“Is it time to invest in crypto?” is probably a question on every enthusiast’s lips, but there is much uncertainty regarding this market, making people ask even more questions.
The common misconception that crypto is a shortcut to wealth should be forgotten, as when it comes to digital assets, there is no shortcut but smart tactics and strategies. Just like any other investment, cryptocurrency requires thorough research and clear boundaries. No matter the allure and intrigue of blockchain technology, electronic currencies are not something to purchase today and sell tomorrow, regardless of how much knowledge in the field you have. With more than 13,000 digital tokens abounding in the market, you need to consider an investing strategy; otherwise, you will likely get lost in this vast ocean of virtual coins.
Although everyone’s needs and interests differ, there are some crypto secrets that experts say will help you get favorable returns:
Steer clear if you are risk averse
As you may already know, the crypto price fluctuates, making investing quite risky. How do you know that it will be a successful investment? You do not, but you can adequately document the market, read news about the cryptos you are interested in, and forecast whether it is worth it or not. However, this job is not for you if you are risk averse. We know this is a recommendation rather than an actual tactic, but we have thought it is imperative to clarify it from the beginning. Thus, ensure you accept crypto volatility or at least live with it. If you are going to be continuously anxious about the investment or not sleep at night because of that, consider investing in something else.
Also, acknowledge fellow investors and the competition that might arise between you and assess risks like government regulations, demand issues, theft, loss of wallet credentials, or theft.
Know what you are interested in
Although there is not that much data available about digital tokens to help you make an informed decision, it is still enough to give you significant insight into what will happen with particular cryptos. Therefore, consider conducting research before embarking on this unsure journey. Document each cryptocurrency’s utility (what individuals use it for) and ask yourself questions like: Do I see myself using this crypto in the following months/years? Is it going to make significant changes in Fintech? If the answer is not positive, we advise you to take another route.
If the answer is yes, consider starting with basic research: price check. Remember to always take the information from pertinent sources like the Binance platform, where prices and other valuable data concerning cryptocurrencies are constantly updated. If you are interested in Ethereum, for example, research the Ethereum price several days (or weeks) in a row to determine the best moment to buy the dip.
Choose a suitable mix of storage
Let us say that you have made your purchase. Now what? You need to store it in a safe place. Cryptocurrencies are held in electronic wallets, either hot or cold. These concepts might sound confusing, but their explanation is pretty simple. Hot wallets comprise everything from web-based and desktop wallets to mobile wallets.
In contrast, cold wallets refer to hardware storage, so the latter is offline. Experts say storing your invested cryptos in a cold wallet would be best, as it is less prone to cyberattacks. Stealing from such wallets would be challenging to hackers, as they require an associated PIN or credential to access the funds, as well as physical possession of a cold wallet. Such wallets are designed with security in mind, that is why it is the first choice among advisors, but even so, hot wallets are easier to use, as everything happens online.
To reconcile all parties, the CEO and founder of Parallel Finance, Yubo Ruan, recommends keeping 80 percent of the long-term investments in a cold wallet and the rest 20 percent used for short-term moves in a hot wallet.
Opt for the long-term investment
It is understandable to fear for your invested money and choose to sell the rip faster than expected, but it is not always the best move. In fact, a significant number of individuals who have millions or billions in cryptocurrency are those who kept it for years, according to CALV! N. He also believes this is the most successful tactic, especially if you are here to get great returns. For example, he made a bitcoin investment worth $280,000, which has turned into $2,000,000. His advice is to regard digital currencies as investing in 401(k) for retirement: slow and steady wins the race.
You can also adopt the dollar-cost averaging strategy, a traditional tactic that is also one of the safest. This means you start investing as little as possible and then make periodic purchases of a target cryptocurrency. This way, you not only reduce the impact of volatility but also avoid the stress of checking the market every day.
Make liquidity a priority
Liquidity, as well as volatility, is one of the most important factors to have in mind when entering the game of crypto investment. It refers to the practice of converting a given asset to cash. Of course, each investor aims to maintain its value during conversion, particularly since the market is moving fast. The concept of liquidity is not to be ignored, as it can decide whether a trader can enter or exit a trade at the looked-for price.
For an asset to secure profit, it has to be in great demand, that is, be traded and not just stagnating. You do not want to be at the crypto’s market mercy, so ensure you carefully analyze the digital coins you want to purchase and look for favorable liquidity.
Another useful piece of advice comes from the chief investment officer at Delphi Advisers, Ben Lies: understanding what you are truly buying. As he explains, many individuals purchase cryptos without a real objective in mind but merely because of the excitement and hype around that asset. With thousands of electronic currencies in existence, it is crucial to understand why and not only what you are interested in.