The crypto market has dropped but is still worth over $1 trillion.
It’s no secret that the crypto market has taken a massive hit over the last year. The current economic climate, inflation, and political instability contributed to it. However, the entire market is still incredibly valuable to investors.
The crypto market was worth over $3 trillion at the end of 2021. This means you can buy the same assets for a fraction of the price today. Of course, buying crypto comes with its fair share of risks, but the opportunity is there for retail and institutional investors.
Do you want to learn more about buying crypto? Then, read this complete guide on what you need to know.
1. Do Your Research
Many people like to say that crypto is incredibly dangerous and risky. While this can be true, it’s also true for all investments. This is why it’s essential to do your homework and research the crypto you want to invest in.
Before you make any investment decision, you should understand the crypto, how it works, how much it’s worth, and what platforms you can buy it on. This will give you a good indication of where crypto is and where it’s heading in the future.
Even if you’re thinking of investing in popular options like Bitcoin and Ethereum, spend some time reading the latest news. This will give you a better idea of where the market is and if it’s a good time to invest. Ethereum regularly posts content about the future of crypto, making it great for investors to stay updated.
In this way, you’re not blindly investing in something you don’t understand. The same goes for any stock, bond, or option you buy in the financial market.
2. Find a Reliable Crypto Exchange
Finding a reliable crypto exchange you can partner with is incredibly important. This is because crypto exchanges are the safest way to buy, sell, and hold crypto. However, not all crypto exchanges work in the same way.
This is why you should always take some time to research the various crypto exchanges that are out there. Even the most popular options can hide things from investors, so taking your time before finalizing your decision is essential.
When looking at crypto exchanges, pay close attention to their work, customer service, and transaction fees. The last thing you want is to keep your money locked up at an exchange. If you can hold your crypto privately, that’s an even better option.
However, buying crypto from an exchange is the most reliable option. This prevents you from having to send money privately to other people. Crypto exchanges let you buy crypto with your credit card, debit card, or bank transfer.
This makes it simple and easy to start a crypto portfolio.
3. Diversify Your Portfolio
When investing in anything, diversification is essential. Diversification simply means not putting all of your eggs in one basket. By spreading out your investment, you’re not at risk of losing everything if one stock or crypto were to crash.
A great rule of thumb is never putting more than 10% of your portfolio in any asset. Many financial experts suggest that people include crypto in their portfolios to help diversify. However, they recommend that you invest with caution due to the volatility of the space.
This is because the crypto market is largely unregulated and can drop quickly. This would put large portions of your portfolio at risk. Invest just 1% of your portfolio into the crypto market to stay safe.
You can expand that to 5% of your portfolio as you learn more about crypto. This exposes your portfolio to the market without jeopardizing your money.
4. Blockchain Technology
Blockchain technology is the secret sauce that allows crypto to operate. This technology is based on a decentralized structure that gives power to individuals. In simple terms, the blockchain is a series of computers connected to form a network.
The network hosts a general ledger that keeps track of every transaction for crypto. Essentially, the database of how much crypto everyone has is stored on the blockchain. Unlike banks that have one database, the blockchain has thousands of copies hosted at the same time.
This means that if someone were to hack one computer and change the ledger, the other computers would immediately notice and correct the mistake. This makes crypto almost impossible to hack. Many bankers agree that blockchain technology is lightyears ahead of the security banks use today.
While the blockchain is impressive, it’s also incredibly energy intensive. You should keep this in mind when choosing crypto to invest in. While Bitcoin is incredibly popular, the network uses more power than most countries.
If you’re environmentally conscious, you’ll love Ethereum. This crypto comes with all the benefits of Bitcoin and more. For example, Ethereum recently underwent a significant update that saw its energy consumption drop by over 99% overnight.
This makes it one of the most environmentally friendly cryptocurrencies on the market.
5. Pay Attention to Fees
Before you start investing in crypto, you should understand all the fees associated with your investment. Some blockchains charge a fee per transaction, while other exchanges add even more fees to every move that you make. Some even charge you a fee just for depositing your own money into your crypto account.
Spend some time and go through the various fees associated with each exchange and each cryptocurrency. This will give you a good idea of what good investments are and which crypto you should stay away from.
