The Top 7 Things to Keep in Mind for Crypto Investors

  • September 23, 2022
  • Jennifer Moore

Risk is like a conjoint twin of the investment market. However, the risk that comes with crypto investment is humongous, and so are the returns. For volatile assets, a crypto investor should learn about price fluctuation, market regulations, future crypto laws, and others. Who knows, a country might ban cryptocurrency as illegal, or some might open up rules for better usage. Every single law or change can cause a butterfly effect.

The Top 7 Advice for Crypto Investors and Traders

If you plan to become a crypto investor, there is much to learn more than the list of coins performing well now. Before getting into crypto trading, here are the top seven things you should know.

1. Know The Fundamentals

There are over 20,000 digital assets listed worldwide. Most crypto investors do not think of learning about the fundamentals as they believe it does not concern them. However, for a better chance of success, analyze and predict the performance of a coin or the market trends, you should be thorough with the basics.

  • Tokenomics

Tokenomics deals with how a coin is created, managed, and removed from a network. Learning about tokenomics helps to understand the behavior of your asset. It would help if you knew how the network rewards the validators and miners regarding initial coin offerings, token distribution methods, and more. Tokenomics also helps a crypto investor to understand the price fluctuation, future adaption, and more. Read token whitepapers to get a better picture of the underlying potential. 

  • Liquidity

Large crypto trading platforms having significant trade volumes, more market accessibility, and multiple asset types will have better liquidity. This functions as a trading security feature. In the case of digital assets, high liquidity indicates a lower probability of a price crash due to “pump-and-dump” by crypto whales. 

  • Transaction Fee

The transaction fee depends on the coin, exchange platform, and government regulations. First, there is a credit card transaction fee if you use one to buy coins. Then, there is a minimal transaction fee, which varies with the coin. This fee is never a specific amount. Currencies with higher transaction volumes have higher fees.

  • Taxation

IRS tags cryptocurrency as a property and as an income. If you bought some currencies and sold them, the profit is subjected to capital gains tax. However, if you receive the coins via mining, interest, or others, it would be considered an income and thus will have income taxes. However, certain transactions are non-taxable, like buying cryptocurrencies, shifting them from one wallet to another, gifting them, or donating to a tax-exempt charity.

Also Read: Generation-wise Crypto Investment Strategy

2. Diversification is Good, But Don’t Overdo It

Diversity is essential to avoid complete loss when a part of the crypto market fails to perform. Experts recommend owning five different currencies. However, over-diversifying your portfolio can lead to inefficient tracking and missing out on news that can affect your portfolio. As a general rule, it is wise not to own more than ten currencies at a time.

3. Do Your Own Research, and Do It Well

A crypto investor should investigate the choices before trading.

  • Value Investing

Value investing is finding undervalued currencies by comparing their actual income and current prices. Purchase undervalued coins and sell when the price is higher.

  • Growth Investing

Some investors pick coins with higher growth potential. It is the potential for the market capitalization of that currency. It depends on the current price and the circulating supply. A low capitalization means more growth potential, but there is also a high risk of failure.

  • Technical Analysis

It would be best if you learned to read market data. Historical data helps to predict the future of any investment market. It goes beyond the basic supply-demand cycle. There are several online sites where you can learn the basics of reading trading chart patterns, resistance levels, moving averages, and others. Financial literacy is a crucial element to succeed in this realm.

4. Enter and Leave- Maximize Profits, Cut Losses

The crucial element of any crypto trading is learning when to enter the market (buy coins) and when to leave. It would help to leave the investment when your target cost is attained. Getting greedy and sticking to the coins even after your target cost is fulfilled might backfire.

5. Determine Total Investment Capital Amount, Risk Profile, and Period

In the case of crypto trading, people use compressed monthly, daily, or quarterly periods to trade coins. In trading, one has to make use of price fluctuations. If you are into crypto investments, you should buy and hold coins for several years or decades to increase the value of your asset.

As any seasoned investor would say, a risk-management plan is vital. It should include the risk cap you can endure for better ROI. According to a Yale study, one should allocate 4-6% of your portfolio to crypto investment. For lower risks, try 1%. A 1% investment is so small that a market crash would be less rattling to the total wealth. But as an average investor, you can enjoy double the returns.

6. Select The Proper Exchange Platform

Choosing a reliable crypto exchange to trade in crypto assets is essential. Global crypto exchange platforms like PayBito offers:

  •  Access to several crypto coins and fiat payment options.
  • Multi-device and platform support.
  • Offer in-built banking solutions with collateralized lending, custodial solutions, and others.
  • High-security blockchain architecture, multi-signature hot and cold wallets.
  • Hassle-free KYC/AML solutions.
  • Access to liquidity pools from exchanges worldwide.

7. Secure Your Investments

Crypto transactions occur online. And, like all other online transactions, crypto trading is also susceptible to hackers and cybercriminals. It is necessary to observe a few steps. 

