Cryptocurrency investment has skyrocketed over the last couple of years. The value of cryptocurrencies like Bitcoin and Ethereum has increased exponentially since their inception, reaching record highs in 2018.
Today, investing in cryptocurrencies is very lucrative. It also comes with risks. If you invest in cryptocurrencies without knowing how to do so properly, you risk losing money instead of gaining. In order to ensure that you don’t lose your investment, you should follow these simple rules before buying into cryptocurrency.
Cryptocurrencies are volatile investments, and some investors get burned. There are ways to mitigate the risk, though, and this article explains them.
In general, you have to know these things before we get deeper into the topic:
-Research – Before you even consider investing, research the companies behind the coin you plan on purchasing. Find out who they are and what their plans might be for the future.
-Know Your Goal – How much money do you expect to put towards cryptocurrency? What exactly do you hope to achieve from investing?
-Stick to a Budget – Just because you have enough money to invest doesn’t mean that you should immediately take the plunge. Always budget for your investments and stick within that limit.
After that, you can focus on more important strategies, which include:
Focus on investing small and regularly
Consistency is key. You need to find the amount you can afford, and invest and re-invest it regularly.
This is a great option for savvy investors who want to take advantage of the potential gains in this relatively new asset class. While cryptocurrency prices tend to fluctuate a lot, they are also prone to significant price increases.
Don’t try to push through hundreds of thousands of dollars overnight. Trading is a marathon, not a sprint, so you want to establish yourself early and build a solid foundation. Keep your amount steady until you really know what you’re doing.
How to find new quality coins and projects
Sometimes it seems like people are too focused on well-known cryptocurrencies and related projects. We all know it’s all about Bitcoin or Ethereum, or some other less-known coins. But there are thousands of them available on the crypto market. Some of them hold great potential, even though they aren’t still recognized by the investors.
Some people prefer investing through their brokerages or stock exchanges, but if you want to take matters into your hands, check out Tradingbrowser.com. This site (and similar ones) provide information on hundreds of cryptocurrency projects and show their current prices along with charts from previous days.
It’s a great way to analyze what’s happening, discover new coins, and decide what to do next with your crypto investment activities.
Aim for the long term
Short-term investments are for those who can afford to risk. Sometimes it ends up in massive gains, but it may result in a disaster if not done properly. Often, the short-term investments are related to hyped coins, that slowly disappear after the audience is done with them.
Some cryptocurrencies were a huge thing for a few weeks or months, but they disappeared overnight, or their value was equal to zero after a few days of global hype.
On the other hand, there are currencies with a stable value, but people ignore them just because they aren’t popular like BTC or other recognizable coins. Anyway, if your goal is to stay in the game for longer, we suggest you aim for long-term investments and projects.
Be consistent with your activities, so you can control the gains, and adjust the strategies as needed.
Keep your crypto assets safe
there are many advantages to using cryptos, such as lower fees and faster transactions, but security is also a very important factor.
There are multiple ways to protect your cryptocurrency, including hardware wallets, paper wallets, and even mobile apps. These methods require varying degrees of effort and expertise.
The most important thing is to back up your private keys. This means keeping track of your passwords and recovery phrases or seeds. Hardware wallets store your private key offline and only allow access to your coins through their interface.
Hardware wallets are essential for storing your cryptocurrency because they provide added security. These wallets also offer other benefits such as cold storage (keeping your coins offline) and two-factor authentication.
A software wallet is basically a piece of software that stores your private keys. The main advantage of using a software wallet is its portability. This means you can access your funds from anywhere at any time.
Keeping your cryptocurrencies safe means you always know how to access them, and you are doing everything needed to protect them from cyber-attacks.
When to sell your crypto profits
The cryptocurrency market has seen massive gains over the last year, and some of the currencies are extremely volatile. The goal is to buy coins at lower prices and sold at higher ones. That’s how your crypto investments are getting profitable.
While it might seem like a good idea to wait until the value of a coin goes up before selling it, you shouldn’t count on that. You can’t predict or estimate if this is the peak, or you can wait for the bigger one. The market is volatile, and no one can plan these things in advance, since there are no patterns you can follow. So, sell the assets when you are ready to do that.
You shouldn’t panic if the market goes down. In the long term, you may not get rich off cryptos, but you can make significant profits if trading properly.
Of course, have a plan B. If you start losing money, have an exit strategy already set in place. Know exactly where you are going, when you are leaving, and how much you intend to take out before you leave.
Buying cryptocurrencies requires knowledge of the market and an understanding of the risks involved. Investing too much of your savings in cryptocurrencies can cause you financial hardship.
Don’t expect to get rich overnight, but always hope that you can make a significant profit from your crypto activities.