Traditional investors are trying to figure out how to incorporate these new-age technologies and assets into their active portfolio, even traders have dived into the world of cryptocurrency investment as it is a great source of generating additional income for themselves.
While the recent slump at the start of the year disappointed many investors, it also created buying opportunities for new investors to dip their hands into the market.
Bear and Bull markets are a part of each asset class and therefore if you compare some assets and coins like Bitcoin they have overall outperformed the stock market too, making it an extremely lucrative cryptocurrency investment.
However attractive these cryptocurrency investments seem, people should not forget that everything that can give returns can generate losses too, so these assets also have a unique risk attached to them which people should be aware of.
Just like any other investment class, investors should have an investment strategy that they should follow and fall back on in difficult times. Just like having strategies in the stock market or with bonds.
These investment strategies can help you get ahead in the game and keep yourself secure while entering the crypto market.
- Having a wide mix of storage options for your crypto
When you are investing in crypto, however big or small your investment may be, it is essential how to store and manage your crypto. There are a couple of ways you can ensure your crypto is safe and stored properly.
There are two types of wallets essentially hot and cold wallets, hot wallets are also known as online wallets that allow you to store your holdings online in an online wallet, there are a lot of hot wallets and usually hot wallets are used by people who need some liquidity and ease of access to their crypto as well as to trade and make or receive payments.
Cold wallets are offline wallets that resemble a hard drive and all your holdings are stored on that cold wallet.
It is usually advised that 80% of your long-term holdings should be on a cold wallet and the rest of it should be on a hot wallet in case you want to trade or get easy access and instant liquidity to your cryptocurrency investments.
One of the top upcoming hot wallets is the FAN wallet.
It is one of the safest platforms for your cryptocurrency investment needs.
- Prioritize the liquidity
It is extremely important to have investments that are extremely liquid and easy to sell and trade, such as Bitcoin which is one of the most liquid cryptocurrencies due to its high demand and popularity. Liquidity is extremely important for traders especially as it determines how fast and seamlessly they can get out of a trade without having to wait for buyers. Liquidity is essentially what shows the demand and supply of a certain cryptocurrency are present.
- Harness Volatility
As exciting as the rallies have been in the cryptocurrency markets, you should remember that the drops have also been equally brutal, the market overall has grown despite all the ups and downs and that is a positive for cryptocurrency investments.
Although this volatility is stressful for some people it is a great boon for swing traders that make quick trades and cash in on the swings of the price of these digital assets.
So always assess the volatility and invest smartly.
- Invest according to your pockets and always take your profits when due
You should be completely aware before investing in the cryptocurrency market, just like the traditional ways of investment you should invest only the amount you can afford to lose as each investment in any form or mode in any market carries a risk and that risk should be taken carefully and assessed.