Key tips you need to know for cryptocurrencies investing

Cryptocurrencies have continued to build a noticeable momentum in the business world as the preferred alternative currency. Recent research statistics show that an increasing number of middle and high income earners are owning and trading in cryptocurrencies especially the bitcoin. Having recently celebrated the 10-year anniversary of the establishment of bitcoin, all indicators point to the fact that cryptocurrencies especially the bitcoin are here to stay. Here are some relevant tips which will assist those who are already trading in cryptocurrencies and those who plan to venture into it.

Security

Data security is one of the most serious problems of the cryptocurrencies. Hacker attacks on exchanges can easily result in the loss of digital assets. Therefore, no precautions are too much when it comes to buying, selling, and storing your coins. One of the best security measures you can employ is using a cold wallet, which allows you to control your private keys. It permits the safe access of your coins in the Blockchain.

Market cap important than price

Price is simply based on the total supply of tokens in circulation, and does not make for a significant investment metric. Focus on coins that have a low market capitalization when you buy. The number of coins in existence times the price of those coins is the market capitalization of the token, which is the most important metric to consider. When you buy a coin, you should look at how many of them you are buying against its total market cap, as this is what will determine its scarcity, supply, and value in the long-term.

Fees

Each exchange offers different commission rates and fee structures. As a day trader making a high volume of trades, just a marginal difference in rates can seriously cut into profits. There are three main fees you must know. Exchange fees is how much you’ll be charged to use cryptocurrency software. Trade fees is how much you’ll be charged to trade between currencies on the exchange. A marker fee is the cost of making an offer to sell. A taker fee is the cost of taking an offer from somebody. Deposit and withdraw fees is how much you’ll be charged when you want to deposit and withdraw money from the exchange.

Avoid panic selling

The crypto market is extremely volatile, which means price swings are normal. Avoid incurring losses by engaging in panic selling. Panic selling is a common mistake beginners make, when they first get into a market without much research and then, when faced with a sudden drop, sell to ‘cut their losses’. Most coins do bounce back in days, if not hours, and then the same people, seeing a surge, buy back at higher prices, only to repeat the cycle.

Diversify

Cryptocurrencies are unpredictable and in a state of evolution, which means there is no single coin (not even Bitcoin) that is ‘guaranteed’ to survive down the road. Diversification and risk management is the key to a sound portfolio and finding good entries in multiple coins will increase your chances of profiting.

Stay current

Crypto markets are highly speculative and respond strongly to good and bad news. To be successful, you need be current with crypto news and other relevant and upcoming economic and business developments.

The tips provided above should assist you to record some gains in the world of crypto.

 

  AUTHOR
Caxton Central

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