The cryptocurrency sector has gained momentum, which shows that the world is increasingly digitizing. However, the prevailing view on this sector is mostly related to the volatility of the price of Bitcoin, the most popular digital currency.
The American website "Inspiration Feed" says in a report that anyone who feels excited about embarking on the journey of investing in cryptocurrencies should see a set of simple rules that must be adhered to, in order to avoid loss and shocks, and increase profit. opportunities.
: When investing in cryptocurrencies. Remember these tips
1 .Consideration of security aspects
Although the main advantage of cryptocurrencies is that they are designed to be safe and secure, there are additional steps that can be taken to take extra care.
Cryptocurrency transfers rely on blockchain technology, which relies on digital encryption to protect personal data, and for further security, you should choose an investment portfolio that contains enhanced protection features.
Offline wallets are often considered the best option, as they are very difficult to hack and manage, since the data is on a hard drive or USB, and not stored based on cloud storage technology.
2. Think about your investment strategy
The first rule to adhere to when investing in cryptocurrencies is to risk only what you are willing to lose, as this area is full of risks and market volatility, and for this very reason the profits are astronomical compared to traditional investments.
You should always balance risks and potential gains, make sure your investments are diversified and logical, and be aware of how much money you risk losing so that your experience in this area is healthy and long-term.
One of the popular strategies in the cryptocurrency market is to buy a specific currency and hold it for life no matter how volatile the prices are, which has made many make profits despite market fluctuations.
3. Beware of selling under penalty of fear
This point is related to the second tip, as anyone familiar with the cryptocurrency market knows that prices rise and fall dramatically, which allows for huge profits, and it is very important for investors to stay calm and stay away from selling in panic periods when prices start to fall.
This is because most cryptocurrency prices tend to adjust themselves days later, so rushing to give them up at the first jolt will cost you a lot of money, both from your original investments and from potential profits.
In general, investing in the field of cryptocurrencies is supposed to be long-term and only those with experience and long breath accept it.
4. Diversification is the biggest gain
Although Bitcoin is the most popular and well-known cryptocurrency in this field, this does not mean that it is the only option for investors, and there is an important tip that beginners should know, which is the importance of diversifying investments.
Buying Bitcoin is a good idea, but it is very expensive at the moment, and there are many alternative currencies that have the ability to develop on par or superior to Bitcoin, such as Ether, Ripple and Litecoin, and these are excellent options for beginners. Looking for inexpensive currencies that have the potential to grow in the market..
5. Beware of scams
Unfortunately, this bull market is full of fraudsters, so you should pay attention to the scams and traps that are set up by luring huge returns that may seem illogical, and you should also beware of wasting your personal keys and addresses to other people, since This is the easiest way for hackers to hack your account and steal your balance.
There are other types of tricks to watch out for, such as phishing attacks with messages with tempting links, so you should beware of strange links that when opened ask you to re-enter sensitive information such as passwords.
By falling into this trap, you have simply provided your confidential data to a gang of criminals.
Finally, some investors talked about another trick: receiving calls from government tax and income institutions, telling you that you have made profits from your digital investments, and asking you to give them your private data so that they transfer your profits to you.
In any case, you should never disclose your financial information and passwords over the phone, and remember that government agencies and institutions do not answer the phone and do not use it for these purposes.
6. Don't stop researching and reading
You should always keep learning more about this area, as the cryptocurrency market is bullish and is now in the process of forming, changing every day. Therefore, you should stay up to date with the latest events and laws regulating this trade, along with market trends and the impact of all of this on your investments.
Try not to rely on noise. Rumors and superficial impressions in your decisions, but you should always research and think well to make the right decisions, and this is very important given that there are many fake and even comic cryptocurrencies that have begun to surface.
Remember that if a currency does not have actual use in real life, its value, no matter how high it is, will eventually collapse, and whoever invests in it will lose money.
The best strategy for investing in cryptocurrencies and when should it be implemented
1.Choose the right mix of storage
When managing your encryption, secure storage is at the top of the list. To keep your cryptocurrency safe, there are two ways to store it.
