The crypto market is a financial element that has surpassed the initial scrutiny of traders, analysts, and various other financial investors around the globe. It was first believed when Bitcoin as a solo cryptocurrency launched back in 2009 that this whole idea was worthless, and there was absolutely no need for decentralization; stretching this whole thing with it was also shoveled somewhere along the lines that this whole bandwagon was bound to doom.
Fast forward ten years later, the crypto market is not only here but also thriving at an exponential rate; the number of opportunities that you can find within the crypto market these days in terms of direct crypto investment, exchange-traded funds, non-fungible tokens, and various other such elements is just out of this world. It almost makes you want to leave the stock and forex market behind and invest your time, energy, and money directly into the good of the market.
If you are new to this whole crypto endeavor, then there are a few things that you really want to understand before trying to invest your money into the crypto market; first of all, the crypto market is an extremely volatile space which means that price fluctuations are so intense that you would be seeing a cryptocurrency rising above the sky and then falling onto the ground in the same day.
If you want to leave your mark investing in the crypto market, then it is important that you learn about the fundamental basics of coming about the right information to continue after money, the crypto exchange between the number of transactional fees and the right cryptocurrency to begin with.
Apart from all of this, you would still be required to pinpoint the best time of the year for the sake of placing a buy order because, more probably than not, there are times of the year when certain factors allow the price of various cryptocurrencies to just shoot over the sky and that is by no amount the right time to invest into a cryptocurrency.
Following are some of the elements that you find up to your liking when it comes to investing in cryptocurrencies and how you can properly invest your money and buy them to secure handsome returns in the future.
Pick the Right Cryptocurrency
There are literally thousands of crypto tokens out there; some of them are old and are considered to be pioneers, such as Bitcoin and Ether, whereas others are fairly new. You wouldn’t want to invest in a cryptocurrency that is soon going to lose its stance and would make you end up with nothing; therefore, certain things are to be considered right from the bat so that you don’t fall on the ground with your face kissing the dirt because that is not a very pleasant sight, not for you or any of the observers.
Before you try to pour your money into a dedicated cryptocurrency, it is only natural to investigate them, and to do so; there are certain things that you need to take into account. First of all, you need to study the coin; you need to understand the very idea or purpose of the token which was intended by the developers, what are the technology on which this cryptocurrency is based, and other such potential information that might or might not sound technical at first.
The next thing that you want to do is to read the white paper, which might contain literally everything from the purpose of the cryptocurrency to the problems it hopes to solve and other financial shenanigans that are associated with the cryptocurrency in question. You need to check out the team who was behind the development of this crypto token and the overall roadmap they took to make it happen.
This will help you to properly understand the true potential of the cryptocurrency in question. The next thing that you want to do is to check out their prices; you need to keep away from tokens that have a low trading volume. It means that people are not that interested in them, and their demand is also not that great; it also means that the token is extremely vulnerable or otherwise, there would be extreme interest poured into the token by the investors out there, which means that it is potentially used to manipulate the market and you should stay away from it.
If anything sounds too good to be true, then it usually is; it is the oldest saying in the financial world that potentially aims toward the investor exploring a financial asset that might possibly be a scam. If the words such as ‘100% guarantee’ or ‘in the shortest time period possible’ are used in the same sentence when it comes to the profit or return on investment, then you should know for sure that this whole crypto project is a scam and is not worth your time.
Last but not least, it is important to assess your risk tolerance. This means that you should know about yourself and just what specific price point is comfortable for you moving forward while investing in the crypto market. Every single investor out there has their own risk tolerance, which means that they can invest a lot or only a certain amount moving forward.
The volatility of the crypto markets makes it a rollercoaster ride which means that it can go up and down within the same instance; you need to assess your volatility tolerance as well moving forward because if you can’t take a few bumps along the ride, then you are clearly not cut out for investing into cryptocurrencies.
Find the Right Crypto Exchange
The next step involves you finding the best crypto exchange out there after the investigation of coins has been done. There are multiple crypto exchanges out there operating in the same settings, which include the user paying an upfront transaction fee whenever they want to purchase a cryptocurrency or want to sell their own using a crypto wallet that is tethered to the account that they have with the exchange itself. There are two types of crypto exchanges out there there are centralized ones, and then there are decentralized ones.
The sole difference between the centralized and decentralized exchanges is that decentralized exchanges have a centralized command which means that there is an owner on staff who is working to sustain the operations of the exchange on a day-to-day basis.
These people are in control of the user accounts and whatever transactions they make, along with the fact that they can change their policies whenever they want without issuing an earlier warning of any kind. These exchanges have more users running on them, which tends to increase the overall trading volume for particular cryptocurrencies that these centralized exchanges are selling.
Therefore these crypto exchanges enjoy a wide variety of crypto tokens, and most of these exchanges out there are centralized in nature.
The decentralized exchanges, on the other hand, don’t have a central command or authority, which means that no one person or entity is in charge of making modifications within the regulations and policies of the exchange itself, and no intermediaries of any kind are required when the user wants to conduct business with the exchange; also they don’t have to pay any additional transaction fee on top of the one that they are already paying just to get some kind of intermediary between the transition.
