Cryptocurrency is the new hype in investing. Cryptocurrency statistics in 2018 revealed that Bitcoin gets approximately 1,203 social media posts an hour – that is one post every three seconds! But cryptocurrency’s popularity does not only stem from it being the most talked-about topic in social media. People invest in cryptocurrency because it offers security, opportunities, and value.
Over a decade ago, only tech-savvy individuals and central banking skeptics deal in cryptocurrency. Now, different types of people use it as an alternative to the complex system of centralized financial institutions. The Philippines has about 4.3 million crypto owners and has the third-highest uptake of crypto globally. The outlook for crypto investing is positive as more Filipinos are expressing interest in crypto.
Learn more about cryptocurrency investing, and how to be a smarter investor with these top ten things to keep in mind before investing in crypto.
1. Match Goals with Investing Decisions
How much risk can the investor take? Is the investor looking for short-term or long-term investment? Answering these questions will help the investors understand whether cryptocurrency investing is the right vehicle for them.
Cryptocurrency is very volatile. Compared to stocks, cryptocurrency is riskier but it also has more potential for reward. If the investor is looking for a sure income, then cryptocurrency may not be an ideal investment for him. However, if the investor understands the risks of cryptocurrency, then investing here opens him to various opportunities.
2. Research Before Investing
Getting a clear sense of how digital currency works is essential in cryptocurrency trading. New investors should learn about the different coins and tokens, including terms like blockchain, mining, Initial Coin Offering (ICO), and keys. Learning about the industry and how it works will not only help them make better investment decisions but also protect them from scams that target beginner investors.
3. Cryptocurrency White Papers
Every coin has a “white paper” that contains all the information about its purpose and the technology behind it. The white paper reveals general and specific details about the project including what the developers intend to do with their work and the timeframe. If the white paper is not easily accessible or it is incomplete in details, then it might be an indication of a scam or problems in the project itself.
4. Learn the Buzz Through Online Cryptocurrency Communities
New investors in cryptocurrency can also get a better gauge of how trading works with online cryptocurrency communities. Examples of these communities are Bitcointalk and CryptocurrencyTalk. There are also various communities on social media platforms, Discord, Reddit, and Telegram.
Cryptocurrency communities allow investors to connect with experts to learn better ways of navigating the industry. Through blogs and forums, beginner traders gain insight into current events, rising trends, and other critical topics that might affect movements in cryptocurrency prices. In addition to investing strategies and tips, communities also offer support and guidance on how to become smarter traders.
5. Be Cautious of Cryptocurrency Scams
Cryptocurrency is now also becoming a popular target for scams. To avoid these, always be cautious of offers that promise gains that are too good to be true.
Some scams are perpetrated through websites and apps that resemble legitimate startup companies. Many of these schemes even imitate the legitimate platforms the investor is already using. Schemers then redirect users to another platform to swindle money out of them. Avoid falling for these tricks, by always check the email, URL, and app developer. Look out for misspellings, strange coloring, and incorrect logos before clicking or using them.
6. Only Invest Discretionary Income
Investing in cryptocurrency has a high potential of reward, but the risk of losing the entire investment is also steep. To prevent damaging losses, investors should not invest more than they can afford to lose.
One may get overwhelmed by the opportunities and the borderless potential of cryptocurrency. But such advantages also have twin evils in that it is difficult to recover if one incurs losses or becomes victim to scams. In high-risk investments such as cryptocurrency, investors should be smarter with how much capital they put in.
7. Safeguard Private Key Phrase
A seed phrase is a series of words that allows users to send and spend their cryptocurrencies. This is the only way to access the wallet, so if the user loses it, he loses the way to control his cryptocurrencies. And if this is stolen, the perpetrator acquires the potential to steal the user’s crypto.
To safeguard the private key phrase, never store it in the computer or leave it out in the open. Try memorizing it. Users can also write it down and keep them in a secure place.
8. Diversify Portfolio
Similar to any investment, crypto traders should also try to diversify their portfolios. Diversifying evens out the high risks of one type of investment with the low risk of another.
For example, the investor can divide his investments among coins having high, medium, and low risks. One may also consider holding some stablecoins for liquidity purposes. Diversifying techniques would vary for every investor. It needs research, assessment of risk appetite, and analysis to achieve an effectively balanced crypto portfolio.
9. Set Profit and Loss Target
Stop-loss and take-profit orders are strategies that set a cap to investment losses and profits. It means that when buying or selling cryptocurrencies, investors should close the deal when the profit or loss reaches the target.
Cryptocurrency is very volatile and so it is hard to predict when to close a decision to buy or sell. Combining both stop-loss and take-profit orders allows for a more decided trading while keeping the risks to the minimum. More importantly, determining the loss target prevents the investor from incurring heavy losses.
10. Choose a Secure and Accredited Trading Platform
Investors need to use an exchange to start buying and selling cryptocurrency. These are online platforms that offer broker services and tools that make crypto trading easier.
However, many of the emerging crypto platforms bring more risks to the investor than benefits. Some are even channels to fraud cybercriminals use to hook in investors.
When choosing an exchange, always check the platform’s authority and accreditations. Also, check the number of cryptocurrencies available on the platform to know whether it offers enough options. Most importantly, make sure that the platform has strong fund security, especially when making large investments.
Jumpstart Your Cryptocurrency Trade with Coexstar
In the Philippines, Coexstar PH is one of the best Virtual Asset Service Provider (VASP) to buy and sell the world’s famous coins. It is registered in the Securities and Exchange Commission (SEC) and regulated by the Bangko Sentral ng Pilipinas (BSP). All activities in the platform are subject to the rules and regulations of the BSP and Anti-Money Laundering Act (AMLA).
Coexstar is a company that users can trust as they provide a secure and convenient exchange platform that is efficient, effective, and reliable. If so the you should check out the infographic we have below from COEX STAR or contact us for more information.