The cryptocurrency market is an enigmatic and exciting place to trade, but it’s also a very risky one. It’s not just the value of your portfolio that you need to worry about; in fact, if your coins are stored on a centralized exchange, there’s always the risk of getting hacked. The crypto market has several cryptocurrencies like Bitcoin which is used by many people around the world. As a result of high technology, people can instantly buy cryptocurrency instantly around the world. Therefore, because of the uncertainties in the crypto market, you need to follow some safety tips before making an investment. So, in this post, we are sharing the best tips on how to invest safely in cryptocurrency.
Here are the 6 best tips to invest safely in cryptocurrency:
- Do research on the market
- Diversify your investments
- Be ready for volatility in the market
- Only invest what you are willing to lose
- Don’t ride a cryptocurrency’s roller coaster
- Do not ignore the blue chips
Do research on the market
In order to invest safely in cryptocurrency, you must do research on the market. Researching the market will give you the trend of the market in the past years. Why is knowing market trend an important factor in this investment? One thing this knowledge will help you decide which cryptocurrency to put in your money.
Researching about the market will give you a hint of cryptocurrency exchanges. You should not just wake up and decide to invest with any crypto exchange platform. You need to know the advantages and disadvantages of each. Some of the cryptocurrency exchanges you should learn about include Coinbase, Gemini, Binance, and Kraken.
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Diversify your Investments
It is always a norm that if you want to make a good investment strategy, diversification is key. Similarly, it is good to invest in different cryptocurrencies. But you also need to diversify your investment portfolio with other assets such as stocks, bonds, and cash.
How much should I Invest? The amount of money that you have determines how much cryptocurrency investment you can make at a time or monthly basis. For instance, if someone invests $1000 USD every month, they can invest $1000 USD worth of Bitcoin and Ethereum.
The importance of diversifying your investments is that it saves you in case of an unexpected occurrence. Take, for example, the recent Bitcoin crash in 2018. Most of the investors who had put all their money in Bitcoin suffered a lot. The crash came after the Bitcoin boom of 2017.
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Be Ready for Volatility in the Market
One of the most important aspects when it comes to investing in cryptocurrencies is being ready for volatility. Cryptocurrency prices can change very quickly, sometimes within a few minutes.
In the past, cryptocurrency has been condemned for its outrageous volatility. Such cases petrified new entrants before tasting the delicacies of the crypto market. It is normal to see tall red spikes on the charts with double-digit negative percentage changes in the prices. All these indicate how volatile the crypto market has been.
Only invest what you are willing to lose
You should only invest what you are willing and able to lose because cryptocurrency investments are always risky. One thing that will help you stay safe is taking your time with research before investing.
Bitcoin is the most popular cryptocurrency, but there are many more like Ethereum or Litecoin. Both of these cryptocurrencies are unpredictable. You never know what might happen immediately after you put your hard-earned cash in the crypto. Therefore, it is advisable to save some money for your upkeep.
It has been a year since Bitcoin has reached its all-time high of $20,000 per coin. What will happen next? Nobody knows for sure! However, we can be certain that new technologies have shifted our economy and humanity in ways we never could have predicted.
Don’t ride a cryptocurrency’s roller-coaster blindly
Riding a cryptocurrency roller-coaster blindly means investing the money you need to live on. And this is not recommended! Cryptocurrencies are volatile, and it’s advisable to save some of your investment for when things go south in order to be able to maintain your living situation should you need that time come.
Investing safely in cryptocurrency means saving up a certain amount of fiat currency so that you are able to maintain your current lifestyle should the need arise. To invest safely in cryptocurrency, you should diversify your portfolio across multiple cryptocurrencies before investing any of your money into them- it’s important.
Do not ignore the blue chips
Blue chips in the cryptocurrency market are the giants- these are cryptocurrencies that have stood out among others for their long history of stability and low volatility. Bitcoin, Ethereum, Litecoin, or Dash could be some examples; you should consider investing in them if your goal is to invest safely and avoid too much risk.
Investing safely means managing risks: it’s not a question of whether the cryptocurrency market will grow in the future, but how much it will grow and when. There’s no way to predict this with certainty- so you should consider investing a small percentage of your portfolio into higher risk bets like smaller cryptocurrencies or ICOs (Initial Coin Offerings).
If an investment is feeling too risky, don’t invest more money- but also don’t withdraw the funds! Instead, wait for a while. If it goes up in value and you feel like it’s on an upward trend, then invest more money; if not, just sit tight and keep your investment safe until you figure out what to do with it next.
Final Word
To invest safely in cryptocurrency, you need to have a vast knowledge of how the market works. The most important thing to remember when investing in cryptocurrency is that all investments are risky, so only invest what you’re willing and able to lose. Bitcoin has been the most popular cryptocurrency but since its price crash a year ago, many other cryptocurrencies like Ethereum and Litecoin have risen in value.
Becoming knowledgeable about the market is essential to investing safely in cryptocurrency. Many people have made money from cryptocurrency while at the same time, some people have lost a lot of money. Be sure to know what you’re getting into before investing your hard-earned cash in cryptocurrency.
