Read this article to learn more about cryptocurrencies and trading as we’ll share our top tips.
The cryptocurrency market is decentralized, meaning it is not backed by a central authority like a government or a central bank. It first appeared in 2009 after the introduction of Bitcoin, and it runs across a network of computers as cryptocurrencies are stored on the blockchain and exist only as a digital record. Today, there are multiple cryptocurrency markets as the industry continues to grow and more individuals are opting for crypto payments because they are faster and more secure than traditional methods of payment.
Bitcoin is not the only cryptocurrency on the market anymore. Many others have appeared since 2009, including Ethereum, XRP, Litecoin, Tether, Monero, etc. With over 5,000 cryptocurrencies, making the right choice is quite a challenge.
The choice can be even more difficult if you haven’t had a chance to deal with cryptocurrencies and trading before. So, by reading this article you will learn everything about cryptocurrencies and trading as we’ll share our top tips.
Decide on Your Preferred Level of Risk
Ultimately, it all comes down to how much you’re willing to risk to set sail in the unpredictable waters of cryptocurrency. With a continually growing number of cryptocurrencies on the market, Bitcoin remains stable and predictable. Bitcoin’s all-time high was $20,000 and since then it has stayed below that number. If you want to avoid risks, it’s better to stick with a verified option like Bitcoin.
Don’t get us wrong, there are other currencies worthy of investment, like Ethereum, Litecoin, and Ripple. These currencies have proven to be stable and trustworthy over time.
However, there are more risky investments than there are safe ones. With that in mind, it’s not a bad idea to diversify your investments. What do we mean by that? Invest in more stable cryptocurrencies to strengthen your investment portfolio. It’s an excellent way to start out in the crypto world as most of these currencies keep their price fluctuations to a minimum.
Note Possible ICO Offerings
If you’re part of a digital currency company, you should be on the lookout for Initial Coin Offerings (ICOs) as they represent the best and quickest way to come up with working capital. Similarly, with ICOs the company will be the first to roll out the new cryptocurrency. If you’ve ever been involved in the stock market, you’ll find this process similar as it involves “betting” that a company that can deliver something and getting returns on your initial investment.
With ICOs, you will have to rely on your intuition and understanding of the offering as there are no historical charts, reviews, or background information about the currency. Also, keep an eye on the team behind the offering and how the cryptocurrency stands out from the crowd. Since you’re starting out with a brand new cryptocurrency, investing in a great ICO could help you maximize your investments. ICOs are great opportunities if you regularly keep track of the trends in the industry.
Missing out on ICOs is possible as the market is quite competitive, but not all hope is lost if that happens to you. You’ll get a chance to purchase the cryptocurrencies on cryptocurrency exchanges.
Our advice is to stick with less-known exchange platforms as the possibility of finding a better investment is higher there. Renowned exchange platforms tend to limit the currencies they trade. Do more research before you opt for crypto exchange platforms.
Independent Research Is Important
We are not discouraging you from listening to a company’s representatives, but we are saying that it’s not enough. You should do proper independent research so you can have a clearer picture of what you’re dealing with.
An important tip before you start trading any cryptocurrency is to look at their historical charts. Don’t get stuck at the price chart, but also pay attention to the market cap and circulation. When checking the cryptocurrency’s full history, look for stability. Ultimately, stability in this volatile market is of the essence. Any cryptocurrency you choose to invest in should ideally showcase continuous growth as well.
Don’t forget to find out more about the company offering the digital currency as you could gather plenty of information about their plans and potential problems. Opt for companies that are able to back their ideas and use innovative technology to advance in this competitive industry.
There are also some things that you should avoid when doing full background checks. If you come across currencies that have suffered significant drops in their market cap, large corrections, and big peaks, it’s best to give them a pass. Those are indications of a dying demand.
Once you make a decision about which cryptocurrency to invest in and trade, keep a watchful eye, and monitor your portfolio daily. Read crypto news and follow up on crypto investments. Independent research should still remain your number-one priority before investing.
Other cryptocurrencies might not have the same rapid growth path as Bitcoin, but picking the right cryptocurrency to invest in can result in lucrative returns.
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