With the latest trends in digital technology, cryptocurrency investment has now become the latest venture in the financial market. This field of investment has drawn a lot of interest due to its fast-growing popularity, with many people yearning to know about cryptocurrency investments.
Here I have prepared three important tips that every crypto investor needs to know based on my experience and some of the common queries that I have encountered in this field. In most cases, individuals get into the market and purchase their preferred cryptocurrency with the expectations of making huge profits overnight, or its price maintaining a continuous rise.
Such misconceptions in the digital currency cause many people to use their life-savings or even sell their valuable properties to invest in this field leading to regrets. This article seeks to provide three essential lessons targeting the area of cryptocurrency investment. These tips will enlighten you on purchasing and selling them when the price is favorable.
Tip 1: Avoid Investing In Cryptocurrency With Life Saving Earnings
Cryptocurrency can be a great venture but is not advisable to invest in the field with life-saving earnings, as it could be risky. For instance, there was a story from late 2017 to early 2018 of a family who had sold their properties to invest in Bitcoin. At that time, the cryptocurrency was trading above $10, 000. It is likely that the family was inspired by how Bitcoin made an excellent run to trade at over $10, 000 from $2000 within a short period when making this bold decision. But this was a dangerous decision to make. Well, some may argue that taking risks is part of the investment or any business, but it is essential to consider the cost and benefits before making such a decision.
After selling their properties to invest in Bitcoin, the price of the digital asset dropped, deeper and deeper causing them to make huge loses. Therefore, it is advisable to invest an amount that you can afford to lose regardless of how promising the price of the digital asset appears to be. In addition, any cryptocurrency can crash like the Dutch Tulip Mania.
Tip 2: Don't Expect A Huge Rise In Price Overnight
As you may know, cryptocurrency price can rise at unimaginable magnitude despite the fact that the market is highly volatile. However, it is good to mention that no investment scheme in the field can offer a 100 percent guarantee of huge returns overnight.
In addition, there have been cases where experts have predicted a massive increase in cryptos prices like Bitcoin but ended up falling to insane levels. For instance, John McAfee, a famous cryptocurrency expert, made a prediction that by mid-2018 a digital asset (Verge) would sell at $15. Instead, the Verge price dropped to $0.002.
The digital currency market is quite responsive to undesirable environments, including bankruptcy filings by cryptocurrency exchanges, government crackdowns and much more. However, even with these harsh factors, the market can exponentially grow at its favorable time.
Tip 3: Expect A Price Fall
The other important thing to keep in mind as a crypto investor is that you should expect a price fall after investment. This will significantly help you decide on the amount that you can manage to risk for this investment. However, some of the newbies tend to overlook this lesson due to the excitement of the potential returns.
After guiding some of my friends to invest in a certain cryptocurrency, one of them asked me, “when will I become rich?” Well, it might appear like a joke, but this is a question that dominates the minds of most cryptocurrency investors. This makes them feel deceived and disappointed when they realize that the price of the digital asset is continuously falling or does not seem to make any movement.
Therefore, it is essential to understand that there could be a market pullback or a price fall when you place your money in any cryptocurrency. The digital asset market does not maintain a continuous rise throughout without a fall in price. This feature is prevalent in the history of even the most popular cryptocurrencies like Bitcoin. Nevertheless, it is good to know that the price of a given cryptocurrency can shoot up by twice the percent it fell.