Do you have plans of investing your money in the cryptocurrency market? Over the past couple of years, cryptocurrencies have surged in popularity, especially last year when it reached an all-time high of $19,000. Although the price currently sits at around $6000, cryptocurrency trading still presents an enticing way to grow your wealth. Before you invest, however, you should learn the ins and outs of the market. Here are 4 of the most important things you should know before investing in crypto this year.
1) Short Versus Long
Just like trading stocks, you have the option of trading cryptocurrencies regularly or holding onto them for the long term. For beginners, it is suggested to use the hodling strategy. This involves buying a coin and keeping it for at least a few months even if the price goes up immediately after your purchase. This strategy is a deal for investing in established cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.
Of course, you can also decide to try day trading. Basically, your goal is to buy low and sell high. This can prove to be very profitable considering the volatile nature of the cryptocurrency market. But since the rewards are high, the risks are high as well. You can make more calculated decisions with the help of Bitcoin Code which uses predictive analysis to help you place the right trades.
2) Diversify Your Cryptocurrency Portfolio
Whether you are in it for the short or long term, it is a wise decision to diversify your cryptocurrency trading profile. By not keeping all your eggs in one basket, you avoid the risk of losing all your money in case the price of the coin you’re invested in goes down suddenly. You need time and effort to learn about other cryptocurrencies and determine which ones are worth your money.
3) Consider Mining Cryptocurrency
If you do not see yourself actively trading cryptocurrency, then you may want to get into mining instead. Mining is the process of generating cryptocurrency by using your computer to be a part of the network. Take note, however, that mining equipment can prove to be expensive for the average individual. But if you have the money for it, this can be an excellent long-term investment.
4) Steer Clear of Investment Programs
Because Bitcoin has become so popular, many investment programs have started to emerge. You will find that most of these programs are operated by so-called gurus who know everything there is about the cryptocurrency market. Of course, this is an attempt to lure in beginners and compel them to shell out money.
It’s in your best interest to avoid these Bitcoin investment programs, especially those that do not have a reputable team behind them. You can always do your own research to further your knowledge about cryptocurrencies. After all, you wouldn’t want to let just anybody take your money and invest it in the market without a single clue of what they’re really doing.