Thinking about investing in cryptocurrency? It is definitely a tempting prospect, but just like any investment you should consider it carefully before you actually put any of your hard-earned money into it.
Before you actually invest, there are five tips that you must know that could help shape your decision.
Expect Unpredictable Market Volatility
Although you may do your best to stay informed and try to predict market trends, cryptocurrency markets are known for being volatile. Over the years there have been several instances where the market value crashed by 50% or more, leading to tremendous losses across the board.
It is important that you are fully aware of the market volatility, and take it as well as the other cryptocurrency investment risks into account when investing. To cope with them you should always stick to the golden rule of investing: Don’t invest more than you can afford to lose.
Do Your Own Research
Listening to advice from cryptocurrency ‘experts’ may sound like a good idea – but that can backfire. Experts are really a dime a dozen in the cryptocurrency world, and many aren’t as reliable as you think.
At the end of the day the best thing to do is to do your own research into cryptocurrencies. The more you understand cryptocurrency and the market, the better. By doing your own research you’ll also be able to quickly figure out which experts are worth following, and which ones you should ignore.
Don’t Fall for the Bonuses
Some cryptocurrency exchanges nowadays offer various sign-up bonuses and other incentives. In many ways they are similar to the welcome bonus up to 7 bitcoins and others that are offered by online casinos.
In general you shouldn’t fall for such bonuses as they tend to have lots of conditions and really aren’t as attractive as they look. Instead you should focus on the details that matter, such as the jurisdiction, reputation, fees, payment methods, and identity verification.
Overall it is better to focus on finding an exchange that is reliable and fits your requirements.
Temper Your Expectations
Many new investors make heavy losses when they first get into cryptocurrency. The main reason for that is because they have high expectations, and often end up biting off much more than they can chew.
Right from the start you should temper your expectations. The fact of the matter is that it is close to impossible that you will be able to become a millionaire overnight, double your investment, or anything like that.
The best thing to do is to take it slow, be careful, and steadily learn more about cryptocurrency.
Keep Track of Your Investments
From the very first day you should make it a point to keep track of your investments. Check on how the cryptocurrencies you’re invested in are performing, determine how much profit or loss you’ve made, and try to identify the reason why.
Tracking your investments closely will let you learn more about the market and the cryptocurrencies that you’re interested in. On top of that it will let you make key decisions at the right time.
Final Words
Investing in cryptocurrency is exciting, and there is definitely a lot of potential for profit. Now that you know the tips listed above, it should be easier for you to seize the opportunities that come your way and take advantage of them.
Although that may be the case, you should still be prepared for some ups and downs. That is simply the nature of the market, and you need to be able to weather some storms along the way.
