In recent years, digital currencies have become very popular, largely thanks to bitcoin and the amount of money people made investing in it! However, now there are several different cryptocurrencies to choose from, and it’s worth considering the following factors before you do.
You’ve already made the right decision, in choosing to invest in a digital currency – now let’s consider what the best fit is for you!
Decide Your Risk Level
It’s hard to decide whether to play it safe and invest in bitcoin (which has a relatively low price at the moment), or to try a newer product (an altcoin). Choosing the latter can be risky – altcoins might not survive, although every company is forever touting their own coin as the next bitcoin!
“There are almost 1,800 cryptocurrencies in circulation at present, and bitcoin (BTC) is the most stable,” says Darragh Lowly, a crypto blogger at BoomEssays and Custom Writing. “It’s likely to survive, given its age, so it’s a safe bet. As for altcoins, there are some very safe bets to be found there too – Ripple (XRP), Litecoin (LTC) and Ethereum (ETC) have all been established for some time now.”
Diversifying your investments is not a bad idea either – you can choose between some stable currencies and newcomers. You can also choose to invest in so-called ‘stablecoins’ which don’t fluctuate – a good way to hold your money between trades. These coins mirror a fiat currency, like bitCNY which is pegged to the Chinese Yuan.
Research, Research, Research!
“Before making an investment, you obviously have to do your research. Reading others opinions and company representatives will only get you so far – you should be looking at the history of currencies, paying attention to the market cap and circulation,” says Chantal Jennings, a tech writer at Paper Fellows and OXEssays.
Once you understand the full history of an altcoin, you can see what phase it’s in. Possibly it’s still growing, and is continually growing, or it has peaked and had a large correction. Steer clear of currencies that have had drops in market caps, as there is less demand for them.
Research too the company offering the coin – look at the sample cases and trials, learn about what innovative technology they use, the CEO’s track record and the technical team.
Stay informed with ‘Initial Coin Offerings’. This method allows companies to raise working capital and roll out new a new cryptocurrency. As in traditional stock market set ups, your investment is a bet on which company can produce the product they are producing and deliver on your investment.
With ICOs, you’re not looking at the history (because there isn’t one, yet) so much as how this offering differs from others on the market. By investing in ICO, you can make big gains – you’re investing at the first level, and your investment will grow with the coin.
Time your Trades Well
By closely following cryptocurrencies social media pages, websites and blogs, you can learn of important upcoming dates. These might be partnerships and project milestones. If you trade on these dates, you will be making a much better investment because there’s always a price jump around these dates. If you have advance notice, you can acquire coins as soon as you hear of this news.
Stay Up to Date
Like any stock market investment, cryptocurrencies fluctuate based on political climates and regulatory shifts. Staying up to date with these changes allows you to avoid big losses. Your investment strategy should be based on the laws, or lack of, regarding cryptocurrency in the jurisdictions which have an effect on your portfolio. Although digital currencies are digital, they are still hugely impacted by external factors.
Likewise, monitor your portfolio carefully, and be vigilant regarding your assets and specific investments. Research shouldn’t stop when you make your investment – you need to stay informed to know when to sell, when necessary, or grow your position.
Staying aware of changes and news is key when investing in anything. Cryptocurrencies are no different. Whilst we’re not likely to see any huge growth like with bitcoin, the digital currency industry is in its infancy and the right investments, managed well, can be very lucrative.
Beatrix Potter is a cryptocurrency writer at Academic Writing Service and Assignment Help writing services. Beatrix writes about cryptocurrency; she also is an online writer at Essay Services website.