7 Thumb Rule to know Before Investing in Cryptocurrency
Many cryptocurrency investors are looking for quick riches. They often fail to materialize as fast as they should. The path is full of scams and traps that will drain the wealth of desperate people.
Bitcoin was not able to reach $50,000 in a decade. This will hold true for any token which is able to last long term, with only the most informed and persistent hodlers reaping the greatest rewards.
So, now let’s Understand the Do’s & Don’t of Investing in Cryptocurrency so that you don’t regret after putting your hard-earn money in Cryptocurrency Investment.
1. Before investing, make sure you understand the mechanisms of buying, trading, and exchanging cryptocurrencies.
You can find platforms that permit you to withdraw or deposit local currency. These platforms are a great way to transfer funds into and out of the crypto ecosystem. Learn how to make basic selling and buying trades, so it will be easy when the time comes.
The mainstream adoption of cryptocurrency for everyday purchases is still in process. However, the ability to cash out to local currencies will be key to maximizing any profits.
2. For long-term success, a diversified portfolio is crucial.
There is a strong urge to tribalism and invest all of your money in one token. This is due to multiple factors such as die-hard believers or smooth-talking fraudsters. Half-cent tokens sometimes rise to hundreds of Dollars, but most projects provide modest gains or disappear altogether when the market turns bearish.
In a highly volatile crypto market, diversifying your portfolio to include top projects across popular sectors, such as DeFi, NFTs, gaming, and layer-one protocol, is the safest way to go. It is possible to make smaller bets than usual on possible moonshots, provided you keep track of your position size.
3. Do your own research before you make any decisions
You should spend some time investigating projects in order to find out if they are sustainable long-term.
Do not buy anything just because someone you are close to (or do not really know) says so. These are the things you should avoid hearing. Cryptocurrency is inherently dangerous and 95% if tokens will be gone over the next ten years.
4. Compare the roadmap to developer activity
Open-source technology offers many benefits, including the ability to see the most recent developer activity in order to gain a better understanding of the project’s progress.
Every project worth digging into will provide a link for its GitHub repositorie which allows you to view the most recent work done on that project. If the roadmap indicates that there are major releases in the near future but that their last GitHub entry was months back, this is usually a red flag that the project may be trying to scam the public.
5. Timing is everything
Although the best intentions may be good, investing in crypto can be driven by emotions. Poorly timed investments can result in a loss of value. As soon as a token begins moving in the markets, forces tend to conspire in order to drive it higher. Investors who aren’t careful can succumb to the Fear Of Missing Out.
Refrain from FOMO and wait for the blowoff top and price consolidation, if you absolutely need them. If you don’t have the funds, look for another solid project that isn’t trading as flat but has real potential. Then ride the wave higher and make profits when it comes.
You don’t need to be afraid, uncertain, or doubtful if it’s something you want to keep for the long term.
6. You shouldn’t lose more than you can invest
As stated earlier, cryptocurrencies can be risky. Most tokens will eventually fall to zero. Remember to limit your investment to what you can afford.
When all expenses are paid, a portion of the funds should be left to go to the crypto market. A little more is kept in reserve for an emergency. The value of a token is not guaranteed to hold over time. It can take years for a token to recover its lost value once it has fallen into bear markets.
7. Keep the long-term in mind
You should look for projects with a real-world purpose, a supportive community, and a dedicated development group to gradually accumulate over time. Keep in mind the above-mentioned rules, as well as bull-bear markets cycles. Fantom’s pumpkittens GameFi project is a great example. Although the project was small, it didn’t have any VC funding or investors. They saw the potential in their innovative ideas and the community was eager to get involved. As a result, it has been voted one of the top Fantom projects. It’s important to remember that a small team is not necessarily a negative thing.
With decades of growth still ahead, cryptocurrencies, as well as global adoptions of blockchain technology, are still very much in their infancy. You can relax, reduce your FOMO and adopt a more measured approach when investing in the cryptocurrency market to maximize your chances of long-term success.
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