Investing in cryptocurrencies is not something for everyone, study, patience, attention and several other characteristics are required. Therefore, if you want to start in this market, it is very important to learn some pillars to invest in cryptocurrencies correctly.
1 – Time is of the essence. But not everything
It is almost impossible to enter the market at the right time. But the importance of timing to enter the market depends on your strategy. Some trading strategies are more time-dependent than others, while accumulation strategies like DCA (Dollar Cost Averaging) are entirely time-dependent.
2 – Choose a strategy (that works for you)
Entering the market without a strategy is extremely risky. That way, choose your strategy, choose when and how to enter and exit the market. You also need to come up with a strategy that you can easily fit into your life. day trading is probably more complex and needs a lot more time to work than a swing trade. Also, you can automate your strategy with trading algorithms.
3 – Strategy without consistency is just a random action.
Without a consistent trading strategy, you will make random bets that generate random results. If you have an accumulation strategy like DCA or Buy The Dip, consistency is what isolates random results from measurable results. Your investment will increase by 326%. This is a stable result. Of course, that doesn’t mean you can’t tweak or optimize your strategy.
4 – understanding market cycles
At the macro level, the market has two cycles, a bull market and a bear market. In crypto, the duration of a bear market in the past has been around 2 years, while the duration of a bull market varies.
5 – Gain Time and Experience in the crypto market
Investing at least a small amount in cryptocurrency would be a good incentive to pay more attention to the current state of the cryptocurrency market. Experience is more important than financial advice. If you’re new to the crypto market, you’ve chosen the right time to join. We are currently in the midst of a bear market. This means that prices will be much lower than last year. Many people are silently piling up, waiting for a new high.
6 – Beware of Bitcoin Halving
This happens every 4 years and has played a significant role in the rise of the cryptocurrency market. Historically, the Bitcoin halving has been a sign of a bear market. The next halving is expected to take place in early 2024, when much of the cryptocurrency community is waiting for the start of the new bull market after this long period of silent accumulation.
7 – Limit your risk
There will often be situations where a project fails or is hit hard for reasons that were not entirely obvious. As such, no crypto asset is immune from default, but top tier cryptocurrencies such as BTC and ETH provide a hedge against the high risk/high reward nature of the broader crypto market. In principle, you should protect the general cryptocurrency market.
8 – understanding the market value
In principle, the higher the market value of an asset, the more dominant that asset is in the market. Market capitalization has long been considered an important indicator of success in the cryptocurrency market, but that doesn’t mean that large-cap assets aren’t prone to failure (just look at UST, LUNA, ICP, and others). Finally, the market value can be calculated by multiplying the price and the current supply.
Notice: The text presented in this column does not necessarily reflect the opinion of CriptoFácil.
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