Investing is a risky venture, but making your money work for you becomes extremely rewarding over time. When it comes to the crypto sphere, it presents large swings in both directions – providing both incredible profits and devastating losses as possible outcomes of investing. Compared to traditional stocks, cryptocurrencies are extremely volatile and require investors to be prepared for every possible scenario. Panic selling and buying FOMO, i.e. in fear of missing out on a good opportunity, do not work in the long run. Given how volatile market movements are, it can be helpful to look at things from the bigger picture.
How to Invest in Cryptocurrencies: A Quick Guide
Investing in cryptocurrencies looks like a complicated process, but in fact, its stages are quite simple. There are two tasks. First, you should research the market to determine what is the best cryptocurrency to invest in. This is the hardest part because it requires a lot of commitment. You will analyze the price history, study the white paper so that you can assess a niche in the market. In addition, you will consider factors such as government regulation and celebrity endorsement. Some investors are looking for cryptocurrencies with a long history of return in value, while others prefer new cryptocurrencies entering the market because they can increase in value quite quickly. Deciding which crypto to invest in is both an art and a science. There’s a reason why even the most seasoned professionals lose money on some investments.
Once you’ve decided to invest in cryptocurrencies and determined which coins and tokens deserve to be your crypto investment, it’s time to build a portfolio. Luckily, you’re at Kriptomat, where buying and selling crypto is as easy as buying clothes in a store or booking a trip online.
Does Bitcoin appreciate long-term?
Bitcoin has a set supply cap of 21 million BTC, which are rewarded to “miners” for securing the network. Roughly every four years, the supply is halved, making BTC increasingly scarce over time. However, it’s worth remembering that BTC isn’t the only cryptocurrency that has this kind of periodic supply reduction. Various altcoins are likewise following a depreciating supply schedule. Since only a limited number of BTC will ever exist, even already lost coins contribute to the rarity of this asset.
Cryptocurrencies offer an impressive value proposition because you can invest small amounts and make large profits, but that doesn’t mean there is no risk at all. In fact, most cryptocurrency investors minimize their risk by diversifying their portfolio across multiple assets.
Is it worth investing in altcoins?
Grayscale Investments, one of the world’s most well-known institutional investors in the blockchain arena, boasts a portfolio that includes multiple cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Stellar, and XRP, among others. Its digital asset portfolio is mainly occupied by Bitcoin, which contains more than $6 billion out of a total asset under management of $7.3 billion. However, having a mix of BTC and other altcoins is a good option to start your investing journey. There are far more people who invest large amounts in the world’s first cryptocurrency than altcoins like Litecoin or XRP. When the price of an altcoin plummets, gains from Bitcoin or other altcoins can save the value of your portfolio. In fact, many altcoin investors move their funds into Bitcoin as soon as it starts to rise, thereby further increasing the value of Bitcoin while the value of altcoins falls.
How risky is it to invest in cryptocurrencies?
The truth is that the cryptocurrency market is unpredictable and just as often makes people rich as it does go bankrupt. There is no objectively risk-free way to invest in anything, and only intuition and experience will help you emerge victorious from investing. How much you should invest depends on how much you can afford to lose, and this should give you some idea of the level of risk involved in entering the cryptocurrency market. Unlike the traditional stock market, there are no centralized entities that can be held accountable for your investments. This makes the blockchain industry excellent for scams, so it’s crucial to only invest in projects that you think are truly valuable. Just because an asset rises in value doesn’t necessarily mean it’s worth anything.
From fraudulent ICOs all the way to blatant pump-and-dump schemes, there’s a lot to learn to be able to better understand the crypto market. After all, you can’t make money on a project if you can’t determine its value.