Therefore, the interest of various people in investing in cryptocurrencies, since money can be made relatively easily; however, the value is highly volatile, that is, prices change constantly and unexpectedly.
So how to take advantage of Bitcoin or other cryptocurrencies with these changes? Apply these fundamental investment strategies for how to invest in cryptocurrency with best crypto investment site and make money.
Understand what you are going to invest in
If you want to start investing in cryptocurrencies, you need to understand how it works. What are the advantages of a digital currency compared to a traditional currency? Does it have any benefit? Is it useful? How does the technology work? Is your production sustainable? Who are its developers? Who supports them? How do they move in the market?
This will help you determine if the value of a coin will increase or remain, or if it will not remain over time. So, never invest in something you don’t understand.
If you want to know the characteristics of Bitcoin from scratch, click here.
Define the time you want to invest
If you want to invest in a cryptocurrency, whatever you decide for, you must define, if it will be for the short, medium or long term. That is to say: will you make currency changes in the next month, in three months or in a few years?
Short term investment
If your plan is to buy and sell regularly, then you should study market trends to take advantage of the ups and downs in order to maximize profits.
You must be very aware of the indicators, the technological news and the announcements of the developers.
Keep in mind that while you can get great returns, this carries high risk. Although, as the billionaire, Warren Buffett said: “The risk comes from not knowing what you are doing.”
Many people have losses when, out of fear or ignorance, they decide to sell and do not wait for their assets to go up in value. Hence the importance of not investing in something that is not understood.
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Experts recommend a long-term strategy as it is predicted that in the future, the value of these coins will stabilize. In addition, you will have to spend less time analyzing.
Investment in initial public offering, ICO
Investment in what? If you are a first time investing in cryptocurrencies, you should find out what ICOs are. The initial public offering of a cryptocurrency is the first time it has been sold to a number of investors before going into circulation.
In this way, the development team obtains a monetary backing that gives it an impulse, credibility and responsibility to continue with its technological proposal.
One of the most popular and successful initial offerings was made by the Ethereum platform, which traded its cryptocurrencies for a cost of just $ 1.3 per Ether. Currently, the cost of Ether exceeds $ 234, which allows us to see the advantages when participating in the purchase of new coins.
However, these cases are really few. Many times, ICOs are just a business for a few. So it is important to have as much information as possible about the project.
You should especially analyze the growth possibilities and the competition of the new currency. Any cryptocurrency with even better technology will have to compete with Bitcoin, for example, a currency that, although it has high volatility, is already consolidated.
There are different factors to take into account, but these are the main ones.
Invest the right amount of money
The rule “invest only what you are willing to lose” is infallible. Think, will you need the money that you are going to invest to pay the rent, the tuition of your children or the essential services in the following month? Can you face an illness or a layoff from work? If you can’t afford essential expenses in the next few months, then you are investing too much money.
Nobody likes to lose money, but if you invest only the money that you have destined to investments in high risk, you will not destabilize your finances, if the worst happens.
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You can start investing 90% of your savings in safe financial instruments such as Cetes or online loans that offer fixed-term returns; and only invest 10% in high-risk instruments such as stocks or cryptocurrencies. This is known as diversification, which helps reduce the losses that some investments can generate and take advantage of the opportunities that present themselves.