You should always factor in your transaction costs when calculating how much profit you’ve made on a trade. This means that if you bought in for $10, but it cost you $10.50, your initial investment should be noted as $10.50. Then, when you sell that crypto for $21 in the future, you can say you have doubled your money.
It’s important to note that you may also have to pay fees when you sell crypto. This means you won’t get $21; you may end up with $20.50. This means that you should use the more accurate number for a more precise calculation of your profit.
6. Stick to the Popular Options
There are over 12,000 cryptocurrencies on the market today. While Bitcoin and Ethereum are the two most prominent options, smaller coins have sprung up overnight. More than half of all cryptocurrencies were launched between 2021 and 2022, highlighting the surge in crypto.
While these smaller cryptocurrencies are incredibly cheap, they’re also incredibly risky. This means that a single investor has the power to move the price up and down quickly. Many influencers and celebrities have been paid to promote coins and crypto, only to sell it for a profit.
These are known as ‘pump and dump’ schemes. The celebrity already holds a massive stake in crypto before they start promoting it. When they promote it, the price naturally rises, and they sell their position for a quick profit.
However, you’re left with a worthless investment. This is why it’s always better to stick to the popular cryptocurrencies on the market. This includes Bitcoin and Ethereum, which are worth hundreds of billions of dollars.
This means that no single person can move the market. In this way, your investment is relatively safe compared to other cryptocurrencies.
7. Current Market Conditions
Current market conditions are not ideal for the world of crypto. The pandemic managed to crash financial markets worldwide, with investors turning to crypto to hedge their bets. This worked well for everyone as crypto skyrocketed to record highs.
However, the effects of the pandemic were still lingering around the entire market. In 2022, inflation hit the global market and caused a cost of living crisis in many parts of the world. This caused institutional investors to leave the crypto market, causing prices to fall.
It’s essential to keep an eye on market conditions going forward. This is because it will let you know where the future of the crypto market is heading. This may help you decide whether you want to sell your position or buy more.
8. Access Your Crypto Anywhere
The best part about crypto is that you can access it anywhere, anytime. Unlike cash you need to carry around, crypto can be withdrawn, bought, or sold anywhere. All you need is a smartphone and an internet connection.
There are even Bitcoin ATMs that will let you buy crypto instantly. These ATMs are handy as they make access even simpler for retail investors. You can visit this website to learn more about Bitcoin ATMs and where to find one near you.
While there are a few different crypto exchanges, they all work the same way. All you need is an internet connection, and you can access your crypto account. Here, you can buy, sell, or hold your crypto assets.
The best part about this is that you can do all of this instantly. No more waiting in line at the bank just to get access to your own money!
9. Start Small When Buying Crypto
When you start your crypto portfolio, it’s essential to start small. This is because the crypto space is still relatively new and isn’t regulated in the same way as the stock market. This is why practicing caution while you learn the ropes is always a good idea.
Once you understand the crypto space better, you can expand your portfolio. However, most financial advisors suggest investing only what you’re willing to lose. This is true because cryptocurrencies can drop in value overnight.
The crypto market doesn’t close, so you could wake up one morning with a drastically different portfolio. This is why investing 1% of your portfolio in crypto is a safe bet. Then, even if you lose it all, the rest of your portfolio will make it back in no time.
10. Update Your Portfolio
When investing in anything, staying updated with the latest news and happenings is essential. While crypto is decentralized, it’s not entirely immune to the economic effects of the world. This is why the current financial crisis managed to tank the entire market.
Staying updated with the latest news will help give you a good idea of where the markets are moving. This will also let you know what institutional investors are thinking and doing. Since these big players are publicly traded companies, they often announce their investments before or while making them.
This will help you know when big money is shifting towards or away from the crypto market. If major investors are coming into the crypto market, you know that prices will rise. If they’re moving away from the crypto market, prices will drop.
This could give you the signal to sell your crypto while they’re high or buy more since the prices are lower now!
Invest in Crypto Today
Buying crypto does come with a fair share of risk. However, the same can be said for any stock or option in the financial market today. Since prices are so low, investors worldwide are optimistic about investing in crypto at a massive discount.
It’s essential to do your research and find a reliable crypto exchange for all your investments. Once you have that all set, you can start small and grow your crypto portfolio in no time.
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