5 things to consider before investing in cryptocurrencies

With so much news about cryptocurrencies, from the rise of Dogecoin to the gains of Bitcoin, many newcomers want to participate in this market. While investing in crypto can be very financially rewarding, there are a few things a new investor should be aware of before "jumping in."

An increasing number of people are investing blindly, assuming it's easy after seeing success stories or hearing a friend or family member experience a huge profit. If it really were easy, everyone would be a "crypto-millionaire."

If you are considering investing in cryptocurrency, here are five things to consider beforehand. The last thing you want to do is walk in blindly and unprepared. Do not believe everything you see on social networks: investing in cryptocurrencies is not easy.

1. Never invest more than you can afford to lose

I like to tell people to research fully aware that you could lose it all and to only invest an amount that you are 100% comfortable with losing. Most people will not come out on top after their first few trades.

Sure, there will always be beginners' luck in some circumstances, but the market is very turbulent and there are many things to consider, many of which are learned while trading live. You can study charts and trends, but nothing compares to what happens when you have real money on the line.

Think of your initial investment like tuition. It is an investment to learn how to invest in cryptocurrencies by trading with real money. If you miss it, write it down as an expensive lesson. The last thing you want to do, however, is invest money that you can't afford to lose because there's a chance that could happen.

2. Do your own research

There is no shortage of self-proclaimed cryptocurrency experts and financial gurus online who claim to have the secret formula for success. They want to sell you access to private Discord servers, Telegram chats and WhatsApp groups.

Never trust another person when it comes to investing your money, especially someone who is not a licensed financial advisor. These characters make money selling information, and once they have you, they can't give a damn if you succeed or fail.

Always do your own research and due diligence before investing, especially if it is a new coin. I suggest you watch some YouTube video tutorials on the subject. When you see how easy it is, you will be much more diligent in researching possible cryptocurrency investments.

3. Use common sense: if it sounds too good to be true, it just might be.

If someone promises you 100x profit on a new coin, be very careful. Sure, there are some cases where early adopters break into a new currency and its value skyrockets, bringing mind-blowing returns.

But, for every such case, there are thousands of investors who lose everything on a single bet, hoping to experience one of those legendary returns. Also, if you see good returns on a coin, take out your initial investment and put it aside.

This is what well-disciplined investors do. They are not afraid of limiting their potential return by doing this. Not every coin will be a winner, so this strategy allows them to reinvest in something else if the coin takes a dip.

4. Never act based on FOMO

Most of the new cryptocurrencies are launched with a lot of enthusiasm. From aggressive PR campaigns to celebrity endorsements, this can cause many investors to blindly jump in without thinking because they fall victim to FOMO, or Fear Of Missing Out.

This can come back to bite you severely in the butt and cause you to make irresponsible decisions. A lot of PR is bought and not organic or fact checked. Celebrity endorsements and partnerships are also purchased, usually in the form of tokens, giving the individual an incentive to promote the coin.

5. Protect your keys

Lastly, and most importantly, you must protect your passphrase or private key. This is the only way to access your cryptocurrency, and if you lose your keys, there is no way to access them. Equally important is the fact that anyone can access and steal your crypto if they get hold of your passphrase.

Previous Post Next Post