The Top 10 Cautious Strategies For Investing In Bitcoin
As crypto currency prices continue to rise, it is important the investors understand how bitcoin, and other similar crypto assets how changed the face of investing forever. Having a cryptocurrency investment strategy is the secret to living an abundant retirement, and who better to learn from than business owners that have invested in Bitcoin since the very beginning. Learn what it takes to effectively invest in Bitcoin in today’s market, and how to avoid the pitfalls that so many crypto investors have fallen for in the past.
1st Tax Inc.
Understand what kind of an investor you are. Some investors do better as buy and hold, the backronym for holding in the crypto world, and gain from the long-term growth. Others enjoy the challenge of jumping in and out of the market. Sometimes it takes a while to get to know yourself and which kind of investor you are. It can be very painful when the market goes down, so you need to know if you can hang on during that time, or if you will panic and sell. If you are the type to panic it is better to trade because then you are likely to get out at an earlier stage with stop losses set and the like. But if you can handle the temporary pain, holding for the long term usually pays out in bigger gains.
Investing in Bitcoin or any other cryptocurrency is highly speculative, and as a completely new asset class it is more important than ever to appreciate that values can go down as well as up. Whilst you should never invest more than you could afford to lose, the potential returns are also unprecedented. As such, you could regard it as a ‘Pascale’s Wager’ situation, in which it is pretty much a risk not to get involved – at least to some extent. Ensure your investment in Bitcoin or cryptoassets generally forms part of a diverse portfolio – in which this uncorrelated asset class can play an important role in de-risking overall.
Either opt for a managed institutional product, or educate yourself in how to securely manage and store the private keys to your cryptoassets. Do NOT leave them on a trading exchange. It is vital to understand the extent of your individual personal responsibility for this, there is no ‘bitcoin helpdesk’ you can contact if you lose your keys or send a transfer to the wrong place. This is probably the single most important thing to understand for new investors in the space, because it doesn’t matter how a crypto asset performs in the market if you have lost the ability to access it.
Bitcoin may not even be the leading cryptocurrency anymore. In the same vein as how “Friendster” was the social media network receiving venture backing in 2002, and a household name shortly later, now you are hard pressed to find a younger millennial that even knows what it was. So as Facebook emerged when the dust settled, some of the other cryptocurrencies are more based on more robust blockchain technology than that of bitcoin, bitcoin is simply the current most-known. It’s possible that bitcoin won’t be the first widely-adopted digital currency, and instead that a so-called altcoin will bear the title (Ethereum, Ripple, Dash, etc.). For this reason, unless you believe you have advantageous information over others in the market, the best bet to go long cryptocurrency is to own a diversified amount (that you can afford to lose) of the top 5-10 cryptocurrencies shown on coinmarketcap.com.
Buy low sell high
It’s a simple principle which is to be followed by any kind of investment, but it’s equally difficult to recognize that whether current is high or low. So how to do this? Well, follow these simple things to decide if the current price is high or low to buy.
Check the price of last 90 days. Get the average price of last 90 days, get the low and high of last 90 days. See if the current price is around low and is below or around average. Then it’s pretty good price to buy. Avoid buying if the current price is around the peak of high of last 90 days.
Never panic sell
If you see the prices are deteriorating, try to be patient and determine a position before exiting. Follow the same method as stated above. See if the current price has gone below 90 days low or all time low? And decide accordingly.
Purchase the Bitcoin from legal and proper sources
Like every other online business, Bitcoin world is also filled with scammers who try to sell Bitcoin in cheap on various classified sites and in the end, they do not give bitcoin but run away with your money. So try to avoid such sites and try to buy from reputed sites.
Store bitcoin safely
If you are holding bitcoin in some exchange’s wallet then do note that the bitcoin is actually owned by the exchange and not by you as the key of the same is with them not with you. So try to store bitcoin in a safe place like hardware or paper wallet and store the seed keys of the same properly.
Here are some of my tips for investing in Bitcoin, Objectives – Before you purchase Bitcoin, you want to know your objective of the trade. If your purchasing bitcoin to make a trade based on technical analysis, and that trade doesn’t work out as planned, then close it out. You don’t want to turn a trade into a long-term investment if that is not your objective going into the trade.
Investment only what you can afford to lose – Just like a stock, you should only risk the money you can afford to lose. If you need the money for a car payment or to pay your rent, given the volatility of the market you should not be placing that money into the crypto market or even the stock market. I know that it maybe tempting to try to
quickly double your money but the trade can go against you.
