The cryptocurrency landscape remains one of the most interesting instruments to get into right now, despite the market uncertainties and rapid changes happening in recent months. Some of the more established cryptocurrencies like Bitcoin and Ethereum continue to show big swings, but there are other coins – and more opportunities – that must not be overlooked.
Before entering the cryptocurrency market, however, it is necessary that you learn the basics and understand how the market works. Unfortunately, not everything you need to know can be found on the internet. Here are the five things nobody told you about cryptocurrency investing.
A Word About Tangible Profits with an Intangible Investment
Of all the ways there are to invest, cryptocurrency may be one of the most difficult to understand. The reason why so few investors have even begun looking at how to invest in cryptocurrency or what kind of profit a good investor seeks to gain is that there is nothing tangible to trade. Cryptocurrency is literally nothing more than a digital currency, sometimes referred to as a virtual currency, and it exists only in cyberspace. But, don’t forget that it has value and really great value at that!
You can’t go to the store with a crypto pound now in the planning stages and you can’t frame the first crypto pound you made on the wall of your business. They don’t exist in the real world yet they have a value equal to, or greater than, the currency your country uses. For example, when Bitcoin was first conceived, one Bitcoin was equal to approximately one US dollar.
Today, one Bitcoin is valued at approximately $2,000 (USD) so you can see those early investors made a killing on the cryptocurrency market. That is not to say that today’s investors can’t realise the same kinds of profit, but the point is that you won’t be able to pull out your wallet to impress your friends – unless it’s an eWallet that is!
Now, onto those five things nobody told you about cryptocurrency investing.
1. It’s Not for Day Traders
Don’t get me wrong, there are a lot of opportunities to make money on a daily basis when you are investing in cryptocurrency. As mentioned before, there are big swings that you can capitalize as you venture into different coins and investment instruments.
That said, you mustn’t be too focused on chasing those daily swings and big profits. Instead, your cryptocurrency investment strategy must focus more on the horizon; the big margin you can gain at the end of a long month.
Cryptocurrency is better used as a mid- to long-term investment instrument. By focusing on the horizon, you can take more factors into consideration and use the insights you gather as a way to ensure successful trades every time.
2. Invest in Companies
Initial Coin Offerings, or ICOs, are among the things that make the cryptocurrency market so exciting. There are always new coins being introduced to the market, which means there are more opportunities to seize when you have the right information.
The one thing you also need to understand about ICOs is that they are very similar to IPOs in terms of how you should analyse the opportunities. You are not just investing in the market value of the coins, but rather in the capabilities and value of the companies behind them.
Think of buying tokens or new coins as investing in startups. There is every chance that the startup you invest in will go on to be the next big thing, but there are also risks involved in the process. Be sure to take those risks into account too.
3. You Are Not Limited to a Platform
Another great thing about investing in cryptocurrencies is the fact that you can use multiple platforms to trade and to access the coins available on the market. You can buy BTC from one exchange and trade it with ETH or LTC on another platform.
This cross-platform capability should be used to your advantage. By taking the time to review things like the market cap on different platforms, you can fully maximize the returns you make, all while keeping the trading experience smooth and hassle-free.
Cross-platform support also means you can use additional tools like NAGA Trader to your advantage. NAGA Trader, formerly known as Swipestox, lets you use Naga Wallet and even NAGA’s own cryptocurrency – the Naga Coin – because they are parts of the Naga Universe. InvestinGoal.com has a complete review of the platform that you would want to check out.
4. Always Remember the Risks
I know a lot of cryptocurrency traders entered the market because of the recent crypto boom; the market has been exciting since and it is only natural that you want a piece of the action too. However, cryptocurrency is similar to other investment opportunities. The classic risk-return trade-off principle applies here too.
When you aim for big gains and large jumps on the market, you are also taking in big risks in return. The amount of return you aim for is proportionate to the amount of risk you will have to absorb in the process. The last thing you want is to leave your investment portfolio too exposed because you fail to recognize the risks properly.
5. It Takes Time and Effort
Crypto isn’t a get-rich-quick scheme; it is actually far from it. Whether you are investing in ICOs or trading existing coins for capital gains, there is always some hard work to be done. You need to make sure you know exactly what you are getting into in order to maintain a healthy ROI.
In the case of ICOs, there is even more homework to be done. For starters, you need to be certain about the people – and company – behind the ICO. Check the founders, learn more about their expertise, and see how the startup will fare on the market.
The more you learn about cryptocurrency, the more insights you have, and the better investment decisions you can make too. It is no different than the financial markets or other investment instruments you can try your hand at.
Summary at a Glance
With these five things in mind, you can now enter the cryptocurrency markets with more confidence. You know the obstacles you will face beforehand and you can prepare better for life as a cryptocurrency investor. All you need to do now is find the best opportunities to seize and start capitalising on the booming market.