Since the crypto market is popularly known for its volatile nature, investing in digital assets like Bitcoin, Dogecoin and Ethereum might seem like a huge risk. Their prices can skyrocket, but they can lose half of their value in a matter of days. Although this novel technology has just recently entered the mainstream scene, investing in digital coins and tokens is almost similar to traditional assets like bonds and stocks. So, if you want to join the crypto craze and become an investor, learning about this new investment space’s ins and outs should be your priority.
Here at Casino Days India, you will learn how to invest in crypto and maximize potential returns. Interested to know more? Continue reading below!
Kickstart your investments: How to invest in crypto
To get you started on your crypto journey, here are the most effective crypto investment tips you should know:
Pick your preferred cryptocurrency
As of writing, there are more than 8,000 cryptocurrencies available in the market. If you’re new to the scene, choosing a digital currency to invest in might feel a bit overwhelming. So, to help you make the right call, below is a list of factors you should consider:
Learn about its whitepaper
Every cryptocurrency being released in the market comes with its own whitepaper. It is an informational document that discusses all the important details of a digital asset—the problems it wants to address and solve, why it was created in the first place and the technology that powers it.
The document will also state the vision of its developers. If the said vision seems realistic enough and is consistently implemented ever since the cryptocurrency’s launch, then it’s something worth investing in.
Consider its market capitalisation
Market capitalisation is one of the most important factors when choosing a crypto to invest in. It is an indicator that keeps track of the market value of digital assets, multiplying a crypto’s current price by its circulating supply.
As of the moment, here are the top 10 cryptocurrencies with the highest market cap:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
- Binance Coin (BNB)
- Cardano (ADA)
- USD Coin (USDC)
- Solana (SOL)
- Ripple (XRP)
- Terra (LUNA)
- Polkadot (DOT).
Learn to diversify your crypto portfolio
Just like investing in traditional assets like stocks, you have to diversify your crypto portfolio to gain better returns in the future. In this way, if ever one of them suffers a huge decline in price and takes a heavy hit, other coins you’ve invested in that perform well in the market could offset your losses.
One of the common strategies in diversification is to choose cryptocurrencies with various use cases to guarantee that you’d benefit from price surges. This includes DeFi, privacy coins, non-fungible tokens (NFTs) and payment coins, among others.
This also means that you have to be an active investor if you want your eggs to hatch. You can’t just sit back and expect your investments to blow up in just the blink of an eye. What this means is, you have to constantly observe the market to know which digital assets are at their peak performance, helping you make better trading decisions in the process.
Understand what crypto wallets are
Once you start your crypto investments, you will be introduced to two types of wallets: hot and cold. Due to their ease of access, hot wallets are generally preferred by novice investors. However, although they offer maximum convenience when it comes to crypto transactions, they are susceptible to network attacks and theft.
Meanwhile, cold wallets remain the most ideal option to store your crypto investments. They are usually physical devices that keep your digital assets completely offline, protecting them from potential hijacking and other online breach-related crimes. So if your priority is maximum protection for your assets, you might want to give these wallets a try.
To keep your investments secure, here are the most recommended crypto wallets to choose from:
- Ledger Nano X
- CoolWallet Pro
- Safepal S1
- Keystone Pro.
Consider copy trading
Crypto trading is the most recommended option for beginners, especially if you have little to no background when it comes to investments. As the name implies, it is an investment strategy where you can copy the trades of a skilled investor. Think like you’re inside a classroom—if you want to excel and get high grades, you follow the strategies of the student who’s on top of the class.
Check out the steps below to get you started:
- Choose a trader. Make sure that you consider their number of followers and overall performance, as well as their risk score.
- Then, connect your account to their movements. Once they trade a certain digital currency, your account will automatically copy it.
This is one of the best ways to get easily started on your crypto investments without studying the ins and outs of the market. However, you have to keep in mind that seasoned traders have their own shares of ups and downs. This is why you need to set up a loss limit to stop your copy trading so you don’t suffer heavy losses in the process.
Know what you can afford
Since cryptocurrencies exist in a highly volatile market and can involve extreme losses, you should only invest in what you can afford to lose. For starters, you should always assume that you’re going to lose whatever amount of money you’re going to put out there. That way, you force yourself to be cautious with your investments and only spend the extra money that you have.
You should also consider your level of expertise when it comes to cryptocurrencies and how much you earn for a living. Start by listing down your expenses, short-term goals and long-term plans to completely assess if you can endure potential investment losses.