You hear it. You see it. But what in blazes in crypto? Don’t worry, we’ve got your back. This second article of our 2-part series has some tips on spotting a good crypto for investment.
Last time, we took a quick peek at what cryptocurrency is and how it became the standout digital currency that it is. Now, it’s time to answer the big question: which crypto should I put my money in?
Instead of answering this directly by giving certain tokens by name, let’s point out some factors that a healthy cryptocurrency must have before investing.
Check out part 1 of this series to learn more about cryptocurrency.
How to Spot a Safe Cryptocurrency
Investing in cryptocurrency is quite tricky, especially with many coins and currencies see drastic changes in a matter of days. Some also rely on their celebrity backing to capture an audience, leaving many investors out of their money in no time.
However, with the right tools and some helpful tips, you can properly invest in a stable cryptocurrency and reap its lovely benefits.
Here are some points to consider when investing in crypto:
1. Study the Crypto Market
Diving into the cryptocurrency market without proper understanding of how it works and the potential risk is a recipe for disaster. Thus, it’s important to have an overview of the market before jumping the gun.
You don’t have to be well-versed with the ins and outs of daily trading, nor master everything there is to know about the crypto market. Checking out reliable sources and talking to those within the industry should be a good step in the right direction.
2. Setup an Investment Strategy
The crypto market is rife with scams and “rug-pulls”, where a coin that potentially looks good will just drop in value overnight. You should enter the market with a proper strategy to avoid losing your investments.
One way to distinguish scammy coins from legit ones is looking at the project and what it offers. As they say, “if it’s too good to be true, it probably is.” Also, do a background check at the people behind the coin. If they have a bad history, chances are the coin will definitely fall.
3. Start With an Amount You Can Afford to Lose
Any smart investor would tell you to only spend an amount that you can lose, as the crypto market is subject to unexpected changes in a whim. With that in mind, it’s not advisable to go “all in” just because your preferred crypto coin is looking good at the moment. Instead, go slow and measure the results as it happens.
4. Spread Out Your Crypto Portfolio
As with investing in traditional options like stocks, placing your money on different coins ensures that you’ll get something back at the end of the day. Putting all your eggs in one basket, per the adage, places you in higher risk when the coin drops in value.
For serious crypto traders, using a trading bot should help you in selecting which ones are worth investing on. These bots track market changes and provide insightful recommendations based on these trends.
5. Simplify the Process With Automated Purchases
Some cryptocurrency exchanges offer automated purchasing, where it sets you up to regularly buy coins at a specific timeframe. This option eliminates the need for constant checking or missing out on certain buys.
Going to the Moon – And Beyond
Crypto is going strong in 2022, and there are no signs of it stopping anytime soon. Investing in crypto is a good choice for anyone with enough funds, though you have to make sure you’re coming in with a proper strategy and mindset. While the market could be volatile, the rewards for making the right choices should net you a good profit and a potential leverage when the currency becomes mainstream.