When it comes to investing in cryptocurrencies, you have to bear in mind it comes with both risks and rewards. To maximize your return on investment and minimize your risks, you need a strategy when investing. There are specific strategies you need to follow to ensure a successful cryptocurrency investment and building your portfolio.
Here are five helpful strategies you can adopt especially if you are new to the cryptocurrency world.
Understand the whole concept of cryptocurrency.
Remember that you do not just invest in something you are not sure and uncertain of. Do not join the cause and follow what others are doing just because you fear of missing it out.
The first thing you have to do is to study the field. Here are important points to be considered before you start your investment:
- What are the other popular digital currencies?
- What are the coins market caps?
- How can you start your own cryptocurrency exchanges?
- Where can you make cryptocurrency exchanges?
Take time to understand the field of cryptocurrency and don’t rush the process. It may take weeks or even months to digest all the information but this step is crucial for you so you can be successful and become an expert in the field. This way, you are not at risk of wasting your resources since you are familiar with the cryptocurrency industry.
Spying on the market simply means, you are observing what is currently working in the cryptocurrency market and Here’s what you need to check:
- What is the most sought after currency?
- What is the value of the currency?
- Which currency has the highest market cap?
- Should you buy and hold the currency for future investments?
Note that the cryptocurrency market is extremely unstable and the values fluctuate every now and then. The values usually depend on many factors including the speculators, the market demand, the supply demand, and different institutions manipulating the prices.
Shop around first and do not settle immediately for a specific cryptocurrency just because it has the highest value or because it is popular now.
For instance, the most sought after currency to date is Bitcoin, but many professional traders and investors have predicted that Ethereum may surpass Bitcoin and become the currency of the future. Therefore, always spy on the market and analyze the information.
Invest in more than one cryptocurrency.
It is never wise to invest all of your money into a single digital currency. Like what they say, don’t put all your eggs in one basket. It is important to balance your portfolio because it minimizes your risk of losing your investment. If one cryptocurrency investment fails, you can still gain with the other ones you have. Therefore, always invest in two or more currencies to have a back up. Constantly spy on the market and choose the currency you prefer.
Start small and scale higher as you go.
Many people assume you become rich in an instant when you invest in cryptocurrency, but this is not always the case. You don’t just become rich automatically once you choose to invest in cryptocurrency. There’s a strategy and a learning curve for you to get where you want to be.
It’s always good to start small, especially for those who have a small risk appetite. Cryptocurrency values are very unstable in nature as it depends on many factors. While many people are starting to trade digital currencies, the values fluctuate even more in this cryptocurrency season.
The rule of thumb, especially for beginners, is to start investing $500 for your cryptocurrencies. You don’t really need to start investing thousands, but it still depends on you. Now that you have your $500, how do you divide this investment, and which currency do you start buying first?
Remember to sign up for your digital wallet, and deposit your fiat currency. Then, purchase the top two cryptocurrencies namely Bitcoin and Ethereum. We choose these two cryptocurrencies because they are the safest and well established compared to the other currencies. They can fluctuate, but not as much for now.
Therefore, split the $500 by purchasing $250 worth of Bitcoin, and $250 for Ethereum. This is a smart move because if ever you will lose any of your funds, the risk is still worth taking.
Once you get used to it, you can increase your investment gradually by buying cryptocurrencies in a higher value. Moreover, you can also Learn forex trading using the methodologies.
Once you’re done with all the four steps, it means you’re already familiar with the cryptocurrency world. You can then proceed to reallocating your funds according to the digital currency market. While you are trading and investing, you’ll notice that some currencies will do better than others.
For instance, Bitcoin’s market has gone up while Ethereum has gone down. You can then transfer your funds to the higher currency market. You can play around according to what’s working in the current market and constantly reallocate your money. With the forex trading you also open for better opportunities. Once you get the hang of it, you’ll realize that your investment has built up eventually from $500 to $1000, from $1000 to possibly $100,000!
Always remember to get to know more of the cryptocurrency market because there is always something new to look into. Just follow these simple, yet tested and proven effective strategies for your investment and only investment in what you know.