By Nathan Ferguson
Want to know how you can put money in cryptocurrencies? Would you like some tips on where to begin? Maybe you’re a trader who believes that your mistakes are too frequent. Here are the cryptocurrency investing tips you should consider, as well as the mistakes you should avoid.
In recent years, cryptocurrencies have grown substantially, making them a lucrative investment option. When Bitcoin first became popular, many banks and financial institutions were skeptical. Still, as banks and financial institutions have invested substantial money and launched cryptocurrency services, the skepticism has gradually declined.
Due to this news, the attention has already turned to cryptocurrencies, and Bitcoin has reached its highest level since its 2014 high of $20,000.
Investing in cryptocurrency is a great way to make money, and we at Trading Education prepared the best crypto investing tips and the most common mistakes to avoid.
Educate yourself about cryptocurrency
Bitcoins are serious business and should not be regarded as a means of getting rich fast. We should mostly rely on the financial sector to be our traditional sources of saving money. In case of an error or if money has been sent to the wrong address, contact customer service. They will return the transaction.
Cryptocurrencies do not allow this to happen. Cryptocurrencies are decentralized and have no CEO. As a result, there is no turning back if you are scammed. Therefore, should you take crypto and blockchain technology seriously, you will be able to tell what is legit on the internet from what is not.
In some countries, vaccines will see a rollout in 2021, which will lead to a much better economic recovery after a year of uncertainty and upheaval. Even so, despite global financial downturns caused by COVID, there is one sector that is poised to rise even higher this year. This sector is led by Bitcoin and is known as the cryptocurrency sector.
Cryptocurrencies are an investment you might want to look into if you have spare cash and are interested in making a high-yielding but high-risk investment. Before you invest, you must know that digital assets are highly volatile. You could either make a fortune or see your investment wiped out. In November 2018, Bitcoin’s price plummeted to about $3,500 from almost $20,000 at the end of 2017. To succeed in the crypto market, you want to invest in crypto and minimise mistakes.
Investing in cryptocurrencies might seem daunting, but what is so hard about it? You don’t have to worry about it being too hard, as long as you don’t make beginner mistakes. As a new investor, you should avoid these mistakes if you wish to invest in cryptocurrencies.
Six cryptocurrency tips
- Have a strategy for crypto trading
Many sharks are lurking out there waiting for your money, so it is difficult to distinguish between genuine and fraudulent cryptocurrency recommendations.
Since the beginning of 2021 have seen 7118 reports of crypto fraud. According to Action Fraud, this was a 30 per cent increase on the same period last year, with a loss per victim averaging £20,500.
It is always a good idea to take a step back from the hype of a cryptocurrency when a lot of information about it confronts you.
Take a critical look at the project that you are working on. What is the number of users that it has? Is the project solving a problem? If so, does it have any connections with the industry? Keep an eye out for coins that promise the world, but never deliver.
- Manage risk
It would be best to be wary of people who offer you tips for crypto trading, as they might not be looking out for what is best for you. Therefore, take note of these tips and do not repeat the missteps as others. Do not get tempted to trade with more money than you can afford to lose, nor do you need to set financial limits on how much you invest in a particular digital currency. Trading in cryptocurrencies is a business filled with risk, and the odds of a trader losing a lot of money are higher than not.
- Diversify your crypto portfolio
Too much investment in one cryptocurrency doesn’t pay off if you don’t know what to do with it.
The same as with stocks and shares, a person should make use of several different digital currencies.
Therefore, you won’t be over-exposed if a particular investment comes to a crashing end; instead, you’ll be less likely to lose money in the event of a market decline.
Do your research before choosing one of the thousands of options available. Worldcoin, for example, is one of the thousands of options.
- Be in it for the long term
It is quite possible for the price of a security to soar and fall dramatically from day to day and for novice traders to be duped into fast-selling when prices are low.
Likely, cryptocurrencies will not leave the market any time soon, so if you’re willing to go your money in the market for months or years at a time, you could reap the most significant rewards.
- Automate purchases
Automating your crypto purchases will allow you to benefit from pound-cost averaging, just like with stocks and shares.
There are several cryptocurrencies exchanges you can use to set up recurring purchases. Coinbase and Gemini are just two examples.
