The appreciation of various digital currencies does not go unnoticed. Only in recent months the value of Biticoin went from 6,249 in June to 6,595 dollars in September 2018, but in July it had a value of 8,424 dollars in CoinMarketCap investing in cryptos.
Therefore, the interest of several people in investing in cryptocurrencies, since you can earn money relatively easily; however, the value is highly volatile, that is, quotes change constantly and unexpectedly
So how to take advantage of Bitcoin or other cryptocurrencies with these changes? Apply these fundamental investment strategies.
Understand what you are going to invest
If you want to start investing in cryptocurrencies, you need to understand how they work. What are the advantages of a digital currency versus a traditional currency? Do you have any benefit? Is it useful? How does technology work? Is your production sustainable? Who are its developers? Who supports them? How do they move in the market?
This will help you determine if the value of a currency will increase or remain, or if it will not remain in time. So, never invest in something you do not understand.
Define the time you want to invest
If you want to invest in a cryptocurrency, whichever you choose, you must define whether it will be for the short, medium or long term. That is, will you make currency changes in the next month, in three months or in a few years?
If your plan is to make purchases and sales regularly, then you should study the market trends to take advantage of the ups and downs in order to maximize profits.
You must be very aware of the indicators (in CoinMarketCap you can check them), the technological news and the announcements of the developers.
Consider that, while you can get great returns, this carries a high risk. Although, as the billionaire, Warren Buffett said: “The risk comes from not knowing what is being done”.
Many people have losses when, out of fear or ignorance, they decide to sell and do not wait for their assets to rise in value. Hence the importance of not investing in something that is not understood.
You may be interested: The alternatives to cryptocurrencies that you should know this year.
Experts recommend a long-term strategy, since it is expected that in the future, the value of these currencies will stabilize. In addition, you will have to devote less time to analysis.
However, in both scenarios, you must be up to date on specialized blogs like Ripio , where you will get all the necessary information about cryptocurrencies.
Investment in Initial Public Offering, ICO
Investment in what? If you are a first-time investor in cryptocurrencies, you must find out what the ICO (Initial Coin Offering) is. The initial public offering of a cryptocurrency is the first time it is sold to a number of investors before it goes into circulation.
In this way, the developer team obtains a monetary support that gives it a boost, credibility and responsibility to continue with its technological proposal.
One of the most popular and successful initial offers was the one made by the Ethereum platform, which commercialized its cryptocurrencies for a cost of just 1.3 dollars per Ether. Currently, the cost of Ether exceeds $ 234, which allows us to see the advantages when participating in the purchase of new coins.
However, these cases are really few. Many times, ICOs are just a business for a few. So it is important to have as much information as possible about the project.
You must especially analyze the possibilities of growth and competition of the new currency. Any cryptocurrency even with better technology will have to compete with Bitcoin, for example, a currency that, although it has a high volatility, is already consolidated.
There are different factors to take into account, but this is the main one.
Invest the right amount of money
The “invest only what you are willing to lose” rule is infallible. Think, will you need the money that you are going to invest to pay the rent, the tuition of your children or the indispensable services in the next month? Can you face an illness or a job dismissal? If you cannot pay essential expenses during the next months, then you are investing more money.
Nobody likes to lose money, but if you invest only the money you have earmarked for high risk investments, you will not destabilize your finances, if the worst happens.
You can start investing 90% of your savings in secure financial instruments such as Cetes or online loans that offer fixed-term returns; and only invest 10% in high risk instruments such as shares or cryptocurrencies. This is known as diversification, which helps reduce the losses that some investments can generate and take advantage of the opportunities that arise.