Key takeaways:
- Have an understanding of the risk involved with crypto investing
- Know what steps to take before investing in cryptocurrency
- Be aware of the Do’s and Don’ts of crypto investing
Welcome to our blog, where we discuss all things related to the crypto world, including cryptocurrencies and much more!
Cryptocurrencies have exploded onto the marketplace in the last 5 years, and people have been investing some serious amounts of money into them. With the cryptocurrency market estimated to be more than $3 trillion, there certainly doesn’t seem to be any sign of this digital currency slowing down. As a result of cryptocurrency becoming so popular, the inevitable influx of investments being made has skyrocketed. Although what comes up usually comes down also. Just recently the cryptocurrency market has seen a huge drop in price, which can happen.
Many crypto companies, such as Coinbase and Gemini, have risen to power due to the incessant demand for cryptocurrency. Crypto investing has its pitfalls, just like any other investment. There is a chance of making money off of it but also losing your investment. That is why it is useful to do your due diligence and have a good idea of what you are getting yourself into.
Although cryptocurrencies such as Bitcoin have millions of traders, there are still no countries that accept Bitcoin as legal tender, until now. El Salvador has become the first country to change this and now allows Bitcoin to be bought and sold legally within its borders.
To find out what to know before investing in cryptocurrency, then please continue as we give away our top 5 tips!
Here are the things you must do Before Investing in Cryptocurrencies-
1. Diversify your portfolio
You may be tempted to stick to one cryptocurrency because that online crypto guru said that it’s going to “take off”. The reality is that putting your eggs all in one basket is an extremely risky move, especially due to the volatility of the crypto market.
Having a few crypto investments will limit any damage that your portfolio might take if one was to plummet. There are literally thousands of cryptocurrencies out there so do your homework and invest wisely.
2. Use mentors or join a community
The easiest way to walk the path ahead is to ask someone who has already walked it. Having that bit of guidance from an experienced crypto investor could make all the difference to your investment strategy. Join some crypto communities and reach out to trustworthy and reputable investors within the space. They would be more than happy to help you out and might also offer some 1-to-1 coaching on what you need to know before buying cryptocurrency.
3. Invest what you can afford to lose
Investing in cryptocurrency comes with risks, just like any other form of investing. That is why we always advocate investing only what you can afford to lose. Doing so will ensure that you don’t get yourself into a financial mess, which isn’t a situation anyone wants to find themselves in. Once all your essential bills have been taken care of, and you have a bit of emergency savings set aside, use some of the money that you have leftover and invest it into cryptocurrency. That way, if the market crashes, you won’t have incurred a substantial loss.
4. Play for the long term
You may have heard of these ‘get rich quick’ stories that surround the crypto world, but the truth is that there is no fast track to success with cryptocurrencies. Many investors have tried and ended up getting severely burnt in the process. The cryptocurrency market is one of the most volatile markets in the world so you need to be prepared to weather that storm!
5. Have a strategy and stick to it
As mentioned earlier, the crypto market is among the most volatile markets there is. That means that when you look at your investments, especially on a daily basis, their value will increase and decrease dramatically. Seeing these contrasting results can influence the behaviour of investors and allow them to make emotional decisions. Having an investment strategy will help you stay resolute in your investment decisions. You will also be less susceptible to making any rash decisions.
These were the 5 best things you must do before investing in Cryptocurrencies. Hope these help you a super investing experience!
It is best to keep a track of how your investments are doing and what could be the next best steps to optimize your crypto investments. At Binocs, we help you get a complete view of your entire portfolio in one place and compute your taxes on the investments seamlessly. Integrate all your transactions in one single place now- https://binocs.co/
FAQ’s
1. Which crypto should I invest in?
That decision is totally up to the investor. The main point that we would like to stress is that there are literally thousands of cryptocurrencies on the market now, so it is vital that you do your own research. To begin with, your research should primarily revolve around.
- Understanding the value of the company behind the cryptocurrency trying to give to the community.
- The sentiment of the community for this coin and its reason (preferably, the community really believes in the tech of the company and not just investing in the cryptocurrency because it seems it will shoot)
- Assessing whether the cryptocurrency offer users access to a wide range of features and applications. If so, then its likelihood of staying relevant and being bought is more probable.
2. How can I spot the scammers?
It can be challenging to know what to look for when investing in cryptocurrency, especially when there are so many scammers out there. If you aren’t careful, then you could end up being cheated out of a lot of money. Some key points to remember before deciding to invest with an exchange and/or a third party (Peer 2 Peer) are as follows:
- Do they have any credible recommendations? – search google and other related sites to see if they can be vouched for.
- Are their social profiles professional? – check all their social profiles, including websites and find out if they have a legitimate brand.
- Can they arrange a video call? – ensure that you get a chance to speak with this person face to face so you can ask them as many questions as needed before deciding anything.
- Are they a regulated exchange? – do your research and make sure that the exchange that you’re investing on is regulated and legitimate. The following sites fit into this category:
- Coinbase
- Binance.US
- Crypto.com
- BlockFi
- Bisq and many more
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