Cryptocurrency is becoming an increasingly popular asset for budding investors all around the world. While the upside potential is huge, it’s important to stay safe throughout the process. This article shares 5 things to know before investing in crypto.
Cryptocurrency Is Highly Volatile
The crypto markets are one of the most volatile in the world. Don’t just take our word for it – Take the graph of your favourite coin or token, then zoom out and see the rapid price movements over the course of its lifetime. Keep in mind that volatility can work in both ways. Your investment could skyrocket overnight, but could also half in value in just a few hours.
Don’t Invest What You Cannot Afford To Lose
Similar to the point above, you should only invest money into crypto that you can afford to lose. Don’t go all in with savings or rent money just because you think you’ve spotted an absolute bargain. While there are ways to predict the likelihood of certain outcomes, nothing is ever certain and you could lose large amounts of money in a short span of time. Always keep reserves to cover day to day expenses.
Another benefit of not over-investing in crypto is that you are likely to make better decisions. If you have everything in digital assets, a dip in price could lead to you panic selling in order to meet bills. This panic selling could leave you with a substantial loss.
Do Your Own Research
DYOR, or ‘Do Your Own Research’, is a term thrown around the cryptocurrency community fairly often. There will always be an influencer or invested individual trying to steer you in the direction of their coin. Browsing through Twitter could be a viable way of creating a list of potential investments, but always research a project thoroughly before buying. Popular research methods include:
- Viewing the official website of the coin or token.
- Learning about the team involved with the project.
- Checking the roadmap and whitepaper of the project.
- Analysing the chart of the crypto asset.
A better understanding of the currency will aid your investing decisions in a multitude of ways.
Always Have A Plan
Having a plan for your investment is also a worthwhile thing to consider. Are you looking for a certain percentage on your initial spend or do you prefer to stake for reoccurring revenue? Grab a notebook, write down your plans and stick to them when possible.
Never Stop Learning
Like with most things in life, learning as much as possible will give you an advantage over others. If you’ve got a spare 10 minutes, why not hop online and do a little learning about your favourite project or crypto in general? Now that cryptocurrency is a large area of investing, there are countless blog posts, Youtube videos and Udemy courses you can utilise.
We hope this list of 5 things to know before investing in crypto has informed you more on the potential risks and rewards of the market. Always have a plan and learn as much as possible along the way. Remember, making safe investments should be the main priority when looking into crypto.