While digital currencies can turn a profit, inexperienced investors risk being scammed or losing money on new cryptocurrencies without any market history.
What to Know Before Investing in Crypto
longing to invest in Bitcoin, yet have no clue how cryptocurrencies function? Do not continue any further! Although digital currencies can be a thrilling investment chance, freshman investors may lose all their money if deceived by scammers or investing in a new cryptocurrency that has no previous history.
Before you put your money into cryptocurrency, there are a few things you should understand.
1. Does the Crypto Market Close? Timing Is Everything
Unlike some other investments, digital assets are very unstable — for example, the value of cryptocurrencies like Bitcoin and Ethereum can change rapidly and unexpectedly. To offset this risk, many crypto investors follow a strategy of “buying the dip,” meaning they buy more of an altcoin when its price temporarily falls.
The crypto market is open 24/7 throughout the year, in contrast to traditional equity markets. This allows investors to “buy the dip” or sell tokens as they please on centralized crypto exchanges (CEXes) or decentralized exchanges (DEXes).
2. You Can Buy BTC With Old-Fashioned Money
Cryptocurrency exchanges such as Coinbase and Binance are mostly used by new investors. By using your debit card, credit card or bank account on these sites, you can buy virtual currencies. If you believe the well-reported rumors, even financial institutions such as PayPal might get involved soon.
3. Watch Out for Scammers
You might come across crypto investment schemes on social media that guarantee high returns from unusual digital assets. Some people even go as far to say that the price of Bitcoin will surge soon. However, it’s important to remember that there are fraudulent individuals in the cryptocurrency world — and many have lost billions of dollars to Ponzi schemes and exit scams. To help avoid these types of traps, CoinMarketCap has published a guide on how to spot a crypto scam as well as tips for keeping your cryptos safe.
4. Build an Investment Strategy
Setting up a plan for your cryptocurrency assets is crucial to success as an investor. This might involve setting a limit order so that your Bitcoin will be sold automatically when prices reach a certain level. Some crypto exchanges also enable you to mirror the moves of more experienced traders in the market. Here’s a guide to swing trading cryptocurrencies from CoinMarketCap and DataDash.
5. Is It Too Good to Be True?
Something that scammers commonly do is make you feel like you’re missing out on something good, called FOMO. Be cautious before investing in cryptocurrency, and keep this in mind: if it seems too good to be real, it likely is. There are lots of news sites with reviews that lack bias which can assist you in making a choice.
6. ICOs? Do Your Own Research
Although the market for initial coin offerings (ICOs) has cooled off since 2017, some investment opportunities still exist. However, these can be extremely risky – so if you’re considering investing in an ICO, make sure you do your homework first. Read the white paper thoroughly and assess whether the company actually has a need for blockchain technology. You’d be surprised how many startups are trying to cash in on the crypto craze without any real understanding of what they’re doing.
7. Beware of FOMO
Caution is advised when investing in digital assets during a bull market, as prices could drop suddenly and without warning. When BTC’s price is high, it might be best to wait for a correction before buying any.
8. Pick a Good Crypto Exchange
To ease your crypto purchase, look for an exchange with high liquidity levels, a variety of assets, secure systems, and dependability . CoinMarketCap created a page that specifically ranks exchanges for those buying Bitcoin for the first time. The ranking is based on how easy it is to purchase crypto on the platform as well as provides more information about regulation and accepted methods of payment.
9. Protect Your Private Keys
Lastly, don’t forget to protect your cryptocurrency. One of the best ways to safeguard it is by using a hardware wallet; this will ensure your crypto remains safe and secure offline.