Cryptocurrency is changing the financial world. Thanks to the arrival of blockchain technology, it’s now possible for digital currencies like Bitcoin to be secure from hackers. That makes bitcoin and other cryptocurrencies truly viable for their intended purpose (at least, as soon as their values stop fluctuating so much).
Because of this, there are many who want to snap these cryptocurrencies up before they become more valuable. Others expect Bitcoin and other cryptocurrencies to decline in value, and invest accordingly. The result is an exciting market, albeit a volatile one — the perfect place for a savvy investor to make trades with lots of upside.
But volatile markets are treacherous places. If you’re going to invest in cryptocurrency, you need to get started off right. Here’s what beginning cryptocurrency investors need to know.
You need a brokerage and news sources
You can stash cryptocurrency that you buy in a cryptocurrency wallet, and you’ll need one if you’re going to invest in cryptocurrency directly. But you probably also want to invest in (or bet against) cryptocurrency funds, companies that are involved and crypto and blockchain, and other related investment vehicles. You’ll need to work with a brokerage that lets you buy and sell crypto-related investments.
You also need to know your stuff before you get started. You need a great trading strategy, of course — more on that in a moment — but you also need to know basic stuff about which cryptocurrencies you’re interested in, and you’ll also need news sources to keep you posted on the latest developments in the market. Be up-to-date with your cryptocurrency news if you’re invested.
You need a strategy
It’s easy to get emotional when you’re investing in a volatile market. Your cryptocurrency investments could rocket upwards in value one day and then plummet the next, or vice versa. You’re going to get excited, overjoyed, depressed, and extremely stressed (sometimes, you’ll be all of those things in the same day). And your emotional volatility is going to tempt you to do silly things.
Don’t make your decisions based on your emotions. Instead, make them based on cold, hard facts. That’s easier said than done, but it’s a whole lot easier when you can lean on a consistent strategy.
So read up, and define your investment strategy. Set down rules for your cryptocurrency or Bitcoin investment strategy, and then stick to those rules — no matter what your emotions are saying.
You need other investments, too
Cryptocurrency is a great place to invest money that you can afford to lose, but would like to see grow dramatically. There’s a chance that you could make a fortune in this market!
There’s also a chance that you could take big losses. That’s why Bitcoin and other cryptocurrencies are not great places for your retirement fund or your emergency fund. Take it from the folks who have already seen their dreams shattered on the cryptocurrency market: you want to be playing with money you could live without.
This doesn’t mean that you can’t invest serious cash in cryptocurrency and get aggressive. It simply means that even the best day traders don’t put all of their eggs in one basket. Would a sports star bet his or her entire salary and life’s savings on a single days performance? Not even the best of all time would be keen on that bet.
It’s the same with day traders, so be smart. Grow your income using only a portion of what you’ve earned so far, and stash a nest egg and an emergency fund in some less exciting places.