The international cryptocurrency market is projected to hit $4.9 billion within the next decade. It’s no wonder droves of people turn to crypto for making investments, day trading, and as alternatives for paying services or buying products. But, how great are they for those looking to invest?
Before looking into the best and latest cryptocurrency investing tips, it’s important to understand the different variables that have a direct impact on the endeavor. There’s a lot of information to take in prior to transforming your first bit of fiat into crypto.
A lot of working with crypto has to do with your lifestyle. There are plenty of strategies that you can use, but each depends on the amount of time and capital you have from start to finish. If you’re interested in diving into the cryptocurrency market, keep reading.
Cryptocurrency and Volatility
Cryptocurrency and volatility are almost synonyms at this point. At least, that’s the relation that many people make. And, while there are a few coins that are stable, most hold true to this supposition.
Fiat money, like the US dollar and the British pound, have been considered reliable currencies for ages. However, uncertainties and frustration with inflation or fluctuations in prices created demand for alternatives and a corresponding vacuum.
Bitcoin jumped in to fill that void and offer a decentralized currency where its value depended mostly on offer and demand. By limiting the prior, the latter regulates itself over time. For now, though, and the foreseeable future, its value will dip and jump erratically.
The short term solution? Altcoins. Now you can find all kinds of alternatives, some more serious than others. A few examples include Dogecoin, Litecoin, and Ethereum. And, while each coin’s value somewhat depends on Bitcoin’s success, they have their own separate markets. All of them fluctuate in one form or another.
The takeaway here is that, no matter which cryptocurrency you’re interested in for investing, expect volatility. There are no guarantees, whatsoever, that you’ll find any kind of return on investment. Thus, the first piece of advice you should take with you is to set a specific budget and stick to it, no matter what.
Picking the Right Coin for You
The way you live, or the lifestyle you want, will impact your options. A person working from home and able to check crypto values every half an hour can most likely benefit from routinely buying and selling volatile coins. Those that can’t check as often should lean more towards stable coins.
What is a stable coin? Well, there are two common definitions. One would be a decentralized coin that maintains value over long periods of time. That is, crypto with a reliable track record. Without financially recommending it to you, the reader, XRP is one example. It’s sat close to $1 for quite some time. As an investment, this type of coin works great for converting fiat for long term trading on different cryptocurrency networks.
The other kind of stable coin involves a more centralized or controlled crypto, literally referred to as Stablecoins. One such example is USDC, one that guarantees a 1:1 value match with the US Dollar. Keep in mind, though, that USDC, and other Stablecoins like it, are usually regulated by US financial institutions and attested to by independent accounting firms.
Stablecoins, in a sense, are everything a cryptocurrency isn’t supposed to be. Many users recommend steering clear of these semi-centralized altcoins.
Either way, whether you’re looking for short or long term investments, you have to make a choice based on your lifestyle and capacity to check and monitor your coins.
Cryptocurrency Investing: What Works Best for You
There are two primary and popular types of cryptocurrency investments. These are for savings or turning a profit. Many a cryptocurrency trader swear by buying and selling by the hour for marginal earnings. Others prefer dumping a hefty sum of Fiat into one or more coins and waiting for their chosen crypto to become a common payment method or rise in value for fantastic returns over long periods of time.
Analyzing Markets
There’s no hidden secret for determining which markets make sense, and which might turn into a disaster. The truth is, every investor has to be vigilant and keep an eye on their portfolio. There’s more, though.
Cryptocurrencies are influenced by a massive number of variables. Whales, for example, can have a major impact on a coin’s value. In 2018, two Bitcoin addresses dumped over one hundred million dollars worth of bitcoins into the network. The coin saw a swift and drastic drop in value. It soon recovered, but this is an example of just one variable knocking a coin off its tracks in an instant.
So, what should you do as an investor? Work with a cryptocurrency business and analyze markets. Many companies provide some kind of guidance after asking a few questions on what your goals in a given market are.
Additionally, it’s a good idea to look for the best cryptocurrency exchanges for optimal buy and sell prices and to avoid additional broker fees. This works whether you’re looking for saving or future profit options.
Saving
If you’re trying to find how to save money, don’t trust your bank, and feel like putting your hard-earned cash under your mattress isn’t secure enough, then investing in cryptocurrencies might be your best bet. Given your expectations for saving, you’d want a coin that is stable or that climbs very slowly in value over time.
While against the recommendation of many investors, Stablecoins might be a great option. They claim to maintain a 1:1 value with a specific Fiat currency. You’d assume that purchasing 100 USDC would mean that, years later, you could trade them in for $100. This seems true, for now, but might change in the future.
Other altcoins are viable options. Look for those that hover around a fixed price. Let’s say, for example, there’s a coin called “Savecoin,” and that it’s usually worth between $1 and $5. While that can seem like an uncomfortable range, a $100 purchase when “Savecoin” is at $1 would presumably result in a later withdrawal of between $100 and $500.
Essentially, some altcoins are dependable and can work well for long term savings. And, sometimes, they can turn a decent profit. Remember, though, that nothing is guaranteed when working with decentralized currencies. The given example, “Savecoin,” might one day drop to $0.02, rendering your investment almost null.
Trading for Profits
Many cryptocurrency investors love following the famous quote by Robert Kiyosaki, “Don’t work for money; make it work for you”. For these individuals, saving money means you’re losing money.
And, because bank interest rate earnings are usually outpaced by lost value from inflation, most people prefer to invest the money in property, the stock market, or other potentially profitable investments. Cryptocurrency is a popular choice as of late.
Becoming a cryptocurrency trader involves a lot of hard work, though. It’s similar, in a way, to working with stocks. You should buy low and sell high. This is especially difficult in a market that’s global and open 24/7. It doesn’t open or close on a daily basis, it’s always active.
Investors that day trade recommend using one Fiat and Bitcoin as anchor points for finding valuable investments in altcoins. That is, of course, if you don’t choose Bitcoin as your primary investment. The most common tip is to use limit orders.
Use Limit Orders
One of the best ways for novices to jump into any cryptocurrency is through limit orders. With these, you set a buy or sell price on the market. If the market reaches your requested number, your order is executed.
It’s the perfect way to avoid surprise losses, and sometimes gains. Post your preferred amounts and wait. It also helps to reduce the necessary time investment needed to control and maintain your volume and value of crypto.
There’s one strategy that seems to work exceptionally well. This is to make consistent investments in a coin over an extended period of time. Once you’ve accumulated a large sum, relative to what you can afford, you can start posting sell orders that match your profit expectations.
It isn’t perfect, but many investors use the strategy with consistent results.
Crypto Keeps Gaining Popularity
The US Dollar was originally backed by gold. This changed with the introduction of the Federal Reserve. Cryptocurrency, on the other hand, never had a material backing. It’s now kept afloat because people trust it and use it with more frequency over time.
So, as its legitimacy grows in comparison to Fiat currencies, cryptocurrency investing climbs in popularity and viability. The decentralized markets, while volatile, offer ample opportunity for monetary gain and savings. With some investigating, you might find the right coins that work for you, and turn a fixed number into a stake in what many consider the future of money.
Contact us now if you’re thinking about investing for some guidance on loans and your first dive into the world of cryptocurrency.
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