How To Invest In Cryptocurrency - Best Crypto To Invest
“How to invest in cryptocurrency” is a basic question among all investors who are serious to invest in the crypto world. In recent times, the hype of trading digital coins is magnificent.
Bitcoin has been at the forefront of crypto with more than 50% market capitalization.
However, in recent times, altcoins are gaining prominence with more and more being released, all with different use-cases.
Traders are now investing in more and more in different Altcoins as well.
Investing in crypto is profitable and at the same time risky.
The crypto that you predicted would shoot 50x goes completely out of the market before you even realize it.
Therefore, you need to analyze which crypto to invest in and this task can be daunting.
Bitcoin was the first cryptocurrency was introduced in 2009. After that, more than thousands of digital coins came into the market.
At the very beginning, Bitcoin was the most famous crypto and investors who bought a bunch of it and held on to it are probably multi-millionaires by now.
In this article, we will guide you how to invest in cryptocurrencies.
All types of traders and investors can consider this particular article as a guideline for them. This article will help you to know how to buy and invest in cryptocurrency, what the best cryptocurrencies are to invest in, investing strategies, and some other important issues related to this topic.
In the first phase, I will discuss the importance of investing in cryptocurrency.
Why Invest In Cryptocurrency?
It is quite evident that cryptocurrency is the future money. The market for digital coins gained popularity in a very short time.
The total market capitalization is near about $273 billion at this moment.
Researchers and experts say that Cryptocurrency could be leading virtual money and maybe after a few years it will replace the fiat currency.
There are a few reasons why investors are moving towards crypto projects.
- It is easy to invest in cryptos. It is a great investment because their value keeps increasing exponentially and the process is relatively simple.
- The exchange fees are minimal. The fees are not the same for each coin, and not more than 1%.
- You can easily buy any goods with bitcoins or other cryptos and the payment is safe, fast, and hassle-free.
- There is no intermediary, and you have full control over your money.
- The block-chain technology is promising with its features. Many global organizations are ready to invest in block-chain technology.
- Cryptocurrency is open 24/7. You have the ability to access digital currency whenever you want.
- This non-traditional investment is performing better than traditional investment.
- The growth of the cryptocurrency is massive.
- There are many cryptos available. You can choose the best one depending on the criteria.
Now we will discuss how investors can start investing in Cryptocurrency.
How To Start Investing In Cryptocurrency
Investing in cryptocurrency carries high risk. You have to invest without risking too much. Before contributing money to make a profit, follow some golden rules. It is crucial to know how to invest in cryptocurrency.
These factors will work as a safety measure for your investment.
Know Your Crypto Asset
Firstly, decide which kind of digital coin you are interested in. To know the proper answer, you need to consider several factors.
You will need a clear understanding of what purposes the crypto aims to serve, does it solve any real world problems or its just an ICO (Initial Coin Offering), what its market capitalization stands at, and for how long it has been in the market.
Once these factors are considered, you can choose the one that suits your liking.
Market analysis is also important along with technical and fundamental analysis.
Technical analysis will help you understand its price movements and predict the future price of the market.
Go for a well-backed crypto
Secondly, select that crypto which is widely-accepted and reliable. Putting your hard-earned money into the right coin is essential.
Make sure that, the coin you are willing to invest in is legit and has a solid backing.
Every coin released into the crypto market is not going to present a widely demanded solution. Hence, it will be out of the market before you even realize it. Investing in them would be useless.
Most cryptos have a community behind it. The team behind it should be transparent in their actions not indulge in pump and dump.
You should also check the technology they use and will this technology hold up and be scalable for future applications is a major requirement.
Decide the Investment Duration
Thirdly, decide the type of investment that suits your trading style. There are three types of investments: short, and long-term.
Are you someone who is a day or a swing trader? Then you can stick to short term investments.
This means trading regularly, making quick trades with a decent success rate.
However, to trade regularly you have to understand the market trend properly.
Try to collect trading market news, information regarding cryptocurrency every day.
