Recent global developments, such as the freezing of Canadian bank accounts and the imposition of economic sanctions as a result of the ongoing conflict in Ukraine, have brought increased attention to the cryptocurrency market.
An ever-increasing portion of the world's population is now looking towards crypto, which offers protection from the world’s economic deterioration, for reasons ranging from the desire to maintain wealth amid collapsing fiat currencies to finding a trustworthy way to transfer value across borders.
But just like with any investment class, you must ensure to use caution before jumping into the cryptocurrency market. The below tips can serve as significant support for anyone trying their hand at crypto investments for the first time.
NEVER INVEST MORE THAN YOU CAN AFFORD TO LOSE
Any wise and successful investor will advise you to only invest money you can afford to lose. This holds true for all markets but is especially true for cryptocurrency, which can experience hourly declines in the double digits. There are too many horror stories of investors spending their entire life savings only to lose everything.
Unprecedented value increases and equally significant value declines have occurred in the cryptocurrency market. Remember that the market is still in its infancy, without early-stage technical impediments or regulatory inspections. This can result in events like hacking, fraud, and a flurry of sell orders that could seem to occur at random. As much as you think you know what is coming next in the market, you can never be one hundred per cent sure, so never invest more than you can afford to lose.
DOLLAR-COST AVERAGING
Volatility is a key characteristic of the crypto market, and Dollar-cost-averaging (DCA) is employed to combat it. DCA is an investment strategy in which a person divides up the total amount to be invested across periodic purchases in an effort to reduce the impact of volatility on the overall purchase. You can reduce losses and spend your money more effectively by making gradual, incremental investments.
It is important to keep in mind that utilising this strategy will result in somewhat higher network prices, but any gains you realise should make up for this. The frequency is up to you; you might do it once a week or once a month. Of course, the more regular you do it, the more effective the strategy becomes. And if you have a strong sense of where the market is headed, you may want to set away some additional money for when it appears to be at a low point.
STICK TO THE MAJORS
The somewhat complex method of researching cryptocurrencies may be scary to some. For these people, it could be best to remain with the major assets that have stood the test of time. The best examples of these assets are Bitcoin and Ethereum, both of which have weathered numerous bear markets.
There are others as well, however it is considerably more difficult to predict if these assets with high market capitalisations will be around in the future. Of course, the same could be said for both Bitcoin and Ethereum, but it's generally agreed that these two have already established themselves as viable options.
MOVE YOUR COINS ONTO SAFE STORAGE
Safe storage is a key requirement when investing in cryptocurrency. Investors frequently lose access to their exchange accounts or, in the worst-case scenario, lose all of their money as a result of a hack or security event. It is your responsibility to store your cryptocurrency assets securely.
The best way to do that is with a hardware wallet. To prevent your money from being stolen, these wallets offer extra security features. Your private keys are generated and stored on the hardware wallet which is then protected by a PIN and an optional passphrase. The keys are never exposed to the internet so they can’t be stolen or copied.
With cryptocurrency, you can own your hard-earned money rather than leave it to the mercy of a financial institution. And here at Coinstop, we want to help you secure your future! That’s why we stock the very best in digital security. From hardware wallets to recovery seed phrase storage devices, our products will help you to become your own bank. Cryptocurrency is the future, and it’s time to start securing yours!