Cryptocurrencies are tending. The first Cryptocurrency was launched in 2009 called Bitcoin, and it is still one of the best-known Cryptocurrency since that time many cryptocurrencies have come into the market. Bitcoin and Ethereum are the largest Cryptocurrencies out of the large pool.
Table of Contents
- What is Cryptocurrency?
- Why Invest in Cryptocurrency?
- Limit Your Exposure
- Various points can affect cryptocurrencies:
- Advantages Of Trading Cryptocurrencies
- Before Investing in Cryptocurrencies
- Is your ICO or Cryptocurrency Trustworthy?
- Know Major Crypto Investors and Players
- Right Amount to be invested
- Step By Step Buying and Selling
- Stocks Market vs Cryptocurrency
What is Cryptocurrency?
Cryptocurrencies are virtual; they are physically not present. This virtual currency works on the cutting edge technology of Blockchains. The primary concept behind it is Cryptography. Bitcoin Inventor Satoshi Nakamoto released his paper that described the details of “How cryptocurrency works”. These cryptocurrencies can be used to perform financial transactions in a system which is entirely decentralised and operates in a trustless manner.
Why Invest in Cryptocurrency?
There are various reasons people invest in cryptocurrency. Some want to make a good amount of money, and some want to get their money invested in assets. One should know why they are investing money in Cryptocurrency and what is their goal. There must be good knowledge about the cryptocurrencies and latest trends like which are more profitable and are followed by most of the people. In the present, the market of Cryptocurrencies are almost crashed, and the prices of bitcoin have gone down.
Many People have lost their money invested in Bitcoin thinking that it will rise, but the scenario is upside down. The price didn’t grow but fell. Various key points are important to know, and one should keep in mind before investing in Cryptocurrencies, and some of them are discussed in the following paragraphs.
Investing in Cryptocurrency is the same as investing in commodities. Commodities can be assets or Base metals. Cryptocurrencies are similar, and they are used in financial and insurance applications and investors can invest in cryptocurrencies. Cryptocurrency Trading can be compared with forex trading, It is the same but instead of selling and buying fiat currencies such as euros or US dollars, traders can trade on cryptocurrencies.
Limit Your Exposure
There are two concepts of limiting your exposure:
- Never invest if you are not willing to lose. You must be comfortable and make trade stress free
- Consider setting profits and losses orders
These limits are offered by many professional trading platforms and can automatically liquidate and “cash out” your position at predefined prices. Many market trading books and guides have specific chart rating techniques and patterns used by professionals to predict the market. The market does follow trends, but the outcome is not guaranteed. Cryptocurrencies are volatile. They are not as stable as currencies are.
Various points can affect cryptocurrencies:
If a government makes some regulation that affects the cryptocurrencies, the price will decrease. For example, when China banned ICOs, the Ethereum fell by 41% in 15 days.
b) Influence from Media
Influence from Media significantly affects a cryptocurrency price, whenever some influential says something about cryptocurrencies some stores start accepting as a form of payment.
c) Changes to the technology
When a cryptocurrency core technology is affected, the cryptocurrencies price is also affected.
Advantages Of Trading Cryptocurrencies
Trading Cryptocurrencies can have advantages. Few of them are given below.
a) Cheap and Fast Exchanges
The transaction fees of the cryptocurrencies are less expensive than a credit card, bank transfer fees, and market trading fees are cheaper than forex trading fees.
b) Extreme Volatility
Many Traders make profits when the price of the cryptocurrency rises, and it experiences large price movements.
Before Investing in Cryptocurrencies
Before investing in Cryptocurrencies, One should decide the cryptocurrency to invest in and the amount. The amount is significant to know. For long term investments, one should do fundamental analysis. Generally, tokens that solve the problem are unlikely to fail then the others.
One should gain information about the market, market cap, and economics of their cryptocurrency. One should plan strategically before investing in Cryptocurrencies. The charts, graphs, and trends should be observed.
Is your ICO or Cryptocurrency Trustworthy?
The next thing that comes in is to find whether the ICO or Cryptocurrency is trustworthy to invest in. It is essential to find whether the cryptocurrency is worth for your money. According to Forbes.com, The only three people can find this, and those are a philanthropist, Billionaire, and Entrepreneur. The best indicators for long investors are ideas that have tangible solutions, positive improvements and the ability to work on complex ideas.
Some of the platforms that allow you to do cryptocurrency trading are Bitmax And Etoro.
Features of Bitmax
- You can trade Cryptocurrencies with large liquidity for bitcoin and up to 100%leverage on margin trading
- Fees: it varies
- It is supported worldwide with exceptions
- Deposit is done through Bitcoin
Features of Etoro
- It copies the trades of leading cryptocurrency investors on this social investment platform
- Fees: Spreads
- Supported in various countries
- Payment methods are through Credit cards, Paypal, Bank Transfer
Know Major Crypto Investors and Players
Crypto Market is one the volatile Market, One wrong step can make you lose all your money. It does not harm to find or know about the major Investors or the players investing from long back and have earned money or even become a billionaire. Many Crypto Investors and Advisors Say that you should invest money if you are ready to lose. You must be willing to lose money since you cannot be sure whether your money will rise or fall.
There may be people of both categories who became millionaire and people who lost all their money.
Market Cap given by coinmarketgap.com at the time of writing
- Cryptocurrencies: 2067
- Markets: 16033
- Market Cap: $121,228,994,077
- 24h Vol: $21,341,676,145
- BTC Dominance: 52.6%
Right Amount to be invested
Investing an amount is very easy, but it is tough to invest money properly. Suppose you invest money and found that all the money you spent have gone, you won’t be able to pay your bills, So it is critical to determine the amount in the right way and properly
Are You Going to invest for a long or short term? If you are investing for a longer period instead of investing money in one time, then it won’t be a great Idea. You should incrementally invest in cryptocurrency and have average value. The Cryptocurrency market is volatile and it is tough to predict the future prices. It is the market which never stops working. Taxes are reduced when you pay for long term
Step By Step Buying and Selling
You should never sell the cryptocurrency at one go, you should try to build a ladder by selling at an incremental way, but when prices go down sell when prices go up. Some people see the trend and find that it is at peak, so they buy at the high price, and when it falls the value goes down, so it is always considered to buy at low price
Stocks Market vs Cryptocurrency
If you find some cryptocurrency company is not performing well, you can sell the stocks and buy off some other company, but this is not in the case of the cryptocurrency Market. You can never predict whether you will gain and loose, for example in the case of bitcoin people invested a lot when it was at its peak but now the prices have really gone down, and people are regretting. Stocks move slowly as compared to Cryptocurrency. Investing in Cryptocurrency is very trickier than to invest in the Stock Markets.
Tips before putting your money:
- Investors should create their portfolio and should work on it regularly, Invest in only things that you understand and have knowledge.
- Stay Away from Leverage. Leverage is the money that brokers give as a loan. It is highly advisable to stay away from leverage until the time you have learned everything and making trades with your own money. Leverages can help you to make huge profits but at the same time, you may lose. Though it amplifies winning and your losses.
Trading Cryptocurrencies work almost the same as trading fiat currencies, and it will benefit you greatly to learn the theory behind the currencies. Though profits are not always guaranteed at the time of trading, you can take steps to avoid yourselves from heavy losses and improve the understanding of the market’s move.
This writes up focuses on the Introduction to Cryptocurrencies and Various key Points and Strategies to follow before investing in the cryptocurrencies. This write up will help people to get an idea about the investment in the cryptocurrencies, Some of the various cryptocurrencies are IOTA, LiteCoin.