. Hot is what is referred to as an online digital wallet, and Cold is an offline wallet, usually stored on a hard drive.
Experts say it's best to store the majority of your cryptocurrency in a cold wallet to prevent hackers from accessing it. It's convenient to have some cryptocurrencies in a hot wallet, though, to move in and out of transactions quickly. A useful guideline is to keep about 80% of long-term funds inside a cold wallet,. A hot wallet can be used for short-term moves.
2 .Prioritize liquidity
Liquidity is important when deciding how and what to invest in the crypto market. Bitcoin is the most liquid cryptocurrency on the market. Liquidity refers to how easy it is to convert an asset into cash while maintaining its value.
The concept of liquidity is important because it can determine whether traders can enter or exit a trade at the desired value. The cryptocurrency market is moving fast, so traders need to be able to move in and out of positions quickly. This means that there must be both supply and demand for cryptocurrency, so that market participants can buy at the best price and secure a profit when they decide to sell.
"You don't want to buy an asset that probably has great potential but isn't trading and it's just stagnant, so you're sitting on it and you're at the mercy of the market,
says Tali Greenberg, head of business development at Allnodes, a crypto hosting provider. When measuring liquidity, it can be helpful to look at trading volume, or how much cryptocurrency has been bought and sold, as well as the overall investor interest in the asset.
3. Take advantage of twists
Crypto is known for its pools, but it is also famous for its declines. Its volatility can be welcome for traders who take advantage of these price fluctuations, but for long-term investors.
Crypto fluctuations can be difficult to manage. Since cryptocurrency is an emerging asset, there is still speculation and hype surrounding it that can often lead to increased volatility. While large price movements are usually seen as risk, daily fluctuations are normal for the crypto market and can be an opportunity to make profits.
Volatility is actually good for cryptocurrency trading, but before jumping, it's best to know how risk-tolerant you are as an investor. It is also important to pay close attention to what is happening in the market by following the news, blockchain updates, and historical charts related to your trades.
4. Invest what you can afford
Just like with traditional investing, you have to invest an amount in the crypto market that you can afford to lose. If you are not able to afford the full potential loss of your crypto investment.
it means that you cannot afford the risk of investing in that cryptocurrency. The determination of risk tolerance in the cryptocurrency market comes down to the amount you earn and your current risk profile.: “A person new to crypto should consider about 5% of their income in the crypto market.
Crypto enthusiasts should look for about 10% of their income allocated to cryptocurrencies, and perhaps a DeFi expert or trader should consider 20% or more for cryptocurrencies.”
5 Determine your gains first.
Experts say that participants in the cryptocurrency market should make gains frequently. When it comes time to take profits, cryptocurrency investors often face the dilemma that the price of a cryptocurrency can sink or rise, but it is best to have a reliable profit-taking strategy.
Set a clear reason and goals to trade cryptocurrencies in the first place, and identify your entry and exit points for trades.
6 .Diversification in investment
Diversification Putting all your eggs in one basket is not a sound strategy in the crypto world. The best strategy to reduce risk in crypto investing is to invest your crypto wallet in a variety of coins and crypto projects.
Greenberg says it's important to diversify across different digital assets associated with cryptocurrencies and blockchain, including the Internet of Things, non-fungible tokens, and DeFi projects. You can even diversify with different cryptocurrency exchanges, she says.
Because exchanges don't always have the same assets. Diversification allows cryptocurrency investors to allocate both relatively stable and speculative assets.
remember this
- In the cryptocurrency market, you are taught to buy low and sell high. Therefore, you need to monitor the market and price movements in it. For example, currencies going in an upward trend will eventually rise in price, which is when you can sell to make a profit.
- You should keep an eye on Bitcoin because it is the basis of cryptocurrencies. Thus, their prices often affect other currencies.
- You have to follow all political and economic news, because of its great impact on the market.
- If you don't calculate the potential profits you will make, you are likely to sell your crypto assets at a lower price. Which will result in your loss.
- Choose a reliable crypto exchange, as it will provide you with fast trades, high security, and easy withdrawal. Moreover, your personal data will not be compromised.