First-Time Crypto Investor? Here’s What You Should Be Aware Of
As a crypto investor buying cryptocurrency for the first time may be exciting, but it’s also sort of anxiety-inducing, particularly if you’re unfamiliar with this vast crypto space. Fortunately, there’s a lot of information on the Internet to get you started; start with this article!
The social media buzz around virtual coins might have determined you to take action and finally make your first investment. Still, you’re a novice and don’t know much. Questions like “What’s the best crypto to invest in?” or “What to do with my crypto now that I’ve bought it?” might keep you up at night, so you definitely need answers.
We know it can be hard to understand how this ‘cryptic’ concept of cryptocurrency functions as an investment, so we’ve compiled a list of valuable tips to help you puzzle it all out and get a piece of the action. Read on!
Crypto Investor: Understand what you’re investing in
Before making any purchase, it’s critical to understand exactly what you’re going to invest in. It may take time to familiarize yourself with cryptocurrencies, but it’s a step you can’t skip, supposing you want to earn some rewards out of your labor. If you don’t know what you’re purchasing, whether it’s Bitcoin or Altcoins like Ethereum and Dogecoin, you’ll most probably fail to reach the desired results.
So, let’s start at the beginning. What are, in fact, cryptocurrencies – any cryptocurrency? Cryptocurrency is a virtual currency existing merely online, so unlike cash currency, these virtual ‘coins’ can’t be held in a physical wallet but an electronic one. Tokens, units, coins – all are virtual coins that can be bought from companies that facilitate digital currency exchanges. You can hassle-free purchase, trade, sell, or mine cryptocurrency, as there’s no central authority to govern it (a third party).
Plan to document everything from liquidity and price history to global adoption and market capitalization before jumping to invest in a particular crypto. All these factors determine the future of that cryptocurrency and make it stand out in the crowd of thousands of cryptocurrencies already existing. The same is true with stocks – if you plan to invest in this kind of asset, ensure you analyze the related companies thoroughly and read the prospectus.
Some of the most famous cryptocurrencies are indeed Bitcoin, Ethereum, XRP, Dogecoin, and Solana, but don’t just assume these coins have no downsides. What matters here is to understand each crypto’s upside and downside so that you know what to expect and what’s your next move.
Also, remember to read all the information from reputable, trustworthy sources like Binance that provide updated, real-time data about Bitcoin price USD or any other cryptocurrency you might be interested in.
Watch that volatility
Volatility is undoubtedly one of the most prominent characteristics of cryptocurrencies, but where does it come from? Although the first cryptocurrency – Bitcoin – came into existence in 2008, digital currencies are still in the early stages. So, inevitably, their prices fluctuate up and down, being highly influenced by external factors, such as worldwide adoption. Even baseless rumors can impact the value of a digital asset at a particular time, so you need to be up to date with all this information from the outside to accurately predict your investment moves. Volatility has long been a game-changer for experienced traders that have a solid command of the market’s fundamentals and can perform trades like greased lightning. But what about newcomers? These people won’t manage to keep pace with these price fluctuations and eventually get crushed by them.
Although volatility might be frightening, you have nothing to worry about if you’re here for the long term. This is, in fact, the recipe for success. The best thing you can do to not be affected by epic price rallies is to adopt a “set it and forget” mindset with your crypto. It’s, indeed, a long game, but it’s way better than trying to get quick cash by impulsively playing with the short-term price swings.
Protect your crypto investments
Once you decide to invest in cryptocurrency, you must take steps to safeguard your assets properly. Surprisingly or not, even here, in the realm of crypto, there are scams and hacks that threaten to steal your coins. That’s why you should watch out for common red flags and adopt adequate digital security habits.
One of the best ways to secure crypto assets is by storing them in an electronic wallet. However, you don’t really ‘store’ the actual assets but rather the related private keys that give you unique access to them. You have two possibilities regarding crypto wallets: you either store your digital goods in a hot or cold wallet. The former involves an Internet connection, meaning that your crypto would be held online, most frequently in the custodial wallet of the exchange you choose to buy cryptocurrency from. As for the latter, your crypto will be stored safely on a piece of hardware, i.e., offline. Cold storage is considered the safest, as it doesn’t allow ‘intruders’ to access your digital assets, as the corresponding private keys aren’t to be found online but on a USB stick or physical paper only you have control upon.
Diversify your portfolio for long-term success
In such an unpredictable market, it would be advisable not to go all-in with one crypto in order to limit risk. Diversification is one of the very strategies of investing, so every investor, whether experienced or not, should consider it before allocating their money only to a certain asset.
You can diversify your portfolio by simply spreading your investments across various kinds of assets – crypto, stablecoins, NFTs (non-fungible tokens), CBDCs (central bank digital currencies, you name it! Consider including successful projects in famous sectors such as NFTs, DeFi (decentralized finance), and gaming so that, in case of a market crash, you’ll be able to track position size and minimize losses.
To invest or not to invest?
The answer is definitely positive, but be sure you’re mindful of these above-mentioned factors before taking the leap.
Found this article helpful? Awesome! Then, check out the rest of our blog to read more articles on finance solutions, career ideas, business tips, job sectors, and much more.