Avoid the Noise – I know this easier said then done, but try avoiding the noise, its easy to get caught up with the hype that bitcoin is going to the 100,000 or 1,000,000 when the coin is making record highs or that it’s a bubble and its going to zero when its going down. Getting caught up in the noise can lead you to make a decision that is
counter your objective.
When it comes to Bitcoin, my top 3 bits of advice for a new investor would be: 1. Focus on the long-term life of your investments. With the way the media reports on cryptocurrency and Bitcoin, it’s easy to get caught up in the hype and either buy on feelings of excitement, or panic and sell when you see the price drop. New investors need to realize that Bitcoin is not a get-rich-quick scheme. Investing is a financial decision that should be approached the same way you’d invest in other financial markets. Use a
reliable investment platform which is uncomplicated and easy to manage. This will help an investor keep track of their assets with less work and stress. Some investors prefer to trade their cryptos actively on exchanges, but that can be an arduous and risky undertaking due to the constant swings in the market. Day trading and swing trading should only be conducted by a seasoned investor with a deep market understanding. Maintain a diverse portfolio. Just like in any market, an investor should keep several types of assets in their bag. The crypto market is volatile and moody.
It can shoot up one day and drop out from under you the next. The benefit of keeping differently performing coins under your control is they will not all be affected the same way during market adjustments and corrections. So the goal is to have your assets complement each other and keep your investments at least balanced out at the end of the day. Finally, you should consider crypto investing to be a relatively high-risk subset of your overall portfolio across traditional assets like stocks, bonds, cash and real estate. As an emerging asset class, crypto investing can potentially earn great returns over the medium term, but it will also encounter tremendous swings along the way. Do not invest more than what you are willing to risk entirely, and always make sure you have a safety nest tucked away in lower risk assets before you branch off to crypto investing.
With the popularity of Bitcoin rising exponentially, many traders and investors are finding out that trading cryptocurrency isn’t totally different than what they are already used to. The keys to trading BTC are based on a lot of the same principles.
The first recommendation I have is to practice patience when investing. Warren Buffet may not always be right, but he is when he says that, ‘The market is a device for moving money from the impatient to the patient.’ That means you should never be in a rush, as the market is going to be there. Another opportunity to make profits will come; stick to your guns and don’t let the fear of missing out (FOMO) get to you. Set goals and targets for each token/coin and wait.
The second recommendation I’m going to give you is to use the tools at your disposal. Use your stop limits and set alarms within your trading apps that will notify you when a token/coin has hit a certain price. That way you can take some profits as your trade moves up. These two tools take a lot of the guesswork out of trading, and when using them, you greatly avoid the possibility of big losses and ensure the chance that you can claim your rewards!
The best tip when it comes to Bitcoin and cryptocurrency trading, is to master a fundamental best practice: security. If this is your first time trading Bitcoin or other currencies (known as alt-coins), be aware than it’s unlike any other type of trade you’ve ever made. It’s really a wild west scenario – there is much profit to be made, but beware of digital bandits. If you’re not careful a hacker could steal away a new investment before you have any idea about what happened. Once your coin is gone, it’s gone forever.
Luckily there are easy ways to prevent this from ever happening. I usually recommend all traders, new or experienced, to purchase a cold storage wallet. This is a secure safe that allows only you to have access to your coins. Cold storage is a must have if you are going to be trading Bitcoin.
My first advice to any investor would be to put off doubts and fears and add crypto assets to your investment portfolio. The second main topic here is security. You need to make sure that you personally hold all the accesses to all your assets and never lose your private keys.
Every newcomer should consider cryptocurrency as a long-term investment. Patience is a trick here, since the market itself is immature so far and thus extremely volatile. I would also recommend to invest not only in Bitcoin itself but consider other strong market players. The team behind the project is a crucial factor in crypto, so you can always unexpectedly meet a new leader. You can go to coinmarketcap.com, for example, to browse the market and create your own portfolio of top-x coins to reduce risks.
Buying bitcoin now isn’t about current price it’s about the theme. Bitcoin is at the forefront of global economies transition from paper money to digital currency. It is in the same place Amazon was in 2007 with the shift from brick and mortar retail to the online marketplace. A shrewd investor will accumulate at every dip, and will be very happy in the long run.