How To Invest In Bitcoin and Other Digital Assets

For a newbie, investing in Bitcoin or any other cryptocurrency is challenging. This is mainly because despite being a relatively new investment class, Bitcoin has come a long way. So what worked a few years ago may not work today.

You have to bear in mind that that just like any other asset class, there are inherent risks in Bitcoin investment. These risks include the possibility of losing your assets due to theft or through miscalculation due to its volatility.

Cryptocurrencies  are so volatile that it is easy to lose all your coins in a short time. This is why you have to take definite steps to ensure that you know what you’re doing before trading your funds.

Great Potentials in Bitcoin

Just a couple of years ago, investors in cryptocurrencies made gains of 1000 percent in days or weeks. Such scenario may not be as common as it was, yet with good experience and trading skills, it is possible to make immense gain through investment in Bitcoin.

But before you do that, be sure that you have researched on how to be a successful investor. Many people invest randomly and end up losing a lot of money.

The most important step you may have to take is studying the market to gain insight on how it works. Bear in mind that you’ll encounter a lot of volatility which means that your funds could be wiped out. In like manner, you could ride the volatility and make a lot of money.

Experienced Investors Warn About Emotion

If there is a pitfall you should avoid as an investor, it is not to allow your emotion affect your investment decisions. Always make such decisions based on empirical evidence after careful study of the market.

Make your investments devoid of sentiments. The step should be research and invest to see the result you expect. Adding your emotion is a quick way to lose in investments.

My first investment was made based on emotion. I thought with the recent upswing in the price of Bitcoin that it was a good time to invest. I just did and lost nearly $300. This is why every investment must be made based on concrete information.

Devote Time To Research

Nothing would prepare you for investment better than research. There is lots of information out there on how to invest in cryptocurrencies that if you do not dig deep, you won’t be able to separate the hype from the reality.

Do not think that you have enough skills to be a good investor just because you read a few articles. What I have discovered is that finding a role model who is a good investor willing to teach others is the best approach to investing in cryptocurrencies.

Learn until you gain insight into the right approach that will give you the sort of result that you want. Hone the skills and keep at it. You will make mistakes but over time, you’ll get better at what you’re doing and make consistent profit.

Never Invest What You Cannot Afford

You should start your investment small with money that is not critical to you. You can purchase bitcoin from exchanges but start small. Many exchanges have demo accounts where you can practice with free funds before using your own money.

Be sure that you have mastered a strategy before using real funds. This is important. Even if it takes you many months to become confident that you’re ready to commit real funds to cryptocurrency, exercise the patience. Do not invest until you’re ready.

Start Small, Buy Low

Do not use all your capital to purchase bitcoins. When you start investing, do not just pursue the price of Bitcoin by trying to predict it. That may be just impossible since there are always unforeseen circumstances. The best approach is to use its present price to find entry points that most investors are willing to support.

There are bases that investors will always support. Investing within these tiny ranges would see to it that you don’t lose your funds. In fact, if you learn this strategy, you’d win most of your investments.

Two Approaches

In investing in Bitcoin, there are two approaches to take. The first is hodling. This entails buying and holding or accumulating bitcoins that you own with the hope that it would become very valuable in the future. This is the safest approach, but we need to know if Bitcoin would actually become very valuable in the future.

It is obvious that it would become valuable because it is deflationary and designed to be scarce. This means that over time, its value would get higher so anyone that holds some bitcoins would find them valuable over time.

Another approach is trading Bitcoin with altcoins. The way this works is that the price of Bitcoin varies continually with respect to those of other cryptocurrencies. These other coins (altcoins) could be traded with Bitcoin.

You trade or buy the dip (fall in price of the altcoin) on the chart and sell the spike (rise in price of the altcoin), you’ll make gains. This way, you increase the volume of Bitcoin you own.

Bear in mind that trading is something that you learn and perfect in before trading your coins. This is due to the high volatility of cryptocurrencies. Practice with a demo account before using your funds.

Diversify Your Investments

There are many coins that you can invest in. It is important that you diversify your investment to reduce the risk associated with them. There are many good coins to put your money in. These include Bitcoin, Ethereum, Litecoin, MIOTA, Monero and others.

Just read through the history and know their peculiarities and uses. This would give you insight into what you’re investing in.

Never Leave Digital Assets in Exchanges

Leaving your coins in exchanges is risky. There are many security issues and threats that are associated with exchanges. Hackers are aware that they hold substantial volume of assets so they’re constantly trying to breach exchange security and steal the coins.

This is why you should not leave your coins in them longer than is necessary. You should buy or trade and move the cryptocurrency to your personal wallet that you control. If you hold a large amount of bitcoins, it is safer to store them in a cold wallet.

Cold wallets are those that are not connected to the internet so they’re impossible to hack.

Avoid These To Keep Your Coins Safe

Aside trading and hodling, there are many other activities that people get involved in in their quest to increase their digital assets. I suggest that you avoid all these since it is possible that you’d make losses than gains.

Gambling and participation in high yield investment programs and ponzi or pyramid schemes is a sure way of losing your assets.

To purchase bitcoin, use a good exchange. You can also learn to trade. There is an exchange that would help you trade your bitcoin and other assets through a social copy trading system. This would enable you copy what experienced traders are doing and get the result they get.

Author: Jofor Humani

Jofor is a crypto journalist with passion for investigative reviews.

Leave a Reply