You would have to be living under a rock to not be familiar with cryptocurrency. But before you can learn to buy Bitcoin, you should first know a few things about buying and trading cryptocurrency in general.
It is all too easy to see the headlines and decide that you want to ride the wave of cryptocurrency. But without the right tips going in, you will just be one of those horror stories of investments lost. Here are seven things that you should be doing when buying crypto.
Best Cryptocurrency Tips
1. Have a Strategy
One of the worst things that you can do when buying and trading cryptocurrency is to just do it on a whim. There is a lot of information to process about buying cryptocurrency in general and it can all be overwhelming.
Take a step back and think about things for a second. What are you hoping to achieve from your investment? Do you plan to buy Bitcoin or are you going to diversify and invest in different types of crypto? Knowing what your strategy is before you start and it makes the answer to these questions a lot easier.
2. Think Long-Term
One of the biggest mistakes that investors in crypto make is that they ride the wave. Bitcoin in particular has shown to be one of the most volatile investments there is. Massive highs, dangerous lows, and everything in between.
Unless you are a day trader, you should be buying crypto and then forgetting about it for a long time to come. Watching the wave will only work to stress you out with each rise and dip. Start with a timeline and let your investment sit until then. You can then reevaluate, look at market trends, and decide what the best course of action is.
3. Diversify
Having diversity in your investment portfolio is key. If you put all of your eggs in one proverbial basket, that just means losing it all should that investment tank. For that reason, investing in multiple cryptocurrencies is highly suggested.
Another good rule to follow is to buy all cryptocurrencies but only trade or sell non-Bitcoin options. Bitcoin is the star of the cryptocurrency world and carries with it the most potential. Just look at the growth that it has experienced since its introduction a decade or so ago.
4. Don’t Go “All-in”
We hear stories all the time about someone who put everything they had into Bitcoin and became the next millionaire. But for every one of those stories, there are thousands where the results are not so positive.
Putting all of your money into anything is more likely a recipe for disaster than anything else. Investing in Bitcoin and crypto is a good thing. Taking an “all-in” approach is not. Give
yourself some leeway in the event that your investment turns sour. At least then you will have a chance to rebound by making other investments or pulling out entirely.
5. Don’t Forget Your Key Phrase
When you store your wallet offline, you will need a key phrase to access it again. Forgetting that key phrase can be like losing the keys to access a bank vault. But it gets even worse than that.
If you guess wrong too many times, your wallet will lock and you will not be able to access your cryptocurrency again. It might not be a big deal if you do not have much in your wallet, but if you manage to forget your key phrase with thousands or even millions of dollars in there, that is a nightmare.
6. Automate Your Purchases
As is the case with regular shares and stocks, automating your purchases can help you take advantage of cost averaging. Most exchanges even allow you to set up a recurring buy schedule where you buy a certain amount of specific crypto on a specific date.
This takes some of the stress out of trying to time it so that you buy a currency at the “right time.” It also means not forgetting to make a purchase and potentially missing out on the crypto that you have been eying.
7. Don’t Buy Just Because the Price Is Low
Perhaps one of the most crucial mistakes that investors in crypto make is they see crypto at a low price and buy sight unseen. They assume that getting in on any cryptocurrency low means there is massive potential Bitcoin profit.
Although that may not necessarily be a lie, it is also more often than not a wasted endeavor. There are too many cases when developers of a new cryptocurrency either leave a project, run out of money, or just stop working on it. That means cash invested in something that will never get off the ground.