The cryptocurrency market has grown huge, which doesn’t help make it easy for people to navigate. If you didn’t understand how Bitcoin worked when it was introduced in 2009, then it can be harder to navigate the thousands of current altcoins.
There are NFTs, DeFi tokens, and other crypto marketplaces. Let’s not even start on how you can buy cheaper via DCA levels and use other bots to your advantage when investing in cryptocurrency.
So, what’s the secret to maintaining a good crypto investment? Is it understanding every detail of the cryptocurrency world?
We’ve highlighted some things you should know before investing in crypto. Also, what should your research focus on when planning on investing, and what are some rules to follow as you navigate the digital currency market?
What You Should Know About Cryptocurrencies
There are a couple of things you’ll experience in the crypto market, and it’s good to know them before deciding to buy. These include the fact that they’re highly volatile. We’ve explained this in more detail and other factors below:
High Volatility
Investing in crypto means accepting that the value of crypto coins changes often. There can even be a 25% swing in one instant. This isn’t exceptional to big crypto coins like Bitcoin and Ethereum.
Unregulated
Since governments don’t regulate the crypto market, you must ensure your safety and security. Keeping crypto coins in your trading platform account or an online wallet can expose you to hacking. Such events have occurred before without the hacker being found and funds recovered.
Market Trends
Market trends are heavily influenced by public perception. You can predict what’ll happen to a specific cryptocurrency by checking what new stories have developed about it.
Unpredictable
The crypto market is unpredictable. With prices increasing tremendously, analysts believe this is a bubble, and some crypto coins can suddenly fail.
Making a Good Crypto Investment
Let’s say you’ve taken a couple of steps towards investing, and now you’re in a trading platform and aren’t sure where to start. Here are things to consider and questions to ask yourself before putting your money in any digital currency:
What Is Its Use Case?
Among the cryptocurrencies you’re looking to invest in, check their white papers to see what they’re all about. What’s their purpose, and is it something that’s needed by people right now?
If a cryptocurrency brings value into people’s lives or solves a current problem, people will likely invest in it.
Does It Have a Community?
A legitimate cryptocurrency will likely have a strong community of miners, supporters, and users backing it up. You’ll find these people active on social media platforms like Facebook and Twitter and in the best crypto Telegram groups.
How Much Is It Worth?
Forget about the price of the crypto coin; calculate its market cap. To do this, you must multiply its worth with the total number of its coins in circulation. It shows a positive growth potential if it’s higher than competing coins.
Visit Its Website
What does the crypto’s website say about it? A good cryptocurrency website should be transparent. It should share its white paper that thoroughly explains the project. If the site seems dodgy with spelling errors and no information about the people behind it, then that’s a red flag.
Rules to Follow While Investing
Once you’ve decided that you’re in and will continue selling, trading, and investing in cryptocurrency, then also make the decision that you’ll follow and abide by these rules:
- Don’t invest money you can’t afford to lose, as the crypto market is unpredictable, trading and soft wallets are at risk of hacking, and coins can suddenly fail.
- Use the dollar-cost averaging (DCA) principle to beat volatility. This means spreading out your investment by purchasing various cryptos. Your investment amount thus becomes less affected by market timing.
- Keep doing research and stick to the fundamentals mentioned in the previous section.
- Invest in major cryptocurrencies that have survived the hardest fluctuations. These aren’t limited to Bitcoin and Ethereum, as plenty of altcoins have been around for a while.
- Use a safe crypto wallet. If your crypto coins have appreciated and you’d like to keep a large portion of them for an extended period, consider storing them in a cold wallet.
It’s Possible to Maintain a Good Crypto Investment
Like any other market you plan to invest in, buying cryptocurrencies involves risk. Therefore, it’s essential to do your research and better understand the market before entering.
Assess the digital currency you’re interested in putting your money in and consider other steps of making a good crypto investment. Stick to the rules you’ve set for yourself and the ones we’ve mentioned above, and you’ll be good to go.
Treat crypto investments like any traditional stocks, considering they’re even a riskier market since they’re unregulated.