Unless you’ve had your head in the proverbial financial sand, you’ve most likely heard of Bitcoin, Ether, and many of the other cryptocurrencies that are on the market today. While all of them are unique in the fact that they function almost completely online, they’re also unique in their individual properties and the industry that they’re specific to.
The recent explosion of cryptocurrencies on the market has left many would-be investors scratching their heads as to what to do, and even more with empty pockets. If you’re planning on investing in the cryptocurrency world, there are a few things you should know.
1. Prepare for the Best…and the Worst
Cryptocurrencies are just like any other commodity: they’ll go through good times and they’ll go through rough times, but your success as a trader will depend on how well you weather the storms that lie ahead.
This volatility can lead to several options, however. While you don’t want to invest in a crypto simply because it has a really low price, it’s not a bad idea to look into the various options that are available for a penny a share (or less). Even better, consult someone who is experienced in the crypto world, like Mark Dukas.
2. Do Your Homework
At the core of every cryptocurrency is a whitepaper, which outlines the basic elements of each specific coin. It can be tough reading, but if you have any technical skills whatsoever, you should be able to leaf through it. People like Mark Dukas Charlotte can help you navigate some of the tougher aspects of it.
Also, read industry analysts as they discuss the various aspects of each coin. While you might not agree with their conclusions, many are experienced voices that at least can give you a basis with which to operate from. Finally be wary of message boards that amateur investors frequent and dispense “knowledge” from; you may find a few people that know what they’re talking about, but those places are also fraught with tons of bad advice that could steer you the wrong way.
Bottom line: if you’re not willing to put in the time and effort to read relevant info on each coin, the crypto world might not be for you.
3. Play With House Money
Recently, there have been a rash of investors who have liquidated their 401K and other retirement portfolios to invest in Bitcoin and other cryptos in hopes of striking it rich. Some have turned out well, but many more have lost everything. Let their losses be a lesson in proceeding with caution. People like Mark Dukas can provide more examples if you need extra reinforcement.
Don’t invest money that you can’t afford to lose. Set a budget for crypto like you would with any other investments, and make an effort to stick with that number. Set an entry point for when you will get in and out of every crypto and resist the urge to budge on that number. Be a disciplined investor and you’ll have a better chance of coming out on top.
4. Keep Some Of Your Coins In a Wallet
The trading platform is where you make your moves, but unfortunately, it’s not too uncommon for those exchanges to get hacked and everyone’s accounts lost.
To safeguard against this, keep some of your coins that you don’t plan on investing in a digital wallet; for further protection, keep some of them in an offline account also. Don’t forget to write down your passwords in a place that you’ll remember them, or else you might end up losing them yourself.
5. Diversify, Diversify, Diversify
Maybe you’re hot on Bitcoin, or maybe Ether is your game. Regardless, no sound investor should have all their eggs in one basket, or else what would happen if that goes belly-up? The price of Bitcoin surged in late 2017 to nearly $20,000 a coin, prompting many people to sell low and buy high into Bitcoin stock. Inevitably, the price plummeted at the beginning of 2018 to nearly half that mark, people panicked, and a fire sale ensued.
Every investor, including Mark Dukas Charlotte, will tell you to diversify your portfolio with different crypto coins that you feel good about. While you want to keep a bevy of stable coins in your wallet at any one time, don’t be afraid to buy coins that are up on the rise, or those who have taken a recent dip. Ultimately, diversification is a risk management technique where losses in one arena equal to gains in another. If you keep your money spread across crypto coins, stocks, and bonds, volatility in the market will become an advantage, rather than a tragedy.