Or if you are the kind of trader that likes to buy low and hold on to your asset till the price is high and then sell then that makes you a medium/long-term trader.
But does that mean you would go about buying every new crypto that is released at a low price? Definitely not.
In the world of crypto, there are many coins that are purely exit scams and you would lose money investing with them. We will discuss about this next.
To help you decide between short and long term investment, here’s a comparison between the two:
- Long-term investment is less stressful whereas short-term investment is riskier.
- Long-term requires less market outlook whereas you need to constantly monitor the market when trading short-term .
- Here, taxes are applicable for both investment whether it is long or short. Nevertheless, the amount is bigger in short-term investment than the long-term one.
- Long-term investment is not the right choice to earn money faster. Short-term investors can earn money faster if they have a decent success rate.
Investing the right amount with the right broker/exchange
The fourth and final factor depends on investing the right amount of money. Do not put all your money into one investment.
With crypto, you need to very careful with how much how you are investing. If you are a new trader/investor, it becomes important that you don’t put more than 5% of your total investment into a single crypto.
A general rule is to invest only the amount that you are ready to lose. This applies in the case of crypto as well.
Cryptocurrency well maybe the future of money, but it doesn’t mean you invest all your current investment into it.
Start with a measly amount, make small profits, and then progressively increase your investment amount as you understand the crypto market better.
With Bitcoin and other major cryptos, you can buy at a low price and hold on to it till there’s a bull run.
Whether you want to buy crypto from an exchange or a broker is entirely up to you. Whatever the case is, you need a well reputed exchange or a broker that offers great service to their traders.
Cryptocurrency Investment Strategies
Investing in crypto requires a concrete strategy. You can’t invest randomly without a solid plan and expect profits to rain. So you have to invest wisely by considering all investing factors.
Here, we have presented certain investment strategies for cryptocurrencies that you can follow to make the most out of your investment.
- Diversifying your investment is one of the best ways to invest in cryptocurrency. Make multiple small investments to minimize your risk level.
- Another strategy is to focus on the leading market cap assets when starting out. If you are new to crypto, it will be hard for you to find out profitable altcoins with a small market cap.
- Check the past trading volume history, coin history, and performance thoroughly before investing in the coin.
- Always follow this golden rule: “Buy low, Sell High”. Buying the dip is a practice that every crypto must master. It doesn’t mean you have to buy at all time lows.
- Buying at prices just before the major historic support levels is a good idea.
- Similarly, selling at the top will ensure your profit is maximized. Technical analysis will help you find the lows and highs of the crypto you are trading.
- Do not forget to keep records of your investment. These records will help you make better investment decisions in the future.
- Put a mark on each upcoming events, news etc. Sentiment analysis is necessary to make yourself updated. The Twitter and Reddit crypto community for example, is highly active and you can get news on the newest altcoins and you can cash in before others.
These are not the only strategies investors follow. There are lots more. Investors set their strategies depending on the market situation.
Cryptocurrency Investment Rules
Investing in cryptocurrencies requires discipline and proper research.
We are going to point out some rules which you can follow:
- Invest money wisely. Don’t be fixated just on Bitcoin. There are so many profitable altcoins now.
- Control your emotions when investing. Investing in a crypto just because it shot 10x overnight is not a good idea.
- Do not invest without having proper knowledge of the asset you are interested in.
- Avoid FUD (Fear and Doubt) and FOMO (Fear of Missing Out) when investing.
- Check the value that the project brings to the table
- Ensure that the crypto provides stability, safety, scalability, and interoperability.
- Avoid scam ICO’s by researching throughly.
- Choose a trusted crypto exchange/broker.
- Keep records of your past investments
These are pretty much the basic investment rules that you have to follow when dealing with cryptocurrencies. Now, the question will pop up in your head would be, “what cryptocurrency to invest in”.
I will give you a basic idea here and for more details, you can have a look at your crypto investment guide.
