There is not a week today without talking about cryptocurrency. These almost providential financial assets have made a few rich people in the blink of an eye. But digital currencies are more and more numerous on the market, and not all of them carry great promise. You will only benefit from this financial windfall if you know what you are doing investing in cryptocurrency.
Know your cryptocurrency
Indeed, in the same way that all commodities cannot be traded profitably, not all crypto-currencies are good investments.
The full return on your capital lies in the investment choices you make. It is therefore imperative to separate the wheat from the chaff. You must train yourself.
Do not hesitate to do some research on the cryptocurrency you are interested in. It is thus necessary to compare the evolution and the reactions of each cryptocurrency with the increases and decreases in the price of Bitcoin.
Keep your cool and avoid running on instinct
Even if you feel good, the market can play you fatal tricks. As you may already know, the volatility of the cryptocurrency market is its biggest asset. But it is also the biggest risk to which your capital is subject. Prices can go up quickly, and go down even faster. So do not bet everything on a single cryptocurrency. This is the best way to prevent this risk.
Young shoots have enormous potential for rapid growth. But these are also the ones with the greatest risk of collapse. So diversify your portfolio by investing in stronger cryptocurrencies like Bitcoin or Ethereum.
Do not fall in love
Also, avoid developing an emotional connection with the cryptocurrency you own. Basically, if you bought them, it is in order to resell them more expensive. Do not hesitate to do so as soon as the opportunity arises.
Buy when the market is at its worst
When we hit the bottom, we can only go back up. This rule is (to a certain extent) as true for the cryptocurrency market.
In fact, the FOMO (fear of missing out, the fear of missing out) pushes many investors to rush to a cryptocurrency as soon as it engages in a significant upward movement.
But it could be that the cryptocurrency that has just jumped 40% or more and towards which you are heading stops growing at this level. Worse, her course could immediately plunge if she is subject to market manipulation. Small cryptocurrencies are the most exposed to this factor.
It would be best to adopt the opposite behavior. Buy low, when it’s flat calm, when the price of cryptocurrency stabilizes after a significant fall. Thus, you will have much more chances to see your investment appreciate.
Panic is a very bad counselor
And it is the beginners who are most exposed to this hazard. The cryptocurrency market is inherently volatile. Do not panic when the market is pitching. There is no cryptocurrency whose evolution curve is straight. Even when it is gaining value, the curve of its growth evolves with its ups and downs. It is therefore useless to rush to sell all its cryptocurrency as soon as the market undergoes a few shakes.
The value of cryptocurrency can play tricks
It’s not just the unit price of a cryptocurrency that counts. Its market cap (market capitalization) , the total value of its money supply, is something that will give you important information on its upside potential.
Eyes bigger than the belly, it can hurt
History will remember that in the cryptocurrency market, any asset that is experiencing a flamboyant rise eventually ends up undergoing a similarly violent correction. With experience, you will learn to spot the peak of the climb to sell your assets.
Ban the overconfidence
Finally, do not make the mistake of thinking that you are a genius because you have done two or three good things. Overconfidence will undoubtedly push you to take thoughtless risks.