With the cryptocurrency market going strong, thousands of people all over the globe have shown an interest in the space. After all, who doesn’t want to make money? However, it is important to remember that the reason people are able to rake in such substantial returns is because the cryptocurrency market is very volatile. While this volatility can certainly provide you with a ton of profits, there is also the possibility of you making equally high losses. There is no doubt that people were able to make millions when Bitcoin and the rest of the market hit their peak in December 2017.
But, this was followed by a long crypto winter in which many had to suffer losses because they had bought high and then sold low. Even though the market is once again on the rise, there is still a lot of uncertainty surrounding it. There are many questions that can often plague people, such as whether it is ethically lawful to invest in crypto, whether it is a bubble, will it really surpass gold, and more. The magic of the crypto space might be dazzling, but this doesn’t mean that newbies should just jump in without armed with proper knowledge.
Having this knowledge can actually play a role in whether you will be able to make any returns in the crypto universe. If you don’t want to lose your hard-earned money in the blink of an eye, you should go in prepared. Listed below are the top things every newbie should know before entering the crypto market:
Do Extensive Research before Investing
The first step to achieving crypto consciousness is to have a complete grasp over its underlying technology i.e. blockchain. This doesn’t mean that you pay attention to the tech jargon and you don’t need to know how revolutionary this technology is either. When you are getting started, you should focus on reading articles, listen to vlogs that discuss cryptocurrencies, and check online forums for more information. This will help you understand why this nascent technology has attracted the attention of corporations and governments and how they are planning to integrate it into their system.
You will come to understand blockchain technology and once you do, it will also help you see its potential and possibilities. Furthermore, you also need to remember that trusting someone else with your funds is a big mistake and it actually defeats the whole concept of cryptocurrencies. The primary purpose of developing cryptocurrencies was to empower people with true ownership of their funds without having to rely on any third-party like banks. Scammers are known to take advantage of newbies in this unregulated market, so you have to be cautious.
Invest Just What You Can Afford to Lose
As mentioned above, the cryptocurrency market is a volatile one and it is fueled by market sentiments and hype, instead of just fundamental elements. This means that the crypto space is intensely risky. On the one hand, you have the potential of making massive amounts of money and on the other, you could end up losing everything you have invested in seconds. Therefore, it is never wise to invest anything you cannot afford to lose. You need to exercise caution and resist the temptation to take loans or mortgaging your house for investing in the crypto market.
Think for the Long-Term
One of the most important things that newbies need to remember when considering stepping into the crypto market is that it is not a get-rich-quick scheme. Sure, there are people who entered the market and were able to make some profits quickly, but that was just their luck. You shouldn’t jump into the space with the sole mentality of making short-term gains, especially if you don’t possess the necessary technical or trading skills. The fact is that a lot of people in the crypto market don’t have any idea of what they are investing in and are only looking for short-term profits.
This can only be a recipe for disaster and unless you want to lose it all, it is imperative that you make every single decision in the crypto market with patience and based on thorough due diligence. It is better to think about the long-term because the market is still in its infancy stage and it would take a while before the different innovations and technology in the crypto ecosystem will achieve mainstream adoption. Thus, short-term trading in this market can be highly volatile and could result in a disaster, especially if you don’t have any trading expertise, whatsoever.
Diversify your Investments
Most of the newbies diving into the crypto space are chasing Bitcoin, but it is better if you spread out your crypto investments across the market. There are more than 5,000 crypto coins and tokens that can currently be found in the space, which means you will not run out of options any time soon. Sure, Bitcoin (BTC) and Ethereum (ETH) are the two biggest and oldest cryptocurrencies and are the foundation of the entire market, but they are no longer the only players. Yes, you need to invest in both coins as they are relatively stable, but you should also look at other altcoins, especially those that have the potential of growing big. A well-built portfolio will be able to offer you better returns.
Manage your Profits and Losses
It is essential that every newbie first learns how to calculate crypto gains before they step into the space. How are you going to make any money if you are unable to calculate how much you make? You need to know the value of your coins at all times and you should know that the key to profitability is buying low and then selling high. When you are placing a buying order, you need to pay attention and count your gains when the market moves in a bullish direction.
When you are starting your journey in the complex world of cryptocurrencies, these tips can be incredibly helpful.