the purchasing decision has been made, a whole new raft of questions crop up tha a savvy crypto convert will want answered.

How much should I spend? What strategies are open to me? Should I invest or consider trading? How can I maximize gains while minimizing risk? Few books delve deep enough into such territory to give a reader the confidence to enter the market with at least half an idea of what they are doing.

Breaking the mold?

Digital Assets: Your Guide to Investing and Trading in the New Crypto Market aims to fill that gap. Written by Jonathan Hobbs, an investment industry veteran turned independent advisor, the book is divided into two parts.

Admittedly, the first part kicks off as expected with cash-bashing; but in fairness, it would be hard to leave this out of a crypto book aimed at beginners. And let’s be honest, it never gets old to hear how bad the traditional financial system really is.

Hobbs then gives the lowdown on Bitcoin, but only so much as to show that it can be trusted, that it is a hedge against inflation and that there is a reason for it to continue to appreciate in value over the long term.

Ethereum and DeFi are similarly explained from an investor's perspective, such as how money can be made through staking tokens on lending platforms, trading derivatives or providing exchange liquidity.

Part One is rounded out with a couple of chapters on how the range and accessibility of crypto products have much improved, for both institutional and retail investors. The development of institutional-grade custody solutions and crypto-exposed funds and trusts has finally opened the floodgates to an increasing amount of institutional and corporate money.

Improvements in the security and functionality of retail exchanges and wallet solutions, along with the rise of DeFi, cater to the needs of individual investors like never before, and this gets us to the point at which we are left off by most of the other books.

Saving for a rainy day

Luckily, this is where Digital Assets is just getting started. The longer Part Two deals with all the nitty-gritty on trading and investing, starting with the question of how much of one's assets should be held in crypto.

Hobbs explains the importance of a diverse investment portfolio and compares the historical returns on various proportions of stocks, and having up to 10% in Bitcoin. Certain readers may be dismayed to hear that due to crypto’s volatility, he does not recommend putting too much of one’s nest egg into it.

Digital Assets also provides examples showing the effect that rebalancing a portfolio can have on reducing risk and exposure to volatility.

The book continues on to crypto investment strategies, covering the ever-popular HODLing, dollar-cost averaging and the more aggressive value averaging. The potential results of each are illustrated with examples using real historical data over various time frames.

And then, it gets started with the big kid stuff...

Make the trade

If you are an average enthusiast, technical analysis will be a baffling source of confusion. Of course, some may understand what a "falling wedge" is, what "flipping resistance into support" means and the importance of the "20-week moving average."

But you will have no idea why these things affect Bitcoin's price the way they do, and hence, you will have no real faith that you can use them to predict future action. Correction: By this point, you should have some idea.

Hobbs’ primer on reading charts, identifying trends, moving averages, trading volume and Fibonacci retracements makes it seem like technical analysis is something that can actually be done, or at least learned over time.

Digital Assets goes on to explain how one can profit from Bitcoin’s volatility by trading short or long on futures contracts. It shows how to read candlestick charts and describes a number of trading styles, along with their associated trading time frames.

Of course, mitigating risk is just as important as taking profits, and there are techniques given to do so using stop losses, position sizing strategies and the various 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 last few sections of Digital Assets examine the potential to incorporate altcoins into a crypto portfolio, explain the basics of options trading, and give guidance on how to tie all of this together into a personal investment strategy.

The book has an easily accessible style, with plenty of diagrams and real-world examples to illustrate the pros, cons, and potential risks and returns of each of the various methods of investing and trading. Some of the concepts around stops losses and hedging Bitcoin options took a few reads to fully understand, but as well they might.

If really digging for things to criticize, it would be the examples that use Trader A through Trader D to compare the different strategies, which was occasionally confusing. However, this was not half as confusing as it was when Hobbs chose to get creative with his character names — by the end of the options chapter, it was hard to remember who was who among Lagertha, Ragnar and Uthred.

In conclusion, while it may not offer as much to those who are already pro traders, Digital Assets is pretty much essential reading for those who have been tempted to dabble in trading but never quite had the confidence. You may find that you are shorting perpetual futures while hedging with a protective call option in no time… and I might just see you there.