The crypto market is worth trillions of dollars, which is why many more people are looking to invest in this digital currency. One of the biggest lessons from early investors is for newbies not to get in because of the hype but study the market critically before venturing into it.
Also, it is essential to understand the uses, such as taking advantage of the new addition of cryptocurrency as a payment option in different industries. For instance, you can now use it to fund your account whenever you want to engage in betting on esports.
If you have chosen or decided to invest in crypto, you must study the market critically due to its volatility and unpredictable nature. In this article, we’ll discuss the things you should know before investing in cryptocurrency.
Learning how to buy, sell, and exchange crypto is one of the essential aspects if you wish to invest wisely and not lose your money.
Understand how to navigate the various trading platforms and know the one best suited for you and your location. Use platforms that offer ease in depositing and withdrawing to your local currency, providing you with a seamless and less cumbersome experience.
Learn the various uses of different crypto platforms. Understand that each of these platforms comes with its unique capability and technicality. Choose the one best for your crypto exchange.
Investors in cryptocurrencies will always say to you, “do not put all your eggs in one basket.” This is good advice because investing all your money in one asset or coin, as the case may be, is a risky venture.
On the other hand, when you diversify your investments, you will still have valued assets if one fails or falls below market expectations.
Diversification helps to reduce your risks. There are two major ways to diversify; one, you can invest in multiple coins, and two, you can invest within tokens created via different crypto platforms. This way, your investments are secured and not dictated by a particular coin’s volatility.
Note that, as much as diversification is good for risk management, it is essential for you not to over-diversify your portfolio. When you do your proper research, you find the assets that you believe in, you study the long-term potential of the coin, go big and constantly keep your eyes on the charts.
Before investing in a coin, do your due diligence. Never buy into social media hype. Run if you are told a coin or token is risk-free with huge returns. 90% of digital currencies will be non-existent in the next few years. Spend quality time reading and researching the prospects of different currencies.
Open Source technology is one of the best things to happen in the virtual world. This gives the average person a glimpse into the latest roadmap of a developer’s activity. You get to follow up on their journey, which helps you discover any discrepancy on time.
A great way to follow a project roadmap through the developer’s activities is via GitHub. The GitHub repository gives you an up-to-date peek at a project’s latest task. If you noticed, the last GitHub entry was months ago, but the roadmap states otherwise; that’s your chance to run because the developers might be trying to scam their way to success.
Knowing when to enter the market and pull out is crucial when investing in crypto. The cryptocurrency world moves quickly and is highly unstable.
Emotions and social media hype drive most investors, sometimes leading them to invest in coins or tokens with limited prospects. When there’s a hype on a token in the market, there are forces, mostly internal, that tend to drive the momentum higher, luring unsuspecting traders who are in constant fear of missing out (FOMO).
As a beginner in the crypto world, always resist the temptation to plug into the hype, and the fear of missing out shouldn’t be what propels you to invest in a token. Always do your due diligence first.
Find a stable and promising coin that has been on the chart with minor inconsistency and invest in it and when the time is right, take out your profit.
Cryptocurrency provides one of the best opportunities to hit it big but not without some patience which is a long-term investment. People lose their life savings in crypto because they think it is a quick get-rich scheme, which is why they invest their life savings without proper research.
Most of those who have gotten rich from crypto have held for a long time. As a newbie or beginner, you need to focus on projects with prospects and not just hop on any coin that seems like quick money, as most of these are scams. You will only end up losing more money.
You need to keep your crypto investments to at least 5% of your portfolio to avoid a financial crisis. The rule is not to invest more than you can lose.