In recent years, many people have started paying attention to the world of cryptocurrency. Whether it’s the stories of financial success, hearing an influencer mention crypto, or an interest in the underlying technology being used, there are many beginners out there in need of tips. Fortunately for you, we have five tips right here!
We have gathered five tips that will help you when entering the cryptocurrency market. Some of them deal with your mentality while others are steps you can take in the real world to become a better trader and keep your crypto more secure.
If you’re such a beginner that you’re wondering “why invest in cryptocurrency” then you should read about the industry before you start trading.
- Embrace Volatility
It’s no secret that the cryptocurrency market is more volatile than others, like the stock market, for example. With this volatility comes the opportunity to make a lot of gains, which is why a lot of people get attracted to cryptocurrency in the first place. Of course, this also means you can lose a lot of money too, so it’s a double-edged sword that you’ll need to embrace if you’re getting into crypto.
Volatility is unpredictable, by definition, and so it can be hard to predict price movements for cryptocurrencies in the same way you would with stocks. Unlike company stocks, many cryptocurrencies explode based on cultural trends and memes born on the Internet, so that adds another layer of unpredictability.
By anticipating and mentally preparing yourself for volatility, you will be a better, less emotionally driven trader. You’ll be able to handle big wins and hold through periods of price instability.
- Pick The Right Platform
Cryptocurrency is traded using one, or even multiple, trading platforms. Since you are essentially sending and receiving money, you need to make sure the platform you pick is legitimate. It shouldn’t abuse its access to your data or financial information and, when the time comes, you should be able to withdraw your gains.
A tell-tale sign that you’re engaging with a good platform is where they ask for some kind of ID. This is to stop bots or fraudsters from accessing the exchange. They should also offer 2FA (Two-Factor Authentication) so you can protect your account from hacking attempts.
- Go Beyond Bitcoin
All too often the word “cryptocurrency” just means “Bitcoin.” While Bitcoin was the first and is still one of the best cryptocurrencies around, there are many, many more that should be on your radar. Bitcoin is sometimes called the gold of the cryptocurrency world, and so holding some is a good idea, but there’s also the silver of the cryptocurrency world – Ether. Ether is the currency behind Ethereum, the largest blockchain in the world.
Alongside Bitcoin and Ether, there are many so-called ‘stablecoins’ that have established themselves as big market players. Don’t let the name fool you, they’re still volatile, they’re just less volatile than altcoins.
Altcoins vary wildly and most of them have smaller market caps. They’re cheaper to buy into but they’re subject to wild price fluctuations. Many of them have use cases that may carry them forward into the future while others, like Dogecoin or Shiba Inu, are ‘meme coins’ because there’s nothing but a community driving them up.
- Don’t Believe The Hype
Having mentioned meme coins and how many cryptocurrencies are propelled by communities, it’s important that you don’t believe the hype. By this, we mean your trades should be made using accurate information, not rampant speculation. Some people make a lot of money by buying up crypto, promoting it online, and then selling everything and crashing the price. The crypto market is highly unregulated, so this happens often.
This doesn’t mean you can’t assess a situation and enter a trade based on the hype other people are engaging in. What’s important is that you’re not buying somebody else’s scheme.
- Get A Digital Wallet
If you’re serious about trading cryptocurrency, you should look into getting a digital wallet. These are ways that you can store your digital assets, through either hot wallets or cold wallets.
Hot wallets are protected software that you can place your cryptocurrency into so that it’s not in your exchange account where it could be hacked. Cold wallets, on the other hand, are physical storage devices. They operate a lot like an external hard drive except you’re storing cryptocurrency on them instead, providing unparalleled security for your assets.