Four top tips for beginners investing in cryptocurrency
The longer a crypto asset has existed, the more likely it is to remain due to its network effect and branding trust. Photo: Getty
So you’ve made a start with cryptocurrency, and learnt all about how to stay safe when purchasing.
The next step is to look at our top four tips to move from beginner to seasoned investor.
1. Learn how to use a crypto wallet
A crypto wallet is software that can store the value of your invested crypto assets without relying on a third party.
If you do rely on a third party, you have to weigh up the risk versus convenience. For example, the exchange could go out of business.
If you hold more money in cryptocurrencies than you are willing to lose, consider buying a hardware crypto wallet, which is the most secure option you can find.
2. Learn about emerging tokens and crypto innovations
The market cap ranking for cryptocurrency is often used to estimate how “popular” a crypto asset is.
For example, Bitcoin has always been the most valued in the crypto market by market cap, followed by Ethereum.
Generally, the longer a crypto asset has existed, the more likely it is to remain in the market, as it receives a strong network effect and holds a kind of branding trust with it.
However, there are many upcoming projects that have potential to grow rapidly and these may take a bit more research.
Following crypto trends and news through sites like Coingecko are a great way to keep your finger on the pulse.
The world’s most popular assets. Photo: 8marketcap.com
3. Diversify your digital assets
Entering the crypto market is a great diversification tactic from traditional financial markets.
However, you can also diversify within the crypto world.
Most investors start with Bitcoin, and then look to add other solid projects, such as Ethereum or Cardano.
4. Apply the Dollar Cost Averaging Strategy
Dollar cost averaging (DCA) is a common investing approach within the crypto industry.
The way to apply this strategy is to buy your selected crypto at regular intervals over a medium- to long-term period.
On some days, you could buy more of the asset when it is cheaper, which lowers your average buy price.
This average buy price is what will determine how profitable you will be.
Time has shown that when the price takes a dive, those who consistently apply the DCA strategy will significantly lower their average buy price.
The easiest way to apply these strategies is with Easy Crypto; the go-to exchange for beginners.