In this type of platform, crypto investors could set a fixed amount of their preferred cryptocurrency to be purchased every month – for example, an amount equivalent to 100 percent of bitcoin. As a result, they receive less currency at times of high prices and more at times of low prices.
Therefore, you will no longer be required to time the market by either buying or selling currency at what you believe is the lowest possible price since it is taken care of. The problem is that even the market experts have difficulty doing correctly.
- Use trading bots
While trading bots can be helpful in some situations, they are not recommended for novice investors seeking cryptocurrency investment tips. In many cases, they are just disguised scams disguised as valuable tools.
The best trading algorithms that time your buy and sell trades to perfection would be used by everyone if they existed!
Five common crypto mistakes
Almost 2.3 million British people own one form or another of cryptocurrency, according to the latest data released by the UK regulator Financial Conduct Authority.
You are very likely to get caught up in the excitement of headlines, which is very easy to do. Below are a few examples of crypto mistakes that are startlingly common.
- Buying just because the price is low
There is no such thing as a bargain when the price is low. You should always pay attention to the reason why the price is low. If the user rate is declining, you should take action.
Developers often leave projects to work on other projects, and the cryptocurrency does not get updated adequately, making it insecure.
- Falling for scams
Cloud multiplier scams
There are cases when fraudsters contact victims over the phone or by email with unsolicited investment offers. Cryptocurrency holders who send their coins to a particular digital wallet will be offered a double or triple return on their investment. They are instructed to send it back to them upon receiving it.
It is recommended that you always view free money offers with a great deal of scepticism.
Spoofing
Crimes are committed by criminals who manipulate cryptocurrencies prices, sometimes inflating or deflating the value of very small or unknown digital currencies by making fake orders to buy or sell them. The value of the coins can sometimes increase by hundreds of percent at once.
There are instances when criminals cancel the orders – which are never going to be fulfilled initially – to make sure no one else can get a slice of the action; in some circumstances, that can lead to a crash in the market.
The criminal community sometimes pre-mines a large amount of cryptocurrency before it is generally available to the public (“pre-mining”).
Several methods can boost the price, including social media promotions and sell on crypto exchanges at a higher price. Afterwards, they disappear from the market.
Malicious wallet software
Best crypto tips tell you to stick with big names like Trezor, Exodus and MetaMask in your crypto wallets.
Hackers can take your crypto funds in the form of dodgy code by using dodgy wallets on the Google Play Store or App Store.
Fake coins
It can be challenging to tell what’s real and fake when so many cryptocurrencies are on the market.
You must realise that when you buy fake coins, criminals may be able to steal your identity as well as your hard-earned money. This is done by using phishing – persuading you to click on links in emails that will install malware on your computer due to clicking on links within emails.
You shouldn’t act on the word of anyone else, and you should make sure to pursue as many sources as possible in your research.
- Going ‘all-in.’
One of the more suspect trading platforms promotes that you need to bet as much as you can if you want to maximise your profits. This will lead to you living in poverty soon.
One of the best tips for investing in cryptocurrency would be to only use a certain percentage of your investment capital on the market — like 5%– and always keep an emergency fund that never gets invested in cryptocurrency.
- Investing only in one coin
Investors tend to make the mistake of investing in one coin. Some cryptocurrencies perform better than others, though they are all correlated. By far, Bitcoin is most people’s favourite. However, there are often some new, unknown cryptocurrencies that can grow by 300-400% within the day, making them highly profitable.
Therefore, it is best to invest in more than one cryptocurrency, analyse the market, and take your time. You are more likely to succeed.
- Errors in crypto keyphrases
You would be losing the keys to a bank vault if you forgot your keyphrase if you keep your crypto offline with a hardware wallet.
You will be unable to retrieve all your cryptographs without your keyphrase.
Know your crypto lingo
Often, there is a lot of jargon thrown around in crypto-land that can be difficult to understand.
The following list of helpful crypto tips will help you learn how to make the most out of your cryptocurrency experience and avoid common mistakes that may cost you your trading account.
In simple terms, altcoins are cryptocurrencies other than the original one, namely bitcoin. The term derives from the words “alternative” and “coin”.
