It is tempting to dive right in due to the news and conversations with friends about how people are getting rich off crypto. However, there are 10,000 cryptocurrencies (according to CoinMarketCap) to choose from, and you wouldn't want to be homeless because you lost all your investment overnight. That would be a bummer, right? Building a solid financial foundation and learning everything there is to know about cryptocurrency before investing money is the way to go.
Before you invest that mortgage payment into crypto, here are a few things you should do.
1. Do your research
With new coins released every day, you must distinguish between the meme coins, the dog coins, the cat coins, and the credible coins. Investigate the developers or teams who are supporting them. Also, keep an eye out for scammers, of which there are many; after all, there's an opportunity for everyone. Despite how great some coins appear to be, remember that if something seems too good to be true, it most likely is.
2. Chill on the "ALL IN"
Unlike poker, investing in crypto isn't a game. Deciding to go all-in into an exciting new coin because a YouTuber told you it's got massive gains isn't a good idea. The crypto market is still unknown, and that makes it very unpredictable. The fear of missing out (FOMO) shouldn't be the reason you lose it all. Like a hot-tempered teenager, crypto's value swings way up only to take a nosedive the next day. Therefore, start by investing money you're comfortable losing to avoid massive disappointment. The Squid game crypto token $SQUID went from $2,856 to $0 in 5 minutes.
3. Expand your crypto portfolio
I have ten different cryptocurrencies in my portfolio because some top altcoins (i.e. coins which are not Bitcoin) may perform better. Diversifying your portfolio also spreads the risk evenly. Some altcoins plummet because of a tweet or from celebrities or governments. Elon Musk, the DOGE lover, seems to hold the meter on how high or low the DOGE coin goes because of his tweets. Choose your investing ratio amongst the coins you love and stick to it.
4. Choose one: HODLER OR TRADER
Are you a hodler (Hold On for Dear Life)? Or do you have enough experience to trade? If you're a hodler, you probably want to invest in crypto long term, buy and hold onto your precious coin in hopes that it increases in value. Bitcoin went from $0 to $64,863 in April 2021, which made many BTC holders rich.
You can also choose to apply your technical analysis to the price chart to predict when the price will go up or drop. Cryptocurrency's volatility makes trading difficult for newbies, so choose what works best for you.
5. Know when to take profits
There is no one-size-fits-all approach to buying or selling cryptocurrencies. The price fluctuates frequently, and you've probably never seen or experienced anything like it before in terms of financial investment. As a result, when trading, you should set a profit and loss target to assist yourself. I learned this the hard way when the whole crypto market dropped by 50% in May 2021.
If you follow the suggestions in this article, you will enjoy your journey in crypto investments.
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