Cryptocurrencies, led by Bitcoin, have taken the global financial sector by storm, booming to more than 630 billion US dollars in total market capitalization value in December from just 18 billion US dollars in January. To compare, the total value of digital currencies and tokens from ICOs (Initial Coin Offerings) is already more than half the total amount of US dollars that are currently in circulation. And to add to the increasing popularity of cryptocurrencies, seasoned financial market institutions such as the CME Group (Chicago Mercantile Exchange and CBOE) have already been trading Bitcoin Futures since December 2017.
The rapidly increasing growth of cryptocurrencies is primarily attributed to the benefits that the technology brings to the people. Aside from enabling fast, cheap, and anonymous transfer of ‘virtual money’, many people are also looking forward to exponentially grow their wealth by buying some coins early before the expected global mass adoption takes place in the near future.
Cryptocurrency in general, is considered as both a high-risk and high-reward form of investment. The prices, which are strongly influenced by news and developments, can fluctuate abruptly over a short period of time. With less than a decade since the conception of this relatively young technology, there is still a lot of room for improvement before an expected mass adoption takes place. Nevertheless, we all must do our own research and exercise due diligence before investing money on cryptocurrencies.
And if you have finally decided to explore new opportunities in cryptocurrencies, then better check out the five useful tips below that can help you minimize your risks and actually gain profits from safer investments.
- Choose the best Cryptocurrency exchange.
The first step is to look for a trustworthy trading platform where you can transfer your money and start buying and selling digital currencies. Several exchanges accept bank deposits and may require you to provide personal information before you can start trading. A few things that you need to check before you sign up include user testimonials, the amount of transaction and withdrawal fees, trading limits, and the variety of currencies that you can trade.
- Secure your accounts and wallets.
If you are going long on the coins that you have bought, it is recommended that you obtain paper and hardware wallets where you can store your coins for a long time. Avoid keeping your money on exchanges and hosted web wallets where you do not own the private key; as it is possible for your account to become exposed online.
- Learn more about the market cycle.
Understanding the behavior of the cryptocurrency market can definitely help you a lot if you are a swing trader. You’ll learn that the possibility of prices doubling in less than a day is just as likely as the value crashing to 40% without prior warning. As a general rule, always buy at the dips and avoid panic selling.
- Diversify your investments.
Many experienced crypto traders advise putting the majority of your investments into Bitcoin and the rest on undervalued ‘altcoins’ (alternative coins) if you want to maximize your growth. Diversifying your investments also reduces your risks of losing big when the value of a particular coin crashes.
- Enrich your knowledge with the best resources.
As stated before the prices of cryptocurrencies are influenced by news and events in the crypto space. Reading more about the latest updates can help you anticipate the movement of the coin prices. Check out Cryptohead.io for up-to-date news, comprehensive reviews, and expert advises on cryptocurrencies.