No matter how “hot” an investment is or how heavily it’s touted, you should always understand it before participating. That may go doubly for cryptocurrency, which hasn’t been around all that long. After all, it’s a challenge to determine an investment’s true value without a solid idea of what will drive growth.
With that in mind, here are some crypto investment tips.
What is Cryptocurrency?
Let’s start there. Cryptocurrency, “crypto” for short, is a virtual or digital currency that’s secured by what’s called cryptography, which renders crypto nearly impossible to counterfeit.
Further, the digital asset can circulate without the need for a central monetary authority, such as a bank or governmental entity. This is what makes cryptocurrency “decentralized”.
You can use crypto to make transactions, with low to zero costs, at any time of the day or night. What’s more, anyone with a computer and access to the Internet can participate, and there are no limits on the number of purchases or withdrawals.
What are Some Cryptocurrency Tips?
- Develop a strategy. There are crypto investment scams out there, particularly as NFTs become more popular. As we said at the beginning, if you feel overwhelmed with crypto info, or feel pressured in any way, sit tight for the time being. What you ultimately want to do is look clear-eyed at the platform or project. Find out how many participants it has or what problem it solves.
- Handle risk. Crypto trading is a high-risk arena, so you should establish limits on how much you invest in a currency.
- Diversify your portfolio. Rather than have all your investments in one cryptocurrency, spread your money out over a variety of them. This way, you don’t risk overexposure.
- Dig in for the long haul. If you’re new to the business, it’s easy to panic when prices plummet and immediately sell. The best strategy is to let your money sit in the crypto market for months or even years.
- Automate buys. Most cryptocurrency exchanges let you establish recurring purchases, which removes the stress of trying to figure out when to buy or sell.
- Utilize trading bots. Although this practice is not recommended for newbies – too many scams abound – it can be useful in some situations.
Crypto Mistakes to Avoid
Now that you have some crypto investment tips, here is what you should do to avoid some common mistakes:
- Don’t buy simply because the price is low. Sometimes, as the saying goes, you get what you pay for, especially if user rates are falling.
- Don’t spend all your capital. Sure, you can “maybe” maximize your capital by “going all in.” Resist those temptations, though, since that could quickly get you into trouble. Experts suggest that you use only around five percent of your investing capital and have an emergency cash fund that you never invest in the market.
- Don’t think it’s easy. No kind of trading is easy. If it were, everyone would basically get rich, right? If you hear otherwise, someone is likely trying to scam you.
- Mind your “wallet.” When it comes to crypto wallets, you should stick with the well-known ones such as Exodus, Ledger, Trezor, or MetaMask.
So, with these crypto investment tips, you can avoid mistakes with crypto trading. You should also know about another way to diversify your investment portfolio, and that is through a platform such as Yieldstreet. These alternative investment platforms offer a curated selection of opportunities across asset classes such as art and real estate that once were the sole province of the ultra-wealthy or institution. These opportunities are not tied to the ups and downs of the stock market and have the potential to consistently generate secondary income.