5 Things You Should Know Before Investing In Crypto

5 Things You Should Know Before Investing In Crypto

With Dogecoin's appearances on American television and bitcoin's gaining acceptance on Wall Street, cryptocurrency is reaching a larger audience than ever before. Rising prices are undoubtedly appealing to newcomers, but they should be informed of the hazards before investing. If you're new to cryptocurrency and wondering whether to invest, here are 10 things you should know before you buy anything.


1️⃣ Put in no more than you can afford to lose

Many other investments are riskier than cryptocurrency. Except for volatility, nothing is sure. Furthermore, in most circumstances, it is uncontrolled. There is no FDIC insurance for this, and there is no buyer of last resort. Cryptocurrency values fluctuate significantly from minute to minute. While the market is reveling in the heat of a bull run, it has been subjected to painful and prolonged corrections in the past and will almost surely do so again.

The degree of danger varies. Bitcoin, the first cryptocurrency, has been existing for almost a decade and is far less likely to vanish than most other coins. However, it is not without danger. As a result, don't bet the farm or your life savings on any coin.

2️⃣ Do your own research

Spend hours upon hours researching the technology before investing a significant amount of money in any digital currency so you understand the value proposition and the risks.

Read everything you can on the subject. Browse developer mailing lists and community forums. Podcasts should be listened to. Borrow books from the library on topics such as digital currency, cryptography, game theory, and economics.

3️⃣Resist 'fear of missing out' (FOMO)

If the sole reason you invest is to prevent missing out, the only thing you will not miss out on is losing everything.

Fear of missing out (FOMO) is a tried and true way to diminish whatever wealth you may have accumulated over time. The problem is that it is a visceral reaction to something that should be investigated first. Trading on instinct will rapidly lead to an uneasy tummy.

4️⃣A portion of a bitcoin can be purchased (and most other cryptos)

You are not required to buy the full coin. For example, Bitcoin may be split to the eighth decimal point. If you're curious about how this thing works, you can buy it for as little as $10 and experiment with it.

"It's a lot better than a lottery ticket," billionaire Mark Cuban recently said on television about purchasing small amounts of Dogecoin. Unfortunately, he also encouraged people to spend doge on items while ignoring the tax implications.

5️⃣Buy using dollar cost averaging (DCA)

Markets may change from day to day, hour to hour, minute to minute, but any cryptocurrency worth its salt, any investment worth its salt, is a long-term gamble.

The greatest method to invest without becoming obsessed is to employ dollar cost averaging (DCA). Purchase a predetermined monetary amount of whichever cryptocurrency you like at regular intervals.

If you use DCA and have a long-term perspective, you will not be pressured to sell or increase your position based on short-term movements.


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