Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) are some of the cryptocurrencies widely reported in the media. Remarkable success stories and profits in the millions, if not billions, have already been written. But is it worth investing in virtual money, and can digital currencies replace traditional financial instruments?
Today, buying crypto is a modern type of investment in the future. To invest in digital currencies, it is not necessary to be a pro, but an understanding of the crypto market basics is a must-have.
The current cryptocurrency market situation
In 2009, the first and probably the most famous cryptocurrency, Bitcoin (BTC), was created. In terms of market capitalization, BTC still accounts for the largest share of the virtual currency market. Ethereum (ETH) and Binance Coin (BNB) rank second and third among cryptocurrencies.
The crypto market has been shaken up in the past year.
Most recently, the bankruptcy of FTX, the former third-largest crypto exchange, in November 2022, caused great turmoil. The collapse of FTX marks the low point of an already disappointing year for the once-so-successful crypto industry.
The fact is that high inflation rates and interest rate changes by the U.S. The Federal Reserve (Fed) encourages investors to sell risky assets such as Bitcoin. The Bitcoin market, the world’s most essential and oldest cyber currency, lost about 64 percent in value last year.
The market capitalization of the top ten coins is currently about $710 billion. By comparison, it temporarily surpassed the two-trillion-dollar mark in 2021. The most significant part of the market capitalization is represented by Bitcoin and Ethereum. However, Cardano (ADA) is one of the cryptos that showed substantial growth in 2023.
Today, you can explore cryptocurrency investing guides for proper e-money investing. You can study crypto trading tips and tricks of professionals for profitable investments.
Is crypto investing really worth it?
Cryptocurrency leads the way in investments. People are naturally subject to substantial emotional fluctuations when trading assets. That’s why it’s essential to have a clear plan for every (crypto) investment from the beginning. Here are three cryptocurrency investment advice to consider:
1. Day trading
In day trading, a trader makes several purchases and sales every day. With these “intraday trades,” the trader hopes to take advantage of small price fluctuations and increase profits compared to long-term strategies.
But this style is characterized not only by a high stress and time factor but also by the fact that you have to pay proportionately more commissions because of the many individual trades on some exchanges, such as WhiteBIT.
In addition, unpredictable price spikes can often occur in these small intervals. If, for example, a Bitcoin whale decides to sell some of their bitcoins, that could move the price by more than 5% in one direction in a few minutes, which could have fatal consequences for intraday traders.
2. Swing trading
When swing trading, the time horizon increases.
Compared to day trading, intraday trades are infrequent. As a rule, swing traders trade several cryptocurrencies simultaneously. Always keep an eye on possible trends so that you can adjust your coin positions and set them as profitably as possible.
3. Investing
You need to analyze the market and spend a lot of time understanding which currency is worth investing in. Using bitcoin investment strategies only guarantees a partial percent result.
Every investor must understand the risks. That is, buying and working with crypto is a risk that is sometimes difficult to foresee. One can learn to earn only by understanding the percentage of funds loss and the cryptocurrency market’s unpredictability.
How to prevent risks when buying crypto?
Money management and risk management are factors that affect a trader from the very beginning of their investment career. It is sometimes the most crucial discipline to consider when trading cryptocurrencies. If you want to trade successfully in the long term, you must always protect yourself from the high risks and losses that the cryptocurrency market entails.
Traders must calculate the risk before each trade, weighing all advantages and disadvantages of the decision. This is the only way to ensure that you invest your capital according to a coherent system.
So it’s important to always stick to math and thus make a profit in the long run. The easiest way to do this is to program an appropriate table in Excel and enter the data there.
There are demo versions of cryptocurrency exchanges. A beginner trader can try to analyze the market, compare risks, and try to make his first purchase without investing. This is a good way for beginners.
Since the risks in this business are inevitable, it is essential to determine a strategy and assess the risks of buying cryptocurrency. Each investor must choose the project carefully and invest funds. Only a proper assessment of cryptocurrency risks will allow you to make money.