Just like any other investment you make in life, you must consider the risks that come with crypto investments. Whether you decide to invest in the casino online industry, the ever-growing cryptocurrency niche, or the more complicated forex trading, you must commit to doing thorough background research to ensure you invest your money wisely. You must spend much of your time learning the trade to perfect the art of money-making from it.
In cryptocurrency, you must learn to practice patience and perseverance and always be ready to learn the latest trends since the niche is constantly evolving. In this article, I take you through seven important crypto investment strategies. Learn why you should research (and the methods you must use when doing this), diversify your portfolio, and keep track of your investment after purchasing the crypto. When is the perfect time to sell in order to profit from your investment? We have all the answers here!
The first strategy for investing in cryptocurrency is conducting your research. When doing this, there’s no need to go too deep into the research but rather focus on the crucial aspects that make the system work. Of the two areas you need to understand, know about the market capitalization and the white paper to any coin you intend to invest in.
To better understand the crypto you intend to invest in, ensure you read through its published whitepaper. For example, if you are looking to buy Bitcoin, you must read its whitepaper. This gives you a better understanding of what Bitcoin is, how it functions, its derivatives, and its positives/negatives. It also highlights the vision of the coin and its solution to real-world problems. Sure, there’s a high chance you’ll encounter plenty of technical jargon when doing this. However, if the vision is clear, you shouldn’t have any problem deciding whether to purchase the coin or not.
Many people tend to consider the coin’s price as one of the deciding factors when investing their money. While it’s a good thing to do, it’s important you research its market capitalization too. This is the coin’s price multiplied by the total number of coins in the market.
Considering this gives you a rough idea of how many people have bought or are using it in the market. It also shows how many coins have been added to the market after transactions have been verified. The higher the number of coins, the more the verified transactions. If businesses and people are comfortable enough to use the coin, you shouldn’t worry much about investing your money in purchasing the coin.
Diversify Your Investments
Once you are satisfied with your research, the next important step is purchasing the coin. Naturally, many would want to venture into mainstream coins – Bitcoin, Ethereum, Litecoin, Dogecoin, Tether, or Ripple. While this is good, you must know plenty of other investing opportunities exist. In fact, tens of new coins are being introduced in the already saturated cryptocurrency market from time to time. Therefore, diversifying your portfolio increases your chance of making more money from crypto.
As a rule of thumb, pick one of two top-tier cryptocurrencies and a few other newly introduced coins. It’s also advised that you invest in prices of alternative – altcoins – while they are still relatively low.
Once you are strapped in with your coins, it’s time you ensure they are secured and padlocked in safe wallets. I know what you are thinking: Isn’t blockchain already safe on its own? Why do I need to take extra measures to secure what is already safe?
Well, to understand why it’s important to safeguard your cryptocurrency, you must understand exchange sites. While the coins are safe, all thanks to blockchain technology, exchange sites that sell them are not. There are cases where exchange sites, such as Bitstamp, Bitfinex, and Bithumb, have been compromised and customer details leaked. Victims of these data breaches lost millions of dollars worth of crypto.
Therefore, the best way to ensure your investment remains safe at all times is to store it in a wallet. If possible, consider using cold/hard wallets, which keep your cryptocurrency away from the internet.
Track Your Progress
Once all the hard work is complete and your coins are safe, all that is remaining is keeping track of how the market reacts. Remember that the cryptocurrency market is quite reactive, and prices fluctuate quickly. In fact, within a matter of minutes or seconds, you can make decent ROI or lose everything you have. The most important thing is to keep track of the coin(s) you bought so that you know the right time to sell.
Know When to Sell
As far as reaping the fruits of your investment is concerned, there’s never a perfect time. It depends on a number of factors. If you are a trader, you can always sell and buy coins. However, if you are a spectator, the best time to sell your coin is when the ROI is high. The most important thing to remember is to always stay up to date with the current cryptocurrency trends. That is the surest way of knowing when to sell or buy coins.