- Cryptocurrency exchanges
As with regular stock exchanges, Coinbase, Binance, Gemini, and Bitstamp offer a similar service to traders and investors, except that they are trading cryptocurrencies rather than common stocks. Cryptocurrency exchanges differ from traditional stock markets in many ways, including being open 24/7 and being open seven days a week.
- Limits
Most exchanges do not limit how many cryptocurrencies trade their users may conduct in a given day or set any restrictions. A short-term suspension of deposits on some sites may occur during turbulent trading days in which cryptocurrency prices are pretty volatile. This happens when cryptocurrency prices are very quickly moving up or down.
- Shorting
“Shorting” cryptocurrency is when you are betting against the price going up and instead betting on the price going down.
- Forks
An example of a cryptocurrency fork is when two chains are created due to a split in a blockchain. It is sometimes the case by the way developers disagree over the order in which blockchains should be arranged, but it is not always the case. After the forking of bitcoin in 2017, the Bitcoin and Bitcoin Cash blockchains were created.
- ICO
ICOs are initial coin offerings, much like initial public offerings (IPOs) or floats in the stock market. An Initial Coin Offering (ICO) sells new cryptocurrency tokens for the first time to investors.
- Margin trading
In margin trading, platforms refer to the borrower borrowing money to bet more on the cryptocurrency than the investor. You must, however, be very careful when you are trading on margin, as you can dramatically magnify the losses if you fail in executing the trade.
- Fiat
It is known as a fiat currency when the country’s government backs the money it is issued by. Some examples of fiat currencies include sterling, US dollars, and Indian rupees.
- Cloud mining
Cryptocurrencies can be mined by people, or produced by individuals, to compete with each other for newly minted coins. Cloud mining pools resources and makes mining more efficient using remote data centres, like those that run Google’s software. You should do some research before registering with cloud mining companies, as many of them are scams. Mining cryptocurrencies requires enormous amounts of computing power. Charlatans are likely to offer easy rewards for cloud mining.
- Bull markets and bear markets
Traditional stock market terms are used here. Market bulls believe that a particular investment will perform well, so they keep buying, and prices rise. On the other hand, market bears are nervous, and prices generally fall.
- Sell orders
In the event the price of a cryptocurrency hits a certain point, a sell order is given by traders to a platform to sell their cryptocurrency. Traditionally, this is known as a “stop-loss”.
- Order book
A cryptocurrency order book lists all the traders looking to buy or sell cryptocurrency at a specific price at a particular cryptocurrency exchange or brokerage.
Thinking Cryptocurrency Is Foolproof
Securing data is not the same as encrypting it. Crypto newbies make the mistake of believing that because a currency is encrypted, it is secure. Cryptocurrencies are encrypted to make them confidential, but that doesn’t mean they are invincible to hacking or theft.
Due to the decentralised nature of this type of asset, your only responsibility will be to keep it safe. Follow these tips to stay protected:
You shouldn’t give anyone your keys. Codes and legends represent cryptocurrencies, so you must keep them secret. Put it in a vault or safe deposit box if you have to write it down. Please ensure that your computer is secure if you must store it in a document. Your computer can be used without your permission once your keys are obtained.
Never leave your crypto coins in exchange for long periods, regardless of how popular they may be. Despite the security measures on crypto exchanges, hackers have made them their favourite targets. To avoid hacks, you should not just leave your digital assets on sale for a long time.
Digital wallets are the best place to store your crypto coins. Choose a system that satisfies your budget and offers the features you need. You should also look at its credibility, performance, and reputation, not just its features. Trust is crucial when choosing a wallet.
Conclusion
The survey by Deutsche Bank found that 41% of investors believe Bitcoin’s price will increase from almost $10,000 in January of 2020 to $20,000-$49,999 in 2021. Bitcoin is usually followed by other altcoins when the price of Bitcoin rises. Consequently, cryptos will do well, in general, this year.
If you don’t know what you’re doing, investing in cryptocurrencies can end in massive losses, just like investing in any commodity or asset. You can make huge profits from a highly volatile market, but it comes at a price. Investing in crypto assets properly can help you make huge returns. Investing requires a high-risk appetite before you get started.
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