Guide on how to invest in cryptocurrencies
Cryptocurrency prices have skyrocketed in the past few years. New millionaires are being made almost every day. It is a gold rush. At the time of writing, the total cryptocurrency market cap is $80 billion with Bitcoin dominating at $38 billion. Just two weeks ago market cap crossed $100 billion. The market seems to be going through a correction phase right now.
Cryptocurrency market as a whole is highly volatile. Ethereum price, for instance, started the year with $8 and reached its peak at $400 in less than six months. At the time of writing it has crashed back to $200.
There is a chance you might lose all the money you put into crypto, but with the right strategies you can certainly minimize risk and loses. Make sure to invest the amount you’re willing to lose. The risk to reward ratio in this market is huge. That’s what attracts a lot of investors.
This doesn’t mean making money by investing cryptocurrencies is a cake walk. Having a long term vision for your investments is key.
In order to buy other cryptocurrencies, you will first need to purchase Bitcoin using fiat. The best way to do it is through a local exchange in your country. In the US, exchanges like Coinbase, Bitstamp and Kraken are go-to for most people. You can check exchanges in your country here.
If there is no bitcoin exchange in your country, you could always use localbitcoins.com and buy bitcoin from other people. Localbitcoins is an escrow service which helps to match buyers and sellers. You can either pay the seller by cash or bank transfer. Most of the sellers advertise whichever payment method they prefer.
Remember: you don’t have to buy a whole bitcoin ($2560 as of writing); you can purchase bitcoin in fractions known as Satoshis. For instance, 100k Satoshis is equal to 0.001 bitcoin.
If you’re planning on holding Bitcoin for long term, make sure you transfer them from online exchange to a wallet that you control. This could be a hardware wallet, paper wallet or a wallet in your pc of which you know private keys.
Online exchange can be hacked and it is advised not to keep your crypto in any of wallets you don’t control private keys of.
Buy other cryptocurrencies
Once you get hold of some Bitcoin, head over to exchanges where you can buy other cryptocurrencies and your Bitcoin.
By doing your research, gain the right information at the right time and understand how it will interact with the market. This will help you predict trends, i.e. whether or not the coin will rise. Look out for any technical analysis on the coin- study charts and find patterns.
In a nutshell, this is exactly what you need to do - buy low, sell high. If the price of a coin you’ve bought goes up quickly, cash out into bitcoin and buy back again once the price goes down.
If it’s a coin that you really believe in - you’re confident of the idea, tech and team - you’d want to hold on to that coin long-term because a good coin will always rise back up again.
There are a lot of apps that can help you track all your crypto investments. My personal favorite is Blockfolio, available for both android and iOS. It has major exchanges integrated to it and almost all the coins.
Lastly, greed can be extremely dangerous in trading. The more patient you are, the better you will do. Period. No one knows what will happen to the markets tomorrow. Doesn’t matter how experienced of a trader you are, you will make some mistakes and lose money. Learn from those mistakes, get back up and make sure not to repeat them.
Investing in cryptocurrencies is one hell of a ride. There are a lot of ups and downs. The community is super active and always willing to help you out.
There is no need to sink your life savings into crypto. We are most likely living in a bubble which could burst at any time. Don’t overreact when the market is doing good and panic when it is down.