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Don’t buy your first crypto before considering these things

Cryptocurrencies are a new asset class backed by powerful technology, namely blockchain. Because they are lucrative, many investors worldwide have become interested in them, aiming to derive significant returns. If you’re considering investing in crypto, there are some things you should keep in mind. First and foremost, the crypto market is defined by volatility, and an uninformed decision can lead to major financial consequences. Thus, it’s imperative to use caution when approaching crypto.

Is it worth it to buy cryptocurrency?

Money has existed in different forms throughout time, and it has now evolved into digital coins. Cryptocurrencies bring many advantages, such as encryption, decentralization, transparency and immutability. As a first-time buyer, you want to know what value you can obtain from investing in digital currencies. One benefit is the ownership over a unique asset class that has the potential to become immensely valuable in the future. Plus, several crypto coins have multiple utilities.

What to consider before buying crypto

Crypto investments have become a trend these days – it seems like everyone wants to start their journey in this exciting market. However, navigating the crypto space isn’t a piece of cake. Here are the best practices to follow before buying your first cryptocurrency.

Research, research, research!

You shouldn’t invest in any asset without researching it first. You need to understand what you’re investing in if you want to make money from it. Spending hours investigating crypto’s origins and utility will help you determine what value it can bring and the risks every coin poses. A lot of information about cryptocurrency is accessible online, but it’s imperative only to use trustworthy resources, meaning that you shouldn’t believe everything you read on the Internet! 

This is a crucial rule especially when it comes to crypto. Join online communities and look for podcasts of crypto experts where you can find reliable advice and information. Learn as much as possible about crypto and related aspects like cryptography and economics – the more informed you are, the easier it will be to make the right decisions.

Pick the right wallet

Your crypto wallet is another thing you should pay attention to. You’re the rightful owner of your crypto, so it’s your responsibility to store it safely. Fortunately, crypto wallets are the solution to ensure your crypto is protected. 

For beginners, crypto exchanges can serve as an efficient wallet option. However, DeFi alternatives have experienced hacks during the past year, which is why you should choose your crypto wallet carefully.

Build a balanced portfolio

Unlike other types of investment, cryptocurrencies are highly volatile, and their prices have experienced massive fluctuations in a relatively short time. Therefore, it’s not wise to put all your cash only on a coin hoping that its value will rise in time. 

Instead, you should focus on building a diversified portfolio. You may be tempted to invest in a crypto that promises a significant return, but you shouldn’t take that risk as a crypto newbie. Instead, consider expanding your portfolio across different projects in sectors like NFTs and gaming.

Only invest as much as you can afford to lose

Because cryptocurrencies pose risks, it’s never wise to invest an amount you can’t afford to lose. Not even if you choose the most reliable crypto out there. Even the bitcoin price has experienced fluctuations, which is true for every cryptocurrency, as they are volatile in nature. 

Thus, before allocating funds to crypto investments, you should take care of critical life expenses and set an amount aside for emergency situations. You can never know for sure if the value you put into a coin holds in the long term. But even if it manages to do so, a lot of time is necessary to regain what gets lost during the bear market.

Don’t follow the herd

First-time crypto buyers can quickly give in to FOMO (fear of missing out) and end up losing their money. If you rely on instinct rather than logical facts, your investments won’t be successful. 

Don’t just buy a coin because everyone’s doing it, and you’re afraid not to lose an opportunity. You won’t always see a return when investing, which is normal in crypto. Do your research to avoid making random decisions based on other investors’ opinions. Don’t put your hard-earned money into crypto before evaluating the pros and cons of each coin.

Use a trustless approach

The crypto industry is a fertile ground for fraudsters who use different tactics to trick people into giving away their crypto. One of these tactics is impersonating a famous person, as they did with Elon Musk to make $100,000 worth of crypto. How did this happen? It didn’t require much effort. Scammers created a false giveaway, pointing to another crucial threat to be aware of when buying cryptocurrencies. They used an SNL fake Twitter account and asked people to send a small amount of their crypto, promising high returns – 10 times the initial amount! 

Isn’t it an attractive value proposition that you can hardly ignore? Of course, it is! But that’s precisely why you should use a trustless approach when navigating the crypto market. Rely on research and check facts before investing in any crypto so that you can avoid scams.

Summing it up

Crypto is an exciting yet speculative asset, so it’s paramount to approach it carefully. Obviously, you can’t jump into the crypto space without researching everything about it and understanding how it works. As a general rule, you should invest in multiple assets instead of relying on a single cryptocurrency that could lose its value. But regardless of the crypto you invest in, you should always start with a small amount and never invest the money you need for other purposes. 

Also, make risk management a priority. Always plan your next move carefully, and don’t let emotions cloud your judgment. Be in the game for the long run, and don’t expect to become a billionaire overnight. Relax, don’t give in to FOMO and stay up-to-date with what’s happening in the crypto market – these are the secrets to succeeding with your crypto investments.

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About SuperCryptoNews

SuperCryptoNews is a global leading blockchain and crypto news provider, covering daily news on the latest tech and trading developments in crypto. We bring you expansive crypto news coverage especially in Asia, with a focus on Singapore, Thailand and Southeast Asia.

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© Copyright of Novum Global Consultancy Pte Ltd {2020, 2021}. All rights reserved.

Contact Us   |   T&Cs   |   Privacy Policy   |   About Us