Investing in virtual currencies, particularly the more popular ones, necessitates a little domain expertise. Fortunately, once you've mastered both, you'll be well on your way to making more informed, and potentially profitable, Bitcoin investment selections.
With a market capitalization of $2 trillion and over 10,000 coins to select from, more and more investors are diversifying their portfolios into digital currencies. As a result, the days of simply holding Bitcoin and Ethereum are, to put it bluntly, over.
Many speculators rush in, chasing the pump, in the hopes of striking gold by taking a shot at the newest trendy altcoin (any coin that is not Bitcoin). It is understandable that new crypto buyers are excited and sometimes overconfident, but it is advised to never buy cryptocurrency without verification.
That is, unless you understand what you're doing and how to keep your losses to a minimum. When it comes to investing, there are a few guidelines to keep in mind. Here, we've compiled a list of the 7 golden laws of cryptocurrency investing.
1. Buying Low and Selling High is a Good Strategy
It may sound conventional, but when it comes to money in cryptocurrency, the basic guideline is "buy cheap, sell high." It is straightforward and simple to comprehend.
If you wish to invest in cryptocurrency, you must first determine when they are at a cheap price and then purchase them. Then sell it when the price rises. This concept is applicable to cryptocurrencies because the nature of cryptocurrencies is unpredictable, meaning that their prices fluctuate frequently.
2. Ignoring Feelings
The much-discussed "emotions" only work against you as an investor. If you let your emotions guide you while investing in cryptocurrencies, you've probably made a mistake.
You've probably heard the term FUD, which stands for "fear, uncertainty, and doubt." These are the three most common emotions you may have as a cryptocurrency investor. Of course, as humans, we become enthusiastic, anxious, and desperate, but when it comes to crypto investing, we must attempt to avoid emotions.
So, there's no need to rush. Assess the market to make well-informed choices. Allowing your emotions to dictate judgments for you is not a good idea.
3 Preventing FOMO (Fear of Missing Out)
The term "FOMO" refers to the fear of missing out, which occurs when we believe that others are having a good time while we are not present or absent. When the price of cryptocurrency climbs and the perception is formed that everybody is selling, FOMO kicks in, and you may feel compelled to sell as well, fearing that you will miss out on the chance. When you watch a cryptocurrency that you haven't invested in gain in value, FOMO sets in. Then you sell your cryptocurrency to pay for it. So, avoid FOMO at all costs and stick to your coin.
4. Adherence to Your Plan
As a cryptocurrency investor, you must stick to your strategy. Markets move in different directions, but you can't modify your tactics every time the marketplace shifts.
As a result, you must devise a strategy and stick to it. Define your investing strategy, whether you prefer long-term or short-term investments. Set stop-loss orders as well, so you can sell when the price reaches your target. Stop losses will assist you in sticking to your goal by preventing you from acting on your impulses.
5. Investing for the Long Haul
When Bitcoin was first introduced in 2009, few people believed it. Despite this, they increased steadily, resulting in a fascinating history marked by ups and downs in value. Those who invested in cryptocurrency in the initial periods would undoubtedly have no regrets because they have only profited from their investment.
Cryptocurrencies are rising in popularity and respect, particularly since many banks and other financial entities have begun to offer bitcoin services.
As a result, they are likely to appreciate over time, therefore consider making long-term investments. This is referred to as Hodling, which is a slang term for "keeping" cryptocurrency. You will almost certainly be grateful in the future.
6. Expanding Your Horizons
Because investing in cryptocurrencies comes with its own set of risks, it's smart to diversify your portfolio. As a result, you're less likely to lose any of your assets. Allow your crypto portfolio to be diversified by investing in a variety of coins. The crypto market today has over 1,500 cryptocurrencies, and you can make the most of them by using diversification techniques. To avoid risk and increase reward, it is usually a smart idea to invest in 3-5 coins.
Because cryptocurrencies are interrelated, their performance is comparable. Nevertheless, some of them function better than others. Some altcoins, particularly those with a low reputation, have a knack for surprising for the better. As a result, diversify your portfolio by investing in other coins.
7. You Should Only Invest What You Can Afford to Lose
Many investors take out loans to invest in cryptocurrencies, which may be helpful to a select few, but not to everybody. The cryptocurrency market is extremely volatile, and it may quickly transform you from nothing to a hero, or vice versa. Furthermore, cryptocurrency's decentralization is vulnerable to a variety of issues, including government laws, hackers, and so on.
Cryptocurrencies are dangerous, and you should be cautious about investing all your money in them. It's a good idea to invest as much as you can afford to lose so that, in the event of a crash, you won't be too concerned about the assets you might lose.
You'll be more likely to invest like a cryptocurrency expert once you've gotten the swing of things. Always remember to research and weigh all your alternatives. Is it possible that coin #1 did not follow any of the seven rules? Make a break for it. Is it true that coin #3 checked all the boxes? Great! You can visit Cryptex to exchange your cryptocurrency. Just remember to thoroughly examine each option, double-check that it serves a valid purpose.