Cryptocurrencies are becoming more and more popular. As of January 8, there were nearly 1,300 coins available for trade on at least one exchange. This rapid proliferation of cryptocurrency has led to astonishing price increases as well as much slower ones.
If you’re someone who is intrigued by the idea of owning your own digital currency but isn’t sure where to start, this guide is for you. Being an early investor in crypto can be scary; however, it doesn’t have to be.
It’s important to understand that the values of many cryptos are tied directly to the price of Bitcoin or another coin. The higher the value of a given cryptocurrency, the more risk there is that you could lose money if the value starts dropping again.
IDENTIFY YOUR GOALS
Cryptocurrencies are incredibly volatile. The value of most coins changes dramatically on a daily basis. Therefore, it’s especially important to understand your goals. Are you interested in holding on to your coins so that they appreciate in value?
Are you looking to make a profit by day trading or by performing short-term arbitrage? Are you hoping to use your investments to buy a yacht or a Lambo?
These are all important questions to answer before you begin your investing journey. As you begin to research different coins, you may find that you have different goals for your investments. If so, make sure you keep them in mind as you invest.
TAKE PRIDE IN YOUR INVESTMENTS
If you’re like most people, the majority of your crypto portfolio will likely go into a digital wallet and sit idle. But even though your coins may be sitting on a computer somewhere in the world, you can take a little pride in them. When you purchase crypto, you are actually buying a digital asset.
This asset can be used to purchase goods and services or held as an investment. Some investors choose to hold on to their crypto assets, hoping to earn a return in the long run by letting them sit on a computer somewhere in the world.
Others may choose to trade their coins in hopes of making a quick profit or by looking for arbitrage opportunities that will let them make a profit by buying low and selling high on two separate exchanges. Regardless of your strategy, it’s important to take pride in your investments. Remember that you are buying something that has real value. And even if the market doesn’t reward you with quick profits, you have a long-term stake in the future of cryptocurrency.
KNOW THE RISKS
Like any investment, there are plenty of risks associated with owning cryptocurrencies. For example, you could lose all of your money if the value of your coins crashes. If the value of Bitcoin decreases by 50%, for example, then you would also lose 50% of the value that you put into it.
Another risk is that the value of your coins could increase significantly but you could be left with nothing if a government decides to ban cryptocurrencies. Cryptocurrencies could also be subject to hacking attacks or other similar issues.
The last risk is that the technology that underlies cryptocurrencies could become obsolete, rendering your investment worthless. It’s worth remembering that many people are attracted to cryptocurrencies because of their potential for quick and large gains. As such, there will always be a significant risk that you could lose all of your money.
USE A TRADING ADVISOR OR TAKE BULKER SHIPS
If you want to try your hand at day-trading a few of your coins, then you can do so with the guidance of a professional trading advisor. There are a number of trading advisors that specialize in day-trading cryptocurrencies. While trading on your own can be exciting, it can also be extremely risky.
In addition to the risks associated with owning and trading a large number of coins, you also have the risk associated with your own trading strategy. A professional trading advisor will help you set up a strategy based on their research of the current market conditions and your coins’ prices. If you decide to trade on your own, remember that you are still at risk of losing all of your investment.
If you want to take a more conservative approach to your investments, consider taking a few popular cryptocurrency investment vehicles. The first is a cryptocurrency-based hedge fund or fund of funds. These are vehicles that invest in a number of different assets, including cryptocurrencies. There are a number of hedge fund-like investment vehicles that let you invest in cryptocurrencies.
Some of these investment vehicles will let you choose which cryptocurrencies you want to include in your investment portfolio. A third way to spread your risk and make a bit more money is to take a cryptocurrency-based investment fund of funds. In these types of investment funds, a number of different hedge fund managers will invest in a number of different cryptocurrencies.
HOLD ON TO YOUR BITCOIN
If you decide to start your crypto investing journey, it’s important to remember that Bitcoin and other top-ranking cryptos have made very few appearances in actual commerce. This means that they are not backed by any real product.
For example, if you decide to hold on to your Bitcoin, you aren’t “buying” its value of it. The value of Bitcoin is just the same as it was in the beginning; it remains an entirely digital asset. Most people choose to sell their Bitcoin because they want to make a profit from their investment and take the profit as payment for goods and services.
Take this decision based on how you want to use your cryptocurrency investments. If you want to sell off your Bitcoin and take the profit to purchase goods and services with it, then don’t sell them all off at once. Wait until you have enough money to make the purchase.
If you hold onto your Bitcoin and the market value of them starts to drop, you can always sell them off or hold on to them in the hopes that the market value will start to rise again. Remember, you can only sell Bitcoin when the market value is less than your original purchase price. If you choose to wait for the market to rise in value again, you will have made a profit from your original investment.
DECLARE YOURSELF AS NOT PROFITABLE FOR DAY-TRADING
Many cryptocurrency investors want to make a profit from their investments. If this is the case, it’s important to remember that you need to be prepared for the market to drop significantly again. One way to prevent yourself from losing a significant amount of money during a market crash is to declare yourself not profitable for day trading.
Day trading usually involves making a trade that gives you a profit of less than 10%, but it can also include buying and selling on the same day. Day trading is usually very risky, but there are ways to reduce the risk associated with it. One way is to create a buy-and-hold strategy. You can do this by buying a certain percentage of a coin that you don’t expect to make much money from. You then have the option of selling off the coins if the market value drops, or holding on to them as an investment.
SUM UP
There are plenty of reasons to be excited about the future of cryptocurrencies. They have the potential to change the way we send money and pay for goods and services. However, it’s important to remember that they are also extremely risky.
You should only invest money that you can afford to lose. If you want to be safe in your investments, you should try to diversify your portfolio by buying coins from different categories. Make sure that you’re invested in coins that have a real product behind them. And lastly, remember to always be careful when making investments.