  • You need a reliable wallet. Choose hardware wallets as it makes security much more manageable. If you are investing more than five grand, you can choose to buy two hardware wallets (one as a backup).
  • Ensure your trading exchange has features such as 2FA authentication, DDoS mitigation, SegWit, Firebase, BIP32, and ERC20.
  • Hackers can access your coins if the assets are left in the exchanges. A majority of the largest crypto heists in history have occurred due to this.

Choosing The Best Crypto Investment Strategy

  • HODL means just holding your coins for as long as possible. If you hold on to your coins, your asset’s price will be monumentally higher as the market value rises. However, make sure to keep an eye out for long-term downtrends.
  • Micro-investing is the best way to build your portfolio over time. Invest a small amount into a crypto investment every month and watch it grow.
  • The dollar-cost averaging strategy involves investing a fixed amount into the market at fixed intervals. This spread will immune you from rapid price fluctuation, and you will get an average profit over time.
  • Both new and experienced investors can try bot trading options. A crypto trading bot software offers automated trading options and quicker trade response times. Certain trading bots also allow users to pilot test trading strategies before making an actual investment.
  • ICOs or Initial Coin Offerings are crowdfunding where creators sell tokens, and once the company is set up, they will replace it with altcoins. Similar to Initial Public Offerings for equity stocks, you can opt to disinvest as soon as the tokens go public. Some prefer to hold if there is a higher potential for the company to grow.
  • Some prefer betting against the crypto price (shorting). Since the crypto price is volatile, a sudden increase or decrease can help you gain profits. However, it is a precarious form of investment.

Wrapping Up 

A crypto investor’s main problems are fear of uncertainty, panic selling, confusion regarding regulations, fake information, and hackers. It is best to avoid rash decisions and always focus on your strategy based on valid secure and effective strategies.

Leave a Reply

Your email address will not be published. Required fields are marked *

Download the Mobile Apps

Contact Us

   

