Investing in cryptocurrency is an avenue to make some cool cash. Similarly, it is the quickest means for you to lose your money due to the unstable price of cryptocurrencies. This is because it is volatile.
Elon Musk could tweet about bitcoin tomorrow and the price skyrockets. The next day Tesla or Amazon may announce that it won’t accept Bitcoin as a form of payment and the price crashes. Hence, caution should be the watch word.
For crypto investors, here are five cryptocurrency investment tips you should know.
Invest what you can afford to lose
Price fluctuation is synonymous with cryptocurrency. So, you should only invest what you can lose. In otherwords, do not put in money that will affect your mental health or money you have budgeted for something important. This is to prevent uttering had I known when prices eventually drops.
Do your research
If you are not a cryptocurrency expert, you should not just jump into crypto investment except you want to burn all your money. You should do a thorough research before deciding which cryptocurrency to put your money.
There are hundreds cryptocurrencies to invest in. So do your research and select the best one to invest in. You can also talk to a crypto expert who can offer professional advice. The best cryptocurrency to invest in 2022 include bitcoin, Ethereum, and Shiba Inu among others.
Never invest against the market
As a crypto investor, your best friend should be the trend. If the market is regularly falling every day and you aren’t sure about the future direction, it’s advisable that you don’t buy in such a trend yet.
Always wait for some signal which says there is a potential trend reversal. The signals could look like two to three days of upside movement and heavy buying volume, to name a few. If you plan to become a long-term crypto investor, learning to read chart patterns would come in handy in making investment decisions.
Diversify your bitcoin portfolio
It is risky to have too much investment in one single cryptocurrency. As with stocks and shares, spread your money out among different digital currencies.
This means you don’t risk being over-exposed should one of them plummet in value – especially as the market prices of these investments are highly volatile. There are thousands to choose from, so do your research. Examples include Worldcoik and Safemoon.
Become an active investor
Your job will not end once you invest the money in the crypto market. You should not just assume that you can sit back and relax while your money grows. You must track the market often because the crypto market is extremely volatile. You might miss out on your biggest buying or selling opportunity. Being an active investor would include you having to rebalance your investments.
Meaning, you might want to reduce the stake in one cryptocurrency and increase your stake in another cryptocurrency. Sometimes, it also means you might have to completely sell your crypto investments to profit from the market peak and later buy it again once the market falls. It all boils down to reacting and taking action towards the market news and indicators consistently.