Investors in Cryptocurrency is not for the weak, they are highly volatile and belong in the Risk part of your portfolio of Investments.
Most Crytpocurrencies don’t have an intrinsic value, however some are pegged to Fiat Currencies or Backed by Gold. However, do your research to ensure it really is backed by an value and not just some flashy claim.
Crypto by it’s very nature is Electronic otherwise known as Virtual so has no physical form.
Right now, Bitcoin, Ethereum, Dash and Litecoin are extremely valuable, those who got in early or from bottom of the last crash are riding on some pretty amazing profits. Some are even starting to view Bitcoin as a store of value, much like Gold is use, but also as a Hedge against inflation.
So, if you want to become an Investor in the future, then follow the four basic Strategies listed below.
Prepare For Volatility
Be prepared for Volatility and don’t be led by Emotion. One-minute Bitcoin is travelling through $53,000 and beyond, then hours later it’s dipping back down towards $50,000, accept that Cryptocurrency is volatile, but with volatility comes the ability to profit.
Now don’t let your emotions rule your head and cause you to panic and sell at a loss, your emotions can cause you a lot of trouble when investing, so ensure you have a plan and stick to it.
If you can’t ignore your emotions, then turn off your device and go lie down, read a book, watch TV or some other way to distract yourself from your emotions. Tomorrows another day, if things are generally in an upwards trend they will do so over time until a reversal happens. By following the trend, you can save yourself from losses cause by emotion.
Accept that there is volatility, if you can’t then Cryptocurrency investing is probably not for you.
Proceed With Caution
As with any investment, do you’re research to get an understanding of what the technology is, if there is any tangible backing, what’s driving the prices. Not being properly prepared could cause you to lose your hard-earned money, invest in yourself first, you want to make a profit at some point. Don’t be caught up in the hype, invest some time into studying before you get your feet wet.
Exchanges like Stormgain allow you to practices with a demo account mode, ideally paper trade for a while.
Diversify Your Investing Portfolio
To Diversify is not to put all your eggs in one Basket. Now diversification in Asset Management isn’t holding more than one Cryptocurrency, it’s holding different Asset Classes, such as Stocks, Bonds, Property.
However, it isn’t such a bad idea to hold more than one Crypto Asset, as they don’t all move in the same direction together and gives to a better chance to ride the waves available due to the high volatility. By using Asset Allocation, you won’t be affected by choosing one bad investment and losing it all.
Investors Store Your Virtual Coins In Cold Wallets
Unless your day trading or only have a small amount of Crypto, you really need to HODL your coins in something more secure than an exchange. As much security your account might have, it’s never going to be as secure as a cold wallet. As they say you don’t own the keys you don’t own the coin.
Investing is a long-term undertaking and as such should be treated seriously, so look into your wallet options, more of which you can read up on in the following articles.