After hearing so much about cryptocurrency, I finally decided to step foot in the crypto space in 2019. I set up my digital wallet and made my first transaction. The process was both complicated and exciting in the beginning. But I realized that it keeps getting easier and more fun as you move along.
I am here today to let you all in on some basic secrets to strategize your cryptocurrency investments. Even though these are particularly valuable for the newbies in the crypto world, these can also serve as reminders to those who have been trading crypto for a while.
The first thing to remember is investing in cryptocurrencies comes with its own risks as well as rewards. That’s why you need to always invest strategically, in order to maximize your return on investment and minimize your risks.
There are 5 strategies that may come in handy for you, especially if you are relatively new to the cryptocurrency realm.
1. Understand the whole concept of cryptocurrency
First, it is important for you to understand the whole concept of cryptocurrency. Always keep in mind that you do not simply in something that you are not sure of. Don’t jump on the bandwagon and follow what other people are doing just because you fear you are missing out. For example, a lot of people see their peers investing in property, and they just follow suit in hopes to generate millions without even conducting proper prior research. Therefore, the first thing you ought to do is study the crypto space.
These are the crucial points to be digested before kick-starting your investment.
- What is cryptocurrency?
- What is blockchain technology?
- What is bitcoin?
- What are the other popular digital currencies?
- What are the coin market caps?
- How can you start your cryptocurrency exchange?
- Where can you make cryptocurrency exchanges?
Take the time to understand the realm of cryptocurrency, and don’t rush the process. It may take weeks or even months to digest all the information, but this step is imperative for you, so you can be on top of the game and an expert in the field. This way there is a very low chance for you to waste your resources, as by the time you actually start investing, you will be well familiar with the cryptocurrency industry.
2. Spy on the market
The second strategy to invest is to spy on the market. What does spying on the market mean? It means you observe what is currently working in the crypto market. What you want to specifically look into is, what is the most sought after currency? What is the value of that currency? Which currency has the highest market cap? Should you buy and hold the currency for future investments?
Always remember that the cryptocurrency market is very volatile, and the value fluctuates every now and then. The values usually depend on a lot of factors such as the speculators, the market demand, the supply demand, and the different institutions manipulating the prices.
My advice is for you to shop around and don’t settle immediately for a specific cryptocurrency just because it has the highest value or popularity at the moment.
For instance, the most sought after currency at the moment is Bitcoin, but many professional traders and investors have predicted that Ethereum may surpass Bitcoin and become the currency of the future in the coming years. Therefore, always spy on the market and analyze the information.
3. Invest in more than one coin
The next strategy is to invest in more than one cryptocurrency. It’s not wise to invest all of your money into a single digital currency. A well-balanced portfolio minimizes your risks. When you possibly lose on a cryptocurrency you own, you can still gain with the other ones you have.
If you decide to invest in only one currency, for example litcoin, what if the whole currency collapses? You would lose all the money you’ve invested in a split second without any backups. Therefore, always invest in two or more currencies. Constantly spy on the market and choose the currency you prefer.
4. Start small and scale higher
The fourth strategy is to start small and scale higher as you go. A lot of people assume you become instantly rich when you invest in cryptocurrency. However, that’s not always the case. You don’t just become rich when you choose to invest in cryptocurrency. There’s a strategy and a learning curve to get where you want to be.
Therefore, always remember to start small, especially if you have a small risk appetite. As mentioned earlier, cryptocurrency values are very volatile in nature and depend on many factors. The values fluctuate even more in this crypto season where many people are starting to trade digital currencies.
For beginners, the rule of thumb is to start investing $500 in crypto. You don’t necessarily have to start investing thousands. So now that you have your $500, how do you divide the money and what currency do you start to purchase first?
Well, the first thing you need to do is sign up for your digital wallet, deposit your fiat currency in it, and purchase the top two currencies: Bitcoin and Ethereum. The reason why we’re selecting these two is because they’re the safest and established choices as compared to other currencies. They are prone to fluctuation but not much for now.
So you split the $500, and purchase $250 worth of Bitcoin and $250 of Ethereum. This is a smart way of going about it. Even though there is risk for you to lose any of your funds, but it’s still worth taking. Once you get the hang of it, you can scale your investment higher by purchasing your cryptocurrencies in a higher value.
5. Reallocate your investment
Once you have completed all the steps from 1 through 4, which means you are familiar with the cryptocurrency realm, you can reallocate your funds according to the digital currency market.
When you started trading and investing, you’ll notice over a period of time that some currencies will do better than others. For instance, let’s say you’ve observed Bitcoin’s market and it’s gone up, whereas Ethereum’s market has gone down. If that happens, you can drag your funds to the higher currency market. This means you can play around according to what’s working in the current market and constantly reallocate your money.
When you get the hang of it, you’ll realize that your investment will build up eventually from $500 to $1,000 to possibly $100,000.
Always remember to do your part and keep getting to know more about the crypto space, as there is always something ne to look into. Be strategic in your investment, and only invest in what you know!