Things You Need to Know Before Investing in CryptoCurrencies

If you are reading this article, there is a chance the wave of cryptocurrency has piqued your curiosity and you are possibly considering to explore this opportunity. While cryptocurrencies have been around for some time, it’s only recently we have started hearing about them as an investment option. Bitcoin has been, by far, the most well-known cryptocurrency and Ethereum is rapidly catching up. They and the other crypto coins, appear to be the trendiest products to invest in at this moment.

Bitcoin just briefly touched $10,000 mark and got everyone talking about the new financial opportunities in these virtual currencies. Many have taken the plunge already yet others stand ashore skeptical with questions galore. Is it a fad? Is there a real opportunity in it? Am I going to lose money? Even though we do not consider ourselves financial experts, we have done our share of research. In this article, we intend to answer some of your questions. Keep reading!

Invest in Cryptocurrency: Why and Why Not?

Dollar power is on the fall; if you don’t see it or believe it, talk to the experts. It’s not a nosedive; it’s a slow decline. But, it is inevitable. This is why it makes sense to hedge your money. Cryptocurrency could be a viable investment option.

The other reason why you would want to invest in cryptocurrency is that you see yourself aligned with the vision behind its origin. You believe that it will bring about a seismic shift in the fundamental structure of the world economy and also the banking system.

Of course, one big reason could be that you completely understand its technology and are confident of reaping its benefits in the future.

But then, there are reasons why you may not invest in cryptocurrency. For the starts, it is risky. It is probably riskier than any other investment. Cryptocurrencies are highly volatile. Within seconds you could lose almost everything you invested or probably even earn a 100 times ROI.

Do not invest in cryptocurrency out of haste just because you fear missing out. If you are looking to make quick money without truly understanding the concepts and technology, you are at a greater risk than the others. Also, investing when the bubble is at its peak is almost a sure shot way of losing.

Which Cryptocurrency Should I Buy?

Only a little over a year ago, Bitcoin was the only cryptocurrency everyone was talking about. At 90%, Bitcoin has the lion’s share of the crypto-market. Even though there were some other cryptocurrencies trying to make their presence felt, if you were to invest, Bitcoin was the only name that crossed your mind. Most other cryptos worked in the grey and were barely trusted.

However, there has been a dramatic change in 2017. While Bitcoin is still the biggest cryptocurrency, its market share has fallen from 90 to less than 50 percent. Those who had kept a hawkeye on the crypto-market were not surprised. They saw it coming, especially since Ethereum started becoming prominent. Bitcoin community was falling apart and issues enveloping blocksize had only grown in size. All of these were the harbinger of what was going to be a drastic crypto-market shift.

That said, Bitcoin continues to be the most trusted, well-known cryptocurrency and probably the safest portfolio to start with. However, it is no longer the only option. In fact, if you wish to maintain a balanced portfolio, hedge your investment in other coins such as Ethereum.

If you haven’t started yet, we would recommend https://coinmarketcap.com as a good place to build your crypto-portfolio.

Crypto-market is new and not a lot of people understand it very well. Every day new currencies are added to the ecosystem while some die away. There are many ways to make money and perhaps more ways to lose it. Every day the value of some coins rises steeply and value of some nosedives and falls flat.

Honestly (and sadly), there is no scientific way to tell one bad coin from the other. However, there are some indicators. Keen observation, sound judgment, and your instincts could take you a long way.

Good coins always maintain transparency and have a clear, promising and yet believable vision. Their development team is active and their community is motivated and enthusiastic. They are easy to reach out to. Bad coins, on the other hand, do not have a clear vision and are often evasive about their objectives. They are not easy to reach and their community is all about making quick money. Such are the coins to be avoided. As a general rule, as we reckon, cryptocurrencies promoting Multi-Level Marketing (MLM) should be kept at an arms distance.

Cryptocurrency is Extremely Volatile

Cryptocurrency market is highly volatile. This is the fact we cannot assert enough. In no time the value can rise by several hundred times. Similarly, the prices can fall down dramatically within a few minutes. The value can decrease by more than half quickly.

You are at a greater risk of loss when you buy the coins at their peak value. When the price is at the peak, it is likely to go down and that too rapidly. You cannot always tell when the value has touched peak. However, if it has risen too much too quickly, it is best to reconsider your buying decision. However, there are some good coins that see sudden rise and fall but have a fair chance of becoming stable. Performance history and age of the coin are some of the factors to consider before buying.

Do Not Store Coins in Exchanges

It is rapidly becoming known that exchanges are not a great place to store the coins. They are hackable and you could lose all you have at once. It is best to store your coins in the wallets or cold storage. No matter how reputed the exchange is, it is still vulnerable to attacks and theft. It would be best to keep your coin in the offline wallet.

You May Get Rich, But Not Overnight

Do not expect cryptocurrency to be the get quick rich scheme; it is not. While there are ways to get rich, usually it does not happen overnight (unless of course, you get really lucky).

The most important thing is to learn. The more you understand the crypto-market the better are your chances of making money. Study various coins and their performances, get as much information as you can about them, talk to the experts, and stay up to date with the respective communities. If you are smart and have good instincts, nothing can stop you from earning dividends.

What’s the Good Time to Buy?

Honestly, there are no rules; only trends and indicators. When the bubble is peaking, experts say it is not the right time to buy the cryptocurrency. Also, when the value is crashing, again it isn’t a good idea to buy; it may dip even further. The best time to buy is when the price of the coin has reached a certain amount of stability.

Crypto-market trading is largely a matter of smart play but luck factors in too. It is hard to tell when the currency has peaked and when it has hit the bottom. There is no science to it. There are times when the currency price rises steeply and once it has reached a certain value we begin to think it has reached the peak. But, often it is the time when the show has just started. Similarly, when the price is dipping, at a certain point you might believe it might not go any lower. But, it sometimes does.

A few months ago, when Ethereum was valued at $100, many considered it extremely extensive. And now when it is nearly touching $500, the $100 moment seems like the most opportune time in hindsight.

Crypto-market bubbles are absolutely incomparable to the traditional market bubbles. 10% rise in the traditional market sounds a lot like a bubble. In crypto-market it is almost insignificant. Even a sudden, 100% rise doesn’t feel like alarming here even though it might just as well be a bubble. But, when it surges by a 1,000% you know it’s got to be a bubble.

CONCLUSION

Many experts believe that cryptocurrencies will bring about a radical change in the financial and economic structure of the world. They will not only become the mainstream currencies but will also surpass the traditional currencies in value and number of financial transactions. However, it’s just a start! The volatile nature of these virtual currencies makes them highly unpredictable. And, since the crypto-market is largely unregulated, people are skeptical about pinning their unquestioned faith in it. What we cannot deny is the fact that they are the hottest trends in the financial world these days. All things considered, cryptocurrencies seem promising and will make some, if not many, people rich. We will have to wait and watch.

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