6-Step Guide Before You Invest in Cryptocurrency
6-Step Guide Before You Invest in Cryptocurrency
A checklist that can help you to invest in cryptocurrency.
The world is flowing in the ship of cryptocurrency today. So much is happening every day in the world of cryptocurrency that people are urged to invest in cryptocurrency. Of course, controversies surround this hype too. But, investors, banks, and next-gen millennials are trying to leverage the advantages cryptocurrency offers. But, are you confused and have a lot of questions about how to invest in cryptocurrency?
Is it worth investing in cryptocurrency? Will I earn money by investing in crypto? How should I get started? Which is the best crypto to buy? Is cryptocurrency investment a long-term investment option?
If these questions are crowding your brain, here’s a guide to help you understand the crypto market before you invest in cryptocurrency.
The Crypto Market is Highly Volatile
Just like the share market, the crypto market is highly volatile. If you don’t know, this year kickstarted with a boom in cryptocurrency. However, in the last month, the crypto market faced a bad hit due to China’s ban on crypto trading. As most people are running behind the best cryptos to buy for investment purposes, keep in mind that risks will come along.
Investing in Multiple Currencies
Financial investors are urged to diversify across a wide range of assets. Investing in more than one crypto stock guarantees protection that you will not face losses because of one failed crypto. However, if you wish to start investing, that too with a small amount, you can consider Bitcoin and Ethereum. They are the biggest cryptocurrencies by volume. Bitcoin is considered a good investment option because of the value it offers and Etheruem is known for its blockchain functionality.
Comprehend Market Capitalisation
While above I mentioned that you can invest in Bitcoin and Ethereum, you can consider other cryptocurrencies too. However, there are several best cryptos to buy right now in the market that is growing at a fast speed. However, you can’t just analyze the price over time and invest. You also need to understand the market capitalization of coins.
It is because a few coins are more affordable (for instance, Dogecoin, Shiba Inu, etc.) and as an amateur, you will begin to purchase a ton of it, assuming that it will reach the price of Bitcoin. Yet, for those coins to arrive at the cost of Bitcoin, the coin market cap needs to arrive at more than that of Bitcoin due to limitless coin circulation. Knowing the market of each coin will give a provisional thought of how a coin will perform in the future.
Choose a Good Crypto Exchange
To invest in cryptocurrency, you need a platform to do trading. A Crypto Exchange will facilitate cryptocurrency investment. There are a number of crypto exchange platforms to choose from. However, choose a crypto exchange with solid levels of liquidity, a variety of crypto assets, strong security measures, and reliability. CoinMarketCap has a page for those purchasing Bitcoin for the first time, which ranks cryptocurrencies by their simplicity of buying crypto and gives more data about their regulations.
Fraudulent Activities in Cryptocurrencies
If you think investing in cryptocurrencies is fancy and rewarding, stop there, because it isn’t. Hackers and cybercriminals have started shifting to cryptocurrencies to take advantage of and earn money. Money laundering, phishing, and other types of cyberattacks are critical issues in the crypto world. Security breaches can cause sizable losses if your digital currencies are stolen. Likewise, fake digital currencies can perpetrate crimes that probably won’t be controlled or tracked.
A Cryptocurrency Investment Strategy
If you have never invested in cryptocurrencies before, you would wonder if there is any particular strategy you should adopt and follow. Experts suggest a dollar-cost averaging strategy, which is the most well-known strategy for everyone trading in cryptocurrencies.
Here, you would buy a fixed amount of cryptocurrencies every week, month, or quarter to minimize your exposure to volatility. Besides this strategy, other techniques like “buy and hold” and “buying on the dip” are leveraged for long-term investments. Nonetheless, extensive reading about the crypto world will guide and help form perceptions, which can be used while investing in cryptocurrency.
Every coin has two sides. It is too early to judge and comment whether cryptocurrency is the future as it is very difficult to predict. Nonetheless, if you want to join the race of cryptocurrency investment, you can surely do that. If you feel you are unprepared, take some time to read more about it and then invest.
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