You can’t get very far these days without hearing words such as Сryptocurrency or Bitcoin. And, for good reason. Mainstream adoption of crypto has been gaining steam for the last 10 years and has been accelerated by the pandemic. Cryptocurrencies are increasingly seen as investments to hedge against inflation during times of economic uncertainty, much like gold.
We prepared 5 tips for those considering investing in cryptocurrency. Here’s how to get started the right way:
1. Take a good look before investing.
Make sure that you do your research and check your sources. You need data-driven information to make an informed decision.
Consult with experts who have experience in both investing and an understanding digital assets. Make sure your information is coming from the right people, and don’t fall prey to the blind enthusiasm of get-rich-quick investment scammers. If you want to make a strong investment, you need to be in it for not too long.
2. Avoid a bad trade or investment strategy.
Cryptocurrency investors beginners are making mistakes in joining what is known as a “pump and dump” group.
Certain social media communities or “crypto masters” may even promise investment tips regarding a particular coin. You should avoid these types of places at all costs, they don’t often come back.
The problem is that since derivatives trading has a winner, but more importantly a loser. Unless a solid trading or investment strategy is in place, heedlessly following such advice is the fast track to burning your money.
3. Understand market caps.
The potential for growth with any investment can be found in its market cap (total dollar amount a company is valued at based upon the stock market). It’s calculated by multiplying the number of outstanding shares a company has by its current market price (CPM). The thing is how much potential it has for growth.
Strong cryptocurrency investments are data-driven. Very important to see the end goal, or the life of your investment, from the beginning. Market cap informs the level of risk associated with an investment, growth potential, and how sensitive they are to economic changes.
4. Don’t put all your crypto-coins in one basket.
There is one and good wisdom when it comes to cryptocurrency investment – diversification is key. This is essential for any healthy cryptocurrency portfolio. Financial advisors recommend taking positions in multiple types of stocks and other investments, diversification. After your research is done, seize the opportunity to invest in multiple coins. For example, you can invest across different sectors which serve different use cases. Establishing a diversified portfolio will help you along your path toward realizing potential future cryptocurrencies profit.
5. Be careful using mobile wallets.
Trading/storing large sums of any cryptocurrency via mobile phone is a big risk.
Your devices are more prone to being compromised electronically or physically. Convenience should not surpass the security concerns encountered with executing trades or storing assets on mobile devices.
Investing in Сryptocurrency isn’t much different from investing in stocks. With Сryptocurrency, you need to open an account with an exchange. With stocks, you open an account with a brokerage. In other ways you deposit funds.
Your initial purchase of Bitcoin is your first opening trade. You have to purchase Bitcoin, first using deposited funds, before you can trade Bitcoin. Hopefully, these 5 tips will help give you solid footing on the road toward the crypto-investing world.
Another important question how can I exchange crypto into national currencies (FIAT) and vice versa? We have a solution for you with the Collect&Pay platform. Contact us how to convert your crypto in real-time.