How to Begin Investing in Cryptocurrency
By TOI Team June 7, 2022 Update on : June 16, 2022
There are many things you should know before investing in cryptocurrency. As easy as it is to get started, there are several risks involved you must be aware of. With the right information, you can confidently manage your investments and learn how to safely store your money.
How To Buy
To begin buying or selling crypto you will need to choose a reliable and reputable exchange. A crypto exchange is a platform that allows you to safely trade cryptocurrencies. Exchanges reflect current market prices. It’s important to make sure your chosen exchange offers multiple two-factor authentication (2FA) methods. If a platform does not have any options for 2FA, then you will know it is an insecure exchange. Some of the largest exchanges include Coinbase, Litecoin, and Binance. Once you choose an exchange you are comfortable with using, you will need to decide on which cryptocurrencies you want to invest in.
What To Buy
Because cryptocurrency is a very volatile market, there is a high risk associated with all crypto investments. The crypto market is known as a high-risk high reward market. The price of a coin can plummet as easily as it can shoot up. When it comes to your own investments, you need to decide which coins are right for you.
Educate yourself on the differences between different coins to better make your decision. Stablecoins, tokens, proof of stake, and proof of work are the four types of cryptocurrencies you may come across. Coins and tokens both work similarly to dollars, in that they represent a value.
The main difference is that digital tokens represent something that can be assigned a price, while digital coins are another form of money. Ethereum is well known as a very successful altcoin in the cryptocurrency market, along with Bitcoin and Binance Coin. It is best to diversify your portfolio and always use a secure method of trading.
How Much To Buy
Think about your goals when developing a plan to invest. Many financial advisors are not huge fans of crypto because it is impossible to assess the volatility. Because of its unpredictability, you must be aware of the risks you are taking. You should set a limit for how much you can invest into a particular coin and not exceed that limit.
How much you buy is ultimately up to you, but it is crucial to never invest more than you can afford. Keep diligent records of your finances and avoid saving everything in one single account. Add your crypto to your investing dashboard to closely monitor its performance.
Become familiar with reading charts and understand support and resistance. Resistance levels show when the asset is not expected to go higher in value while support levels refer to the price it will not fall below. Analyzing these levels over time can help you understand trends and make wise investments.
After familiarizing yourself with the fundamentals of cryptocurrency, you can better understand how to begin investing. Always make sure to review these important tips before making any major decisions with your cryptocurrency investments.