Making the decision to enter the crypto world can be a daring thing. There’s no centralized power to walk with you along this journey, and the rumors which circulate around the digital currency space can be scary for any individual. Fortunately, the crypto-currency community is in no shortage of helpful information. If you are looking for pointers that will help you with your Bitcoin investment efforts, here are some tips to have in mind.
1. Learn to Store Your Bitcoin First
When you are planning to invest in Bitcoin, learn the techniques of buying and selling. Read the reviews about some of the leading exchanges to find out about the easiest and safest avenues for buying Bitcoin. Some of these platforms make it possible for you to buy Bitcoin with PayPal, which is one of the most convenient ways to go about purchasing your crypto-currency.
As is the case with any other financial investment, it’s imperative that you devise ways to protect your assets. You will need to make sure your assets are well-guarded against any form of cyber-attack. There are Bitcoin wallets that are purposely built for enhancing your investment security, so it is important to learn about these as well so you can keep your assets away from prying eyes.
2. Take Caution
In any type of investment, there is bound to be risks. In this case, the risk is enhanced by the newness and volatility of Bitcoin. It can be tempting for anyone to be bold, throwing their money at Bitcoin once they hear various success stories. Especially if you are a first time, taking caution throughout your investment is a crucial part of the process. There is no reason to want to become a millionaire overnight and losing huge amounts of money as a result.
3. Bitcoin Mining
The Bitcoin mining industry has accelerated at an alarming rate. During the earliest Bitcoin days, an average home computer could easily crack the puzzles to get new Bitcoin. However, this has become a difficult thing to do in the current times. In 2018, Bitcoin mining is conducted profitably within the specialized data centers which are jam-packed with machines that are specifically designed to mine Bitcoin. Today, it would cost you millions to set up a home mining operation, which implies that it is reasonable to invest in Bitcoin which is already in circulation.
4. Consider Diversification
It is easy for investors to be infatuated with the concept surrounding Bitcoin. However, the truth is, there are thousands of other crypto-currencies apart from Bitcoin you can invest in. These options could help in offsetting some of the risks that come with Bitcoin investment. Investing in crypto-currency the smart way is similar to trading the stock market – you’ll require a strategy for managing the risk. Do not just put your eggs in a single basket. Hedge your options by investing in other crypto-currencies.
5. Watch out for the Market Cap
One of the common mistakes traders make during their investment process is to base their decision purely on the price of the coin. In reality, crypto-currency’s value is only valid after you have considered the current circulating supply. When buying Bitcoin, don’t focus so much on the current value but take into consideration the ratio of the total market cap. When a coin gets closer to a market cap, it means that the demand will be higher when selling at a later date.
6. Set a Clear Profit Target
Since Bitcoin is a relatively new market, it can be difficult to determine what time is ideal to buy and sell. The volatility of Bitcoin’s value is unlike anything you’ve experienced, so it’s imperative that you set profit and loss targets which are clear to you when opening a trade on Bitcoin. Beginners of Bitcoin trading mostly fail because they get so much drawn into their investment to the extent of forgetting when to avoid a bad position. By ensuring you are able to set a stop loss and the exit point for profits should the trade misbehave, it will become easier for you to reduce losses.
7. Be Ready to Handle FOMO
Another newbie mistake among the Bitcoin traders is the dreaded fear of missing out (FOMO). Should the newbies of Bitcoin trading witness a double-digit growth in the Bitcoin over a period of 24 hours, they’ll invest due to the fear of missing out on further increases in price. What these investors do not realize is that they will be buying the Bitcoin at a higher price that day as opposed to the tradition of buying low and selling at a higher price. The most profitable investor of Bitcoin accepts the fact that it is impossible to catch every market move. Instead of making hasty investment decisions, these traders will bide their time and only act when the conditions of the market are favorable. For instance, the best time to invest is when the prices have bottomed out and Bitcoin price is ready to shoot once again.
8. Keep off the Exchanges
When it comes to Bitcoin trading, there is so much thievery and hacking which investors are likely to experience and, therefore, it’s imperative to take all the necessary precautions. It is not hard to make the life of hackers difficult. Use exchanger for exchanging only. After buying a currency, move the money from the exchanger into a wallet which is controlled by you only.
9. Accept Bitcoin Volatility and Risky Nature
If you are to be mentally prepared for Bitcoin investing, you need to come to terms with the fact that Bitcoin investing is a volatile and risky affair. The volatility of Bitcoin is sufficient to scare off even those who consider themselves to be experienced investors. Nevertheless, if you are ready to implement a strict strategy for managing the risk and consider diversification, there’s no reason for you to turn this high-risk opportunity into a profitable investment.
As a newbie in Bitcoin Investment, you need to take all the precaution necessary to ensure you make sound decisions throughout your investment process. Taking into account the pointers above will go a long way in ensuring you are comfortable with investing in a volatile yet very profitable area.