6 Ways to Safely Invest in Cryptocurrency
A Bitcoin emblem on a laptop
The world changed on one fateful morning of 2008 when Satoshi Nakamoto, the man behind Bitcoin, released the white papers to the public. The paper documented the creation of a new digital currency that was foreign to anything people had seen before.
Nearly 14 years later, cryptocurrency has revolutionized the world. If you’ve kept up with the news, you’ll have heard about numerous people becoming millionaires and billionaires through their cryptocurrency investments. Perhaps you were one of the lucky ones to jump on the train early, in which case you already know about the value of cryptocurrency.
However, what about those people who are new to the cryptocurrency train? They’ll want to know more about cryptocurrency and how they can safely invest in it. After all, no one wants to lose their hard-earned money . That’s why new investors and traders must know how to invest in cryptocurrency safely. You have to know everything there is to know about the crypto space. In addition, you’ll want to be aware of the potential pitfalls and dangers of investing unwisely.
Various crypto emblems
Ways to Safely Invest in Cryptocurrency
Here are some ways to safely invest in cryptocurrency. They include:
Start Small
The first thing you have to know is that cryptocurrency prices vary wildly. Prices change by hour, minute, or second. That’s why most experts recommend easing into the asset class. In addition, numerous cryptocurrencies exist. Research shows there were over 10,000 cryptocurrencies in existence by the end of 2021. You’ll want to ensure that you choose the right cryptocurrency for you. As a result, prepare yourself to conduct a lot of research.
Understand the Risks
It’s important to understand the risks before plunging into the cryptocurrency world. For instance, when you purchase an asset class like stocks, you know that their value could appreciate or depreciate due to numerous factors as poor quarterly earnings or product recalls.
Cryptocurrencies operate similarly. However, the factors affecting their prices vary dramatically. You have to consider regulations and the impact they can have on cryptocurrencies. Since cryptocurrencies are still in their infancy, many governments haven’t devised foolproof methods of regulating them. As a result, cryptocurrency regulations are constantly changing, and that’s something you need to keep a close eye on because it impacts your investments. Likewise, you also have to be mindful of how merchants and retailers adopt different cryptocurrencies. For example, PayPal recently launched support for four cryptocurrencies. Not only can PayPal users purchase cryptocurrencies from the platform, but they can also use cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Bitcoin Cash for purchases. However, PayPal might end cryptocurrency support if regulations change, resulting in their prices dropping drastically.
As a result, you’ll want to be careful about such factors when investing in cryptocurrency.
Research Cryptocurrencies
As we stated above, over 10,000 different cryptocurrencies exist. You’re probably familiar with the most popular ones like Bitcoin, Ethereum, and Litecoin. However, other less popular cryptocurrencies like Solana, Cardano, XRP, and more exist. Investing in these cryptocurrencies might prove more fruitful than investing in the popular ones because they haven’t taken off yet. That means you can get these cryptocurrencies at lower rates and generate more sizable returns from them with lower risk. For instance, Bitcoin has dropped 3.73 percent over the past year. Meanwhile, cryptocurrencies like Cardano have increased by nearly 50 percent. Therefore, you’ll find investing in altcoins to Bitcoin can be a wise decision.
In addition, you’ll also want to consider numerous other factors before investing in a cryptocurrency. For instance, you’ll want to assess their blockchain network because the blockchain impacts things like transaction fees and speed, adoption, etc.
A person holding cryptocurrencies
Pick the Right Cryptocurrency Platform
Typically, you’ll need a cryptocurrency exchange if you wish to buy or sell cryptocurrencies. You’ll want to choose the right cryptocurrency platform for your needs because some will charge your exorbitant fees. Crystal Ball Markets is one of the best cryptocurrency brokers around. You can’t go wrong with our platform if you’re looking to trade cryptocurrencies.
Don’t Look into the Past for the Future
One mistake many new cryptocurrency investors make is assessing a cryptocurrency’s price or growth potential by how it performed in the past. For instance, Bitcoin used to be worth next to nothing at one point. However, one Bitcoin today will set you back around $40,000. Most investors think this means that Bitcoin will continue growing rapidly, and its price will grow at a similar trajectory as the earlier years. However, that’s not necessarily the case.
Savvy investors look to the future to assess how a cryptocurrency will perform. If you’re buying a cryptocurrency based on its past performance, you haven’t done your homework.
Manage Risk
Cryptocurrencies are like any other asset class. They require you to manage risk because of their inherent volatility. You don’t want to go all-in on one cryptocurrency. Likewise, you also want to prevent having most of your investment capital tied up in cryptocurrencies alone. Whether you’re planning to become a long-term crypto investor or an active crypto trader, you must manage your risk. Hence, ensure that you follow proper risk management principles like adhering to the one or two-percent rule. Likewise, ensure that you use stop-loss limit orders and hedge your bets.
You don’t want all your money tied up in a single cryptocurrency because you never know how cryptocurrencies react to market changes. It’s better to choose a few different cryptocurrencies to manage risk.
Don’t Invest More Than You Can Afford to Lose
You’ve probably heard this countless times before but ensure that you don’t invest more than you can afford to lose. Investing more money than you’ve got in speculative assets is a quick way to lose all your hard-earned money.
A man putting a gold Bitcoin emblem in his pocket
Start Trading Cryptocurrencies with Crystal Ball Markets
Crystal Ball Markets is a cryptocurrency trading platform. If you’re looking to start trading cryptocurrencies, you’ll need an online trading platform. You’re unlikely to find a better online crypto broker than Crystal Ball Markets. Visit our website today for more information. Alternatively, you can register with us today to get started.