A good exchange along with choosing the appropriate crypto is a key factor to become a successful investor. Build your investment portfolio before investing in a coin.
Remember, the popularity of a crypto will not be the same in each year. The popularity of a coin mainly changes in terms of market capitalization, supply circulation, trading volume, coin’s price, and so on.
Best Cryptocurrency To Invest In
Bitcoin is still the number one crypto in the crypto market. Ever since its inception, it has been leading the crypto market in terms of market price and capitalization.
In 2009, the initial price was 0.008 USD. At its all-time high, the value of Bitcoin reached $19,665.39! In just about 8 years, its value skyrocketed.
However, the current value at the time of writing this article stands at $9900 approximately.
Bitcoin dominates the crypto market. There are 7.1 million unique bitcoin users and 32 million bitcoin wallets in existence. It’s market share is more than 50% thus establishing its dominance.
The reason why we mention all these quirks and features about Bitcoin is that it should still be your first choice of crypto. It is the most popular and widely used crypto. Bitcoin is used in many countries for payments and transactions.
It is the most liquid crypto and you will never face an issue when buying or selling bitcoins and this is why we recommend bitcoin as the preferred crypto for beginners.
Even though its price does fluctuate a lot and there are whales that influence it’s price, you can profit greatly by investing in bitcoin. It is never too late to do so!
Along with bitcoin, you can invest in some other altcoins as well. Although, bitcoin paved the path for decentralized currencies, it didn’t solve all the problems at the time.
More and more cryptos were released to tackle advanced solutions. For example, Litecoin, a fork of bitcoin was released for faster transaction processing. It is one of the top 10 cryptos today.
Similarly, there are other cryptos that has been in the market for more than 5 years and serves unique purposes. We will recommend you cryptos that you can confidently invest in and clear your doubts on which cryptocurrency to invest in.
- Bitcoin Cash
- Binance Coin
The Right Time To Invest In Cryptocurrency
If you are one of the few who still hasn’t boarded the crypto train, we highly recommend that you do. It is high time that you start adding cryptocurrency to your asset portfolio.
But what is the right time to invest in a crypto? This cannot be guessed. You have to carefully analyze a lot of factors such as its price movement, history, ico offering, airdrop, and more.
Using technical analysis, you have to find out the entry and exit points of that asset. Bear phase is a good period to buy in that asset and sell it during a bull run.
It may not seem as easy as it sounds but you can start by investing low.
You can follow top traders, get advice from them, follow crypto podcasts and social media for insights on when to buy and sell.
In the next section, we will list some tips and tricks to maximize your returns on crypto investment.
Cryptocurrency Investment Tips And Tricks
To keep your crypto investment simple and risk-free try to follow these:
- If you want to save your money from higher fees then it is better to use exchange platform rather than brokers
- Limit orders are the best option. Try not to use market orders if possible
- Buy low and sell high
- Do not buy useless altcoins that have no use-case.
- It is better to adopt diversified investment to omit high risk
- Do not focus always on the price trend
- Invest according to the market mood and form your own cryptocurrency investment strategy.
- Don’t share your private keys with anyone
- Watch out daily cryptocurrency market news
- Join different types of social media groups and discuss recent trends of the crypto market
- DYOR (Do Your Own Research)
- Find out if its pre-mined and how its tokens are allocated.
- Learn about cryptocurrency features.
- Be careful about your leverage ratio.
- Traders often misinterpret the block-chain technology with Bitcoin. Remember block-chain and bitcoin is not same
- Know the taxes of cryptocurrency trading
- Know about dead coins
- Watch out from scam coins and avoid investing in them
After reading this article we hope you have a basic understanding on how to invest in cryptocurrency. You have also learned the top cryptocurrency to invest in.
If you haven’t invested in crypto yet, we recommend you open an account with a reliable exchange and start investing with Bitcoin and then gradually start trading other altcoins as well.
We hope by following these steps, you will now know how to invest in cryptocurrency. It is extremely important that your concept on cryptocurrency, and how it works is very clear.