Today, you can use cryptocurrencies everywhere. You cannot only pay for big purchases but also for PlayAmo casino games or online subscriptions. What’s more, it’s a way to make profit. Want to invest in cryptocurrencies? Then follow these tips.
Invest Only What You Can Afford to Lose
During the recent cryptocurrency crash, amateur investors lost a lot of money, and, judging by the stories, many had broken monitors and laptops in addition to their money losses. Remember, this is the most important rule: as soon as you convert money into cryptocurrency, consider that you lost it. There is absolutely no guarantee that you can get it back. And scenarios can be different: losses due to market downturns, hacks, software bugs, and government intervention.
If you’re investing money you can’t afford to lose, think carefully – you can’t do that. And it’s not just about cryptocurrencies. It’s also about mortgages and loans.
Always Watch What Happens to Bitcoin
Most cryptocurrencies are more closely tied to Bitcoin than Asian currencies were to the dollar during the Asian financial crisis. If Bitcoin starts to rise in value, the price of any cryptocurrency can fall as people sell them to buy Bitcoin. If Bitcoin, on the other hand, declines sharply, other cryptocurrencies may also become cheaper as people exit them for fiat money. The best period for alternative cryptocurrencies is when Bitcoin gradually becomes more expensive or cheaper, or stands still.
Learn From Your Mistakes
Never assume failure is final, always evaluate the situation and try to figure out why it happened, and let that experience help you on the next step – this time the results will be better because you have become more experienced. Everyone starts out as an amateur, and losses happen to any trader on a regular basis.
No one is perfect, and there is no genius in the world who makes money on every trade. Don’t let losses throw you off – they make you more professional if you learn from your mistakes, of course.
Diversify Your Investments
The more you invest in certain tokens, the higher the potential profit, but also the higher the possible losses. You can also consider the cryptocurrency market as a whole: if you consider this direction promising, you can assume that the total market capitalization of all cryptocurrencies will grow. What are the chances that this growth will be triggered by one cryptocurrency rather than many? It’s low, which means that to benefit from this rise, it is better to have a diversified portfolio.
You may recall that between January 2016 and January 2018, Corgicoin rose 60,000 times and Verge rose 13,000 times. Over the same period, Bitcoin rose 34 times. If you had invested only in Bitcoins, you would have made good money, but including other tokens in your portfolio could have yielded much higher returns.
Don’t Be Greedy
When this or that cryptocurrency starts to grow, our greed grows along with it, but if the growth is over 30%, why not lock in a profit? Even if you set yourself a goal of 40% or 50%, you can take at least part of the profit in case the goal is not reached. If you wait too long, you can lose what you have already earned or even be at a loss, so take it as a rule to withdraw profits and then make a new entry, if the situation looks promising.
Always Check the Cryptocurrency Ticker
The point is that tickers are not universal and can sometimes vary from exchange to exchange, and this can cause losses. For example, Bitcoin Cash is traded as BCH on some exchanges and as BCC on others. However, BCC is also the ticker for the BitConnect token, which has been exposed as a fraudulent company. So if you bought BCC thinking you were buying Bitcoin Cash, you would lose a lot of money.
Don’t Invest Blindly
There are many people who will do anything for profit. And, of course, when playing the cryptocurrency market, they will take every opportunity to profit at the expense of less informed investors. They will talk loudly about the benefits of this or that currency, just to inflate prices and make a profit.
Today, due to the speculative nature of the cryptocurrency markets, an investor has to analyze the situation himself, because no one can take responsibility for his investment for him. Even information received from a very good and famous investor is only information, but not insurance against failure.
Don’t Be Afraid to Miss Something Important
December’s rise in Bitcoin from $10,000 to $20,000 was largely due to such fears and seasoned with media advertising and futures announcements on the CME and CBOE exchanges. Since then, Bitcoin has managed to fall below the same $10,000 per coin.
If you see a rapid rise, you can be sure it will be followed by a correction. It’s only a matter of time because a speculative bubble is almost always followed by a collapse. Trying to jump on the train at full speed is only James Bond’s game, but most of us should be on the safe side and just wait for the train to come to the next stop.