Cryptocurrencies promise to become non-manipulative currencies and world currencies in the future. For example, as per the DASH live chart , Dash is a cryptocurrency with a market value of more that $ 2.3 billion and fans of cryptocurrencies like this (such as Litecoin, Bitcoin etc.) see a future that investing in this type of currencies are good alternatives to the dollar, the euro, and could play a decisive role in the future of the world. Therefore, many people these days are looking to invest in the cryptocurrency market, and in this article, we will see how to invest in this market.
Should I invest in cryptocurrencies?
Currently investing in cryptocurrency is the best type of investment and this comes from the following reasons:
Loss of money due to inflation warns people to protect the value of their money. One good way to avoid this problem is to convert it to authentic cryptocurrencies.
The amazing technology of cryptocurrencies
Blockchain technology helps you not be limited to a specific geographical time and place and eliminates intermediaries from your life to create demand and demand will increase prices.
On the track record
Since the introduction of Bitcoin in 2008 until today, Bitcoin investors have benefited greatly from the increase in the price of this cryptocurrency over time. Therefore, investing in such assets that are scarce and demand-driven will allow you to make a profit over time.
What are the risks of investing in the cryptocurrency market?
Some business experts believe that cryptocurrencies are a bubble and will disappear as long as they grow. Jimmy Damon, CEO of JP Morgan Bank, is one of them. They believe that since cryptocurrencies are not sponsored by any individual or institution, they fluctuate too much and cannot compete with traditional currencies. As a result, they will never be a substitute.
Severe price fluctuations
This is a very important point. With a positive swing you can make a lot of money, but keep in mind that nothing is 100% and you may lose your initial money.
Governments’ legal policies on cryptocurrencies
Most countries in the world still do not officially accept cryptocurrencies as a currency. Therefore, governments may disagree with it or enact restrictive laws. Of course, the Chinese government, for example, has tried several times to block bitcoins, but to no avail.
Factors affecting the price of cryptocurrencies
Which countries accept your cryptocurrency? Which companies have accepted it as a currency? How popular is it? Answering these questions can help you choose the cryptocurrency to invest in.
What sets this cryptocurrency apart? What are the unique features of this cryptocurrency that may increase its demand?
Security can be a hallmark of a cryptocurrency. Basically, cryptocurrencies that are not covered by a particular company and operate on the blockchain network have this feature.
Cryptocurrencies that have been profitable to invest in over the past few years
Bitcoin has long been the most valuable cryptocurrency for investment. By looking at the charts of previous years, you can see the extraordinary price increase. Of course, as mentioned earlier, there are risks associated with fluctuations.
Ethereum is the second-largest cryptocurrency on the market, rising by about 3,000 percent since last year. Ethereum has a bright future because of features other than being used as a currency.
Litecoin is one of the strongest cryptocurrencies. The high security of its protocol and the difference between its extraction and bitcoin are among the strengths of this currency.
Monero has recently experienced great growth. The main feature of Monero is that it is really anonymous and the public can’t see the transactions of a wallet.
Steps of investing in cryptocurrencies
Select the desired cryptocurrency
The first step is to decide what cryptocurrency to invest in. Do good research on the desired cryptocurrency and follow the published news of the desired digital currency.
Setting aside money to invest
Everything needs planning and goal setting. Specify the amount of capital and investment period. Given the risks mentioned above, choose the right amount for your situation or you can, for example, add to your capital every month. The investment period is very important. It