Investing in the world of cryptocurrency is both extremely lucrative and yet insanely risky at the same time. From near-instantaneous crypto millionaires minted overnight to staggering losses, you’d be forgiven for thinking that crypto investment is for the crazy or brave.
The fact is however neither holds true. Like any other investment, the crypto market is all about risk management and research. When properly leveraged, the extreme volatility of the crypto market can be used to your advantage.
Investing in cryptocurrencies requires skill and patience. In this guide, we’ll share with you, everything we’ve learned from some of the top crypto investors in the world.
1. Understand your investment
Knowledge is power. By understanding your investment and the world in which it operates in, you’ll be better equipped to accurately predict price movements and shifting market trends.
When you first start investing in cryptocurrencies, you should always take the time to understand your investment. For example, while Bitcoin may be the oldest and most popular cryptocurrency in the market, its behavior as an asset has changed over the years.
In the early days, Bitcoin was regarded as more of an alternative investment that was poorly understood. Over time as Bitcoin gained momentum, shifting market sentiments and even geopolitical tensions were able to affect BTC price valuations.
Hence when investing in cryptos, take the time to do your research and stay abreast of current affairs. This gives you the edge over other investors and may even allow you to stay ahead of the crowd.
Current Chicago Bulls NBA player, and potentially a future player to figure in this website list of best-undrafted players in NBA, Garrett Temple is a blockchain investor.
Temple, together with a few other NBA players have been investing in a basketball project related to cryptocurrencies called HotShot. However, just like these athletes did their research, so should you because not all investments are worth it.
2. Work with trusted sources
By virtue of being an unregulated and decentralized asset, cryptocurrencies have always been able to remain relatively isolated from external factors. Whilst being able to protect cryptos from inflation, this also has the misfortune of leaving your crypto investments vulnerable to theft and hack attacks.
As we saw by the collapse of Mt.Gox – Japan-based crypto exchange, participants in the cryptocurrency industry are not required to comply with regulations of any kind. Thus when something such as a virtual heist occurs, investors are often left with little-to-no legal recourse.
Furthermore, the lack of regulation means that moral hazard will always be a very real threat to the crypto industry.
Thus, when entering into the crypto industry, you should always take steps to ensure that you are working with only the most trusted of individuals and service providers. From crypto exchanges to eWallet providers, always remain on the alert and suspicious of any untrustworthy individuals.
3. Keep yourself updated
Despite being decentralized and unregulated, cryptocurrencies can still be very much affected by real-world events. A good example of this would be the 2019 U.S – China Trade War which given today’s events may seem like it occurred a million years ago.
At the height of the trade war, Bitcoin prices rose significantly on the back of fears that the Yuan would take a severe hit as a result of U.S sanctions against China. Investors looking to hedge the value of their assets turned to cryptocurrencies such as Bitcoin in lieu of the USD or Yuan.
As a result, we saw an increase in cryptocurrency prices as investors began scrambling for cover. This shows us the importance of keeping up to date on global events that may affect your investment strategies.
4. Never allow emotions to take charge
Investing is a purely objective action and should never be colored by personal feelings or emotions. Whether you’re selecting the right assets to invest in or making a choice, you should always stay objective and logical at all times.
This will prevent you from falling prey to any foolish decisions that can and will cost you dearly. Whilst simple, you’d be surprised by how many investors have fallen prey to less than objective decision making.
The crypto market is a lucrative one with plenty of opportunities for massive profit. However, a word of caution: the crypto market is no place for amateurs and neither is it a place for gamblers.