Introduction
Many of us have a brief idea about cryptocurrencies. Currencies such as bitcoin, dodge coin, Ethereum, etc., have created a buzz around the world lately. Cryptocurrencies which were once disregarded as an asset class, are now being promoted heavily by investors. Many companies such as Tesla have considered Bitcoin as a currency and have opened a payment method for their customers where they can buy a Tesla car by paying the company using Bitcoins. Due to the promotion of cryptocurrencies as a major asset class, more and more people have started investing in them. Moreover, due to heavy investment made in it, cryptocurrencies became the best performing asset class of 2021.
Rodrigue Nguesso, a personality with a decent amount of experience in cryptocurrency investments, has said that the crypto market is on the path to giving investors the highest return on investment in the coming years. According to him, money kept in banks is slowly losing its value due to inflation and global uncertainties such as the Russia-Ukraine war and COVID-19 pandemic. Moreover, according to him, “wealth is not about having plenty of money in your bank accounts; it is about creating investment in asset classes that beat the effects of inflation.”
I believe Rodrigue Nguesso is correct in his ideology because, with the rising inflation, the prices of goods and commodities have skyrocketed. Thus to buy the same good, you now need to pay more than what you paid before. Hence the value of your money decreases with time. Thus, it is rational to invest in asset classes that beat inflation so that you can easily manage your expenses.
This article will give you smart investment strategies that you must apply while investing in cryptocurrencies. Because with great returns, the risk involved is also high. Thus it is advisable to invest carefully and with proper research.
Get some knowledge about the basics of Cryptocurrencies.
Crypto investment can be highly intimidating because the returns here are unlimited. Thus newbies are highly attracted to making their investment in the crypto market. But many newbies lack basic knowledge about the working of the crypto market. Similar to the stock market, the profit and loss generated by a particular stock depending on a company’s earnings and liabilities. In the crypto market, the price of a particular coin depends on the number of coins that are being mined. Thus the price of the cryptocurrency highly depends on the supply and demand of a particular currency.
To get more knowledge associated with mining coins, it is necessary to get information about blockchain technology. Moreover, you must have considerable knowledge about economic concepts such as exchanges, supply and demand, inflation, wallets, etc. If you don’t have knowledge about these important terms, then don’t straightaway jump into investing because you might lose a considerable amount of capital.
Gain knowledge about the technology behind cryptocurrencies
One of the main reasons behind the loss of capital in the crypto market is the lack of information about the working of the crypto market. Many people just abruptly jump into crypto investing by looking at the number of returns their friends have generated. In this process, these people lose a considerable amount of their hard-earned capital.
Before entering the crypto market, it is highly essential that you understand the technology that is driving the crypto market. You shouldn’t rely on another person’s knowledge about crypto investment until you are able to judge the risk and returns associated with it.
To learn about the crypto market, you need to find educational resources such as websites that provide a platform to invest in cryptocurrencies, YouTube channels that enlighten people about blockchain technologies, and articles specifically targeted toward educating people about the technology associated with cryptocurrencies.
Give importance to liquidity.
Once you have gained thorough knowledge about the working of the cryptocurrency market, it is now to make your first investment. But when you start trading in the cryptocurrency market, it is necessary that you focus on liquidity as it is an important concept in crypto trading because the cryptocurrency market moves quickly. Thus, you need to take and leave your position quickly in a particular cryptocurrency.
Moving swiftly in the crypto market will help you buy currencies at the correct price. Moreover, before investing, you must create a target about how much return you want from a particular currency. For example: – you buy a bitcoin at a certain price, then you must decide the percentage return you want from the bitcoin. When I invest in the crypto market, I have a target of 10%. Thus once a currency gives me a 10% return on my investment, I book my profit and bring it to my utilisation. Setting a target in the crypto or stock market prevents you from bearing losses.
Focus on volatility
Cryptocurrency investment is a fairly new asset class. Hence volatility is quite natural in the market because of the speculations made by people. Many people see large price movements as a risk. But this daily volatility must be seen as an opportunity to invest because, in a volatile market, you can make profits if you can stay in the market. Thus, when focusing on buying strong and available currencies at a low price.
Invest in currencies that you can afford.
Trading and investment in the stock or crypto market can be highly engrossing and convert into addiction. Many people fall into the trap of taking loans for investing in the stock market or crypto market, which is extremely wrong. The investment must be made with the amount of money you saved. Thus, if you see a cryptocurrency which is performing well but is out of your budget, you must avoid buying it. Because avoiding buying that particular cryptocurrency will prevent you from getting into the habit of taking loans for investment. Moreover, it will also prevent you from exhausting all of your resources.
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