Watchlist

BCH/USD

BTC/USD

ETH/USD

HCX/USD

XRP/USD

ETC/USD

BSV/USD

LTC/USD

EOS/USD

ADA/USD

BAT/USD

HBAR/USD

UBU/USD

AAVE/USD

GRT/USD

YFI/USD

WBTC/USD

USDC/USD

UNI/USD

TUSD/USD

SNX/USD

SHIB/USD

PAX/USD

MATIC/USD

MKR/USD

ZEC/USD

FTT/USD

DOGE/USD

BTG/USD

BUSD/USD

CHZ/USD

COMP/USD

DAI/USD

XLM/USD

SOL/USD

XTZ/USD

DOT/USD

VTHO/USD

TRX/USD

LUNA/USD

ALGO/USD

AVAX/USD

TFUEL/USD

THETA/USD

VET/USD

NEAR/USD

BCH/BTC

BTC/BTC

ETH/BTC

HCX/BTC

XRP/BTC

ETC/BTC

BSV/BTC

LTC/BTC

EOS/BTC

ADA/BTC

BAT/BTC

HBAR/BTC

UBU/BTC

AAVE/BTC

GRT/BTC

YFI/BTC

WBTC/BTC

USDC/BTC

UNI/BTC

TUSD/BTC

SNX/BTC

SHIB/BTC

PAX/BTC

MATIC/BTC

MKR/BTC

ZEC/BTC

FTT/BTC

DOGE/BTC

BTG/BTC

BUSD/BTC

CHZ/BTC

COMP/BTC

DAI/BTC

XLM/BTC

SOL/BTC

XTZ/BTC

DOT/BTC

VTHO/BTC

TRX/BTC

LUNA/BTC

ALGO/BTC

AVAX/BTC

TFUEL/BTC

THETA/BTC

VET/BTC

NEAR/BTC

BCH/USDT

BTC/USDT

ETH/USDT

HCX/USDT

XRP/USDT

ETC/USDT

BSV/USDT

LTC/USDT

EOS/USDT

ADA/USDT

BAT/USDT

HBAR/USDT

UBU/USDT

AAVE/USDT

GRT/USDT

YFI/USDT

WBTC/USDT

USDC/USDT

UNI/USDT

TUSD/USDT

SNX/USDT

SHIB/USDT

PAX/USDT

MATIC/USDT

MKR/USDT

ZEC/USDT

FTT/USDT

DOGE/USDT

BTG/USDT

BUSD/USDT

CHZ/USDT

COMP/USDT

DAI/USDT

XLM/USDT

SOL/USDT

XTZ/USDT

DOT/USDT

VTHO/USDT

TRX/USDT

LUNA/USDT

ALGO/USDT

AVAX/USDT

TFUEL/USDT

THETA/USDT

VET/USDT

NEAR/ETH

BCH/ETH

BTC/ETH

ETH/ETH

HCX/ETH

XRP/ETH

ETC/ETH

BSV/ETH

LTC/ETH

EOS/ETH

ADA/ETH

BAT/ETH

HBAR/ETH

UBU/ETH

AAVE/ETH

GRT/ETH

YFI/ETH

WBTC/ETH

USDC/ETH

UNI/ETH

TUSD/ETH

SNX/ETH

SHIB/ETH

PAX/ETH

MATIC/ETH

MKR/ETH

ZEC/ETH

FTT/ETH

DOGE/ETH

BTG/ETH

BUSD/ETH

CHZ/ETH

COMP/ETH

DAI/ETH

XLM/ETH

SOL/ETH

XTZ/ETH

DOT/ETH

VTHO/ETH

TRX/ETH

LUNA/ETH

ALGO/ETH

AVAX/ETH

TFUEL/ETH

THETA/ETH

VET/ETH

NEAR/ETH

BCH/HCX

BTC/HCX

ETH/HCX

HCX/HCX

XRP/HCX

ETC/HCX

BSV/HCX

LTC/HCX

EOS/HCX

ADA/HCX

BAT/HCX

HBAR/HCX

UBU/HCX

AAVE/HCX

GRT/HCX

YFI/HCX

WBTC/HCX

USDC/HCX

UNI/HCX

TUSD/HCX

SNX/HCX

SHIB/HCX

PAX/HCX

MATIC/HCX

MKR/HCX

ZEC/HCX

FTT/HCX

DOGE/HCX

BTG/HCX

BUSD/HCX

CHZ/HCX

COMP/HCX

DAI/HCX

XLM/HCX

SOL/HCX

XTZ/HCX

DOT/HCX

VTHO/HCX

TRX/HCX

LUNA/HCX

ALGO/HCX

AVAX/HCX

TFUEL/HCX

THETA/HCX

VET/HCX

NEAR/HCX

BCH/INR

BTC/INR

ETH/INR

HCX/INR

XRP/INR

ETC/INR

BSV/INR

LTC/INR

EOS/INR

ADA/INR

BAT/INR

HBAR/INR

UBU/INR

AAVE/INR

GRT/INR

YFI/INR

WBTC/INR

USDC/INR

UNI/INR

TUSD/INR

SNX/INR

SHIB/INR

PAX/INR

MATIC/INR

MKR/INR

ZEC/INR

FTT/INR

DOGE/INR

BTG/INR

BUSD/INR

CHZ/INR

COMP/INR

DAI/INR

XLM/INR

SOL/INR

XTZ/INR

DOT/INR

VTHO/INR

TRX/INR

LUNA/INR

ALGO/INR

AVAX/INR

TFUEL/INR

THETA/INR

VET/INR

NEAR/INR

BCH/AED

BTC/AED

ETH/AED

HCX/AED

XRP/AED

ETC/AED

BSV/AED

LTC/AED

EOS/AED

ADA/AED

BAT/AED

HBAR/AED

UBU/AED

AAVE/AED

GRT/AED

YFI/AED

WBTC/AED

USDC/AED

UNI/AED

TUSD/AED

SNX/AED

SHIB/AED

PAX/AED

MATIC/AED

MKR/AED

ZEC/AED

FTT/AED

DOGE/AED

BTG/AED

BUSD/AED

CHZ/AED

COMP/AED

DAI/AED

XLM/AED

SOL/AED

XTZ/AED

DOT/AED

VTHO/AED

TRX/AED

LUNA/AED

ALGO/AED

AVAX/AED

TFUEL/AED

THETA/AED

VET/AED

NEAR/AED

BCH/EUR

BTC/EUR

ETH/EUR

HCX/EUR

XRP/EUR

ETC/EUR

BSV/EUR

LTC/EUR

EOS/EUR

ADA/EUR

BAT/EUR

HBAR/EUR

UBU/EUR

AAVE/EUR

GRT/EUR

YFI/EUR

WBTC/EUR

USDC/EUR

UNI/EUR

TUSD/EUR

SNX/EUR

SHIB/EUR

PAX/EUR

MATIC/EUR

MKR/EUR

ZEC/EUR

FTT/EUR

DOGE/EUR

BTG/EUR

BUSD/EUR

CHZ/EUR

COMP/EUR

DAI/EUR

XLM/EUR

SOL/EUR

XTZ/EUR

DOT/EUR

VTHO/EUR

TRX/EUR

LUNA/EUR

ALGO/EUR

AVAX/EUR

TFUEL/EUR

THETA/EUR

VET/EUR

NEAR/EUR

BCH/SGD

BTC/SGD

ETH/SGD

HCX/SGD

XRP/SGD

ETC/SGD

BSV/SGD

LTC/SGD

EOS/SGD

ADA/SGD

BAT/SGD

HBAR/SGD

UBU/SGD

AAVE/SGD

GRT/SGD

YFI/SGD

WBTC/SGD

USDC/SGD

UNI/SGD

TUSD/SGD

SNX/SGD

SHIB/SGD

PAX/SGD

MATIC/SGD

MKR/SGD

ZEC/SGD

FTT/SGD

DOGE/SGD

BTG/SGD

BUSD/SGD

CHZ/SGD

COMP/SGD

DAI/SGD

XLM/SGD

SOL/SGD

XTZ/SGD

DOT/SGD

VTHO/SGD

TRX/SGD

LUNA/SGD

ALGO/SGD

AVAX/SGD

TFUEL/SGD

THETA/SGD

VET/SGD

NEAR/SGD

Loading
+
Chat Now
Welcome to Paybito Support