7 Things To Keep In Mind When Investing In Cryptocurrency

Jump to page contentsdropdown-arrow

7 Things To Keep In Mind When Investing In Cryptocurrency

After reading our guide on crypto jargon and a beginner’s guide to trading Bitcoin you are probably ready to invest in cryptocurrency for the first time. At this exciting time, it is a good idea to consider these seven facts which can help you achieve your trading goals.

It’s a Volatile Market

Cryptocurrencies have made the headlines many times due to their massive price fluctuations over a short period of time. Price swings are extremely common, especially amongst newer Altcoins, although even main coins, such as Bitcoin, are known for massive gains and losses. This volatility is due, in part, to the market being unregulated by a central entity.

Securing your Investment

Unfortunately, this industry has not been immune to criminals, and there are numerous cases of hacks and fraud. As a responsible investor, you should seek to protect your keys and only use reliable, trustworthy cryptocurrency exchanges to do business with. Consider storing your digital currency in offline wallets, and never share confidential information, such as user details or passwords, with third parties.

Currency Performance

If you’ve got experience trading stocks and other, more traditional financial instruments, you need to be aware that cryptocurrencies don’t normally follow the same patterns and rationale. Rather than being affected by performance data and market caps, the value of digital currencies tends to vary depending on news stories. This is why you should always stay up to date with the latest cryptocurrency news.

The Best Time to Invest

The basic investor rule of thumb to buy when the price is low and sell when it’s high applies to cryptocurrencies too, up to a certain point. Digital tokens are such a new instrument that it is difficult to gauge when a price is actually high or low. Historical data is extremely limited, especially compared to traditional instruments. You should avoid panic buying or selling, as you could result in later regret. Instead, give time for the currency to level-off temporarily.

A Higher-Risk Investment

It is important that you understand that cryptocurrency is classified as a high-risk investment, and you should only invest a portion of your capital in it. Just like any other financial instrument of this risk, there is a high potential for rewards, however, you should never invest more than you can afford to lose.

Not all Currencies are Created Equal

You are probably aware that there exist many different currencies. You’ve definitely heard of Bitcoin and perhaps Ether and Litecoin. In fact, there are over 800 different ones, and this number is increasing. Different currencies are created with different purposes, and you should read extensively about the currency you intend to invest in.

Cryptocurrency is Becoming Mainstream

The more time passes, the higher the number of governments and international bodies embrace cryptocurrencies. Legislation, regulation, and oversight are increasing, as is entrepreneurial innovation in this sector.

Recently Similar Guides

cex-promotion exmo-promotion

Latest Guides

Blockchain,Intermediate

Big Brands Who Hopped On The Blockchain Bandwagon

With the world’s attention to the cryptocurrency industry only set to increase, it is inevitable that major brands and corporations seek to establish and develop their presence so as to remain relevant. In the future, all businesses would need to adapt to Blockchain technology, similarly to how they had to adapt to the Internet. However, […]

17 July, 2019
Bitcoin,Blockchain,Crypto Mining,Satoshi

Who Is Satoshi Nakamoto?

One of the most mysterious names of the 21st century, Satoshi Nakamoto is the person or group responsible for the creation of Bitcoin. Nakamoto wrote the Bitcoin White Paper and created its reference implementation. His actions would lead to a revolution in peer-to-peer technology and give rise to Blockchain technology. An Unresolved Mystery While Satoshi […]

16 July, 2019
Beginner,Blockchain,Mining

Blockchain For Dummies: A Basic Guide

Blockchain is the underlying technology upon which digital tools are built. The most popular amongst these tools are cryptocurrencies. In fact, blockchain was developed as a way to support the first cryptocurrency, Bitcoin. Beyond just supporting digital transactions, however, blockchain is poised to revolutionise the world, by facilitating everything from smart contracts to national elections. […]

12 July, 2019
Beginner,Fiat,Intermediate

What Is Fiat Currency And Which Exchange Platforms Accept It?

Fiat Currency is the term coined to describe money which is government-issued but is not backed by any type of commodities, such as silver and gold. Today, the majority of national funds fall under this category, with the value of the currency set by individual governments or central banks. Although they might appear worlds apart, […]

11 July, 2019
Intermediate,Margin Trading

Margin Trading: A Detailed Definition & Guide

As an experienced cryptocurrency trader or investor, you’ve probably already heard the term margin trading. So far, you have had to use your own funds to speculate, but what if you could amplify the amount you trade, in order to generate a higher return, faster? This, in essence, is the definition of margin trading. Margin […]

10 July, 2019
Decentralised,Exchange Platforms,Intermediate

What Exactly Are CEX And DEX Exchanges?

Centralised Exchanges (CEXs) and De-centralised Exchanges (DEXs) represent the majority of cryptocurrency exchanges available today. They both carry out the same basic function; that of offering cryptocurrency in exchange of either fiat currency or other cryptocurrency. However, what distinguishes them is the way in which they carry out this function. When Bitcoin was created, its […]

9 July, 2019
Coinbase,Intermediate,KeepKey,Ledger,Wallets

Hardware Wallet vs. Hot Wallet, Which Should You Choose?

Wallets play a very important role within the cryptocurrency industry, but cold wallets and hot wallets play this role considerably differently. Either type of wallet has its own attributes and limitations which make it an indispensable tool for traders and investors, but these same attributes also make it vulnerable to different threats. Commonalities between Wallets […]

5 July, 2019
Intermediate,KeepKey,Ledger,Wallets

What is a Hardware Wallet and How Does it Work?

A hardware wallet is deemed as the safest category of wallets as it stores your cryptocurrency offline, in a physical device you can carry around with you. In an industry which is increasingly plagued by malicious attacks and cyber hacks, this cold storage device can help you protect your Bitcoin and other currencies. The Main […]

4 July, 2019