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How to Buy and Smartly Invest in Cryptocurrency

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The cryptocurrency market is one of the most fascinating financial markets to watch. The market is not only filled with volatile assets but is very much shrouded in mystery.

Investors looking to make profits from cryptocurrency trading are often at a loss on the best ways to go about it. While some may take the leap to buy and hold crypto coins, others are not sure it is worth the risk.

Our aim in writing this guide is to help you understand some of the winning strategies for cryptocurrency investments. Read here for more information on that.

1.  Always DYOR

The excitement of holding crypto, the joy of making profits, and the future projections of the market can make you start investing in crypto immediately.

Yet, you mustn’t forget that the market is volatile. Bitcoin (BTC), the leading cryptocurrency by market capitalization remains a major force to reckon with. The rally of BTC can send other coins pushing for a new price discovery mission. Likewise, a depreciation of Bitcoin’s value can send the entire crypto market crashing like a pack of cards.

The rule of thumb is to always Do Your Own Research (DYOR) before investing in any crypto. Some of the factors worth considering when researching are:

·         The market capitalization of the crypto coin.

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·         The maximum supply of the coin.

·         Find out the long-term prospects of the relevance of the crypto coin.

2. Don’t Invest Your Savings

Cryptocurrency trading can help you make more money. Talk about multiplying your money! That notwithstanding, be careful with your investment decisions, because the market can be “funny” at times.

Do not invest your savings or money that you will need urgently. Instead, consider investing only “what you can afford to lose.”

This way, you wouldn’t be overly bothered if the crypto market tanks and your funds go down the drain.

3. Don’t Buy Bitcoin

This seems awkward, right? Why should we advise you not to invest in Bitcoin? There are several reasons for that and they include:

·  Buying Bitcoin should only be for long-term investment. So, if you are looking for short-term trades, investing in Bitcoin is not ideal.

·  The second reason is that some Alternative Coins (Altcoins) with potentials tend to rally more than Bitcoin. For example, it may take Bitcoin two months or more to gain 50%. This is the reverse with Altcoins, as some of these can do 50% or more in 2 weeks or less.

4. Spread Risks by Diversifying Your Portfolio

Risk management is an important skill for successful cryptocurrency trading. To be a smart crypto investor, consider spreading your risks by diversifying your portfolio.

Do this by buying more than one crypto. The idea is that if one of your crypto coins is tanking, the other might be “mooning.”

Besides, it is advised to invest in more than one crypto coin because it will help balance your portfolio.

Take note that portfolio diversification can be risky, as well. This is usually when you invest in crypto coins with no “real value.” It is therefore important to only invest in cryptocurrencies that have working products and are building something beneficial for the cryptocurrency ecosystem.

Try not to overdo the portfolio diversification thing. It is better to hold 4 crypto coins than to hold 10 or more. The fewer and more prospective the coins are, the higher your chances of making a decent profit.

5. Do not Overly Rely on What the Crowd is Saying

The majority is not always right, as far as cryptocurrency investment is concerned. It will interest you to know that some crypto projects hire the services of influencers to promote or “shill” the projects.

Do not overly rely on what most cryptocurrency investors are saying. The cryptocurrency market is both volatile and unpredictable.

Thus, it is quite hard to make informed investment decisions from what most investors are saying.

Arm yourself with the right knowledge so you can understand the current trends in the market before investing in any crypto.

6. Maintain an Investment Discipline

A successful cryptocurrency investor does not limit all he or she does to making profits from crypto trading.

A majority of successful investors learn as well. This usually starts with the development and maintenance of an investment discipline.

Some investors prefer to stick to the Spot market. For some others, trading crypto Futures is the best. While some cryptocurrency investors simply buy and hold crypto coins for years.

The general rule is to develop an investment discipline that works for you and stick to the same.

7. Choose a Robust Security Model for Your Crypto

Storing your crypto coins is very essential. You don't want to lose it or be tempted to sell it when you are not ready.

The popular option is leaving the crypto coins on a cryptocurrency trading platform/exchange.

Due to the hacks on some of these exchanges, it became imperative to use “soft wallets,” such as Trust Wallet and the Blockchain Wallet.

You may also want to consider hardware wallets, which essentially help you store your crypto coins in a handheld, offline device.

Conclusion

Trading smartly is important to help you maximize profits as a cryptocurrency investor. The tips above have been used by some of the notable personalities in the crypto ecosystem and it has been working for them.

Have you tried any of those cryptocurrency investment options? Which of them worked best for you?

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