Decentralized exchanges work as an intermediary on their own, and hence these have got it covered from the beginning. Another great advantage of working with decentralized exchanges is that these are completely anonymous, and there are no fees of any kind except for a minimal transaction fee that you have to pay upfront, and this also enjoys a wider selection of crypto tokens.
But the overall trading volume is extremely low, and the transaction times could be longer than expected. There are various elements that you can check for in a crypto exchange before making your decision, and these involve; checking out the reputation of the crypto exchange and do multiple users from around the globe are using this crypto exchange or not? Was this exchange tethered with any scams or fraudulent activities in the past, and what about the trading volumes that these crypto exchanges enjoy on a day-to-day basis?
Other than that, you need to check out the geographical restrictions; the majority of crypto exchanges out there would ban users from a classic geographic location because the laws and regulations of that particular country or area don’t allow the exchange to operate in their vicinity which is why they have to be extremely careful hence banning some of the users from utilizing the services of the exchange in question.
Next up, you need to look at the security features, what kind of encryption metrics are being used by this particular crypto exchange, how often they are managing their security solutions, and do they have two-factor authentication systems enabled for even the most basic crypto transactions or not? The fees that these crypto exchanges charge for the sake of converting your crypto into another one, for trading, withdrawals, and various other applications, need to be checked beforehand.
Because if there are better alternatives in terms of lower transaction fees and having the same features, then obviously, you need to go for the one that allows you maximum comfort. Here you also need to make sure that whatever cryptocurrencies you want to trade in are available within the listings of this particular crypto exchange; sometimes, even the most popular cryptocurrencies are not listed, so the exchanges are because of the legislation and other variables elements.
Therefore you need to make sure that whatever crypto token that you have found is listed at that specific crypto exchange. Last but not least, you need to take into account the overall trading volumes in that particular exchange; the more the trading volume is, the more stable the exchange and its overall operations are going to be. Check out these exchanges in a thorough fashion and leave no detail or page unturned, and you will have at your hand the best possible cryptos exchanges to commence into the crypto business.
Wait for the Right Time to Buy Crypto
After you have decided which cryptocurrency you’re going to engage with and the crypto exchange that you want to perform this operation on, the next thing that you need to cross off from your list is the time to enter the market itself. You are all set to buy a particular cryptocurrency, and you have gained the capital that is required to do so; the next possible step in the process is to determine which is the right time to enter the market itself?
It has already been established up there that the crypto market is especially like a rollercoaster ride, you might think you are going up at a particular instance, but the very next one, you are coming down hard; this is the volatility of the crypto market, and it is intense.
Bearish and bullish cycles continue to interchange with each other; at a particular instance, if there is a bearish cycle which means that the prices are being slain hard, then a change in the momentum of the market occurs, and you have the bullish cycle which means that the prices are once again sustaining themselves to a higher place and the market is cooling off and coming to a state of equilibrium.
Now you don’t want to get in when the market is bearish, but you should rather consider pinching yourself into the action when there is a bullish market through and through. To better understand various stages within the crypto market, what these reflect, and what they mean in the long run, it is important to catch up with a variety of these market stages. First of all, you have got the accumulation stage; it is the stage in the life cycle of a crypto entity when it is undervalued, and the prices are extremely low.
There is a general feeling of disbelief and contempt toward this particular cryptocurrency, and there is a fear lingering over the heads of traders and investors that they might lose more money if they continue to invest in this particular cryptocurrency. They are going to hesitate to create new entry points.
Whereas investors with brains and brawn smell this as an opportunity, and they just get into it right then and there. The next step is the markup stage, this stage refers to the overall sentiment where it is warm and welcoming, and investors feel optimistic again about investing their money into this particular cryptocurrency.
There are news and predictions and signals regarding that particular cryptocurrency, which means that social media is becoming vocal about this particular cryptocurrency. There is a general understanding that the price of this crypto is going to increase, and the fear of missing out is established among the investors, and they don’t want to let this opportunity slide from their fingers.
The next is the distribution stage; most of the investors who got in earlier into the price action for this particular cryptocurrency at the accumulation stage are now dumping their position and leaving the market for good. The buying momentum is extremely low once again because the prices are not reaching new all-time highs, and the overall sentiment of the market is pretty neutral here.
Last but not least, you have got the mark-down stage; at this particular stage, the demand for this particular cryptocurrency has died down completely, the market is once again changing cycle from bullish to bearish, and it is not looking good for this particular cryptocurrency at the moment.
In the very start, investors just might not care too much about the signs that are there suggesting that the price of the cryptocurrency is going to decrease, but once the fear sets in and the price drops become consistent, they are going to dump their position for good and leave this particular crypto behind. But once again, this stage is also temporary, the investors begin to feel the joy of prices once again becoming whole and recovering, and they just continue to invest more money once a new bullish cycle has begun.
This is the life stage of a new cryptocurrency that has just launched its operation within the crypto market. You might have noticed one thing at each different stage and instance, and that is the fact that volatility remains strong no matter which particular stage of the crypto market is being approached.
It is an innate quality of the crypto market, and each and every cryptocurrency that they are an extremely volatile financial asset, but you don’t have to worry about that. Because you are not in it for the long run, you are, of course, after an opportunity and seeing it through that your investment is repaid to you in the form of the return that you get from this gem of a cryptocurrency, and then you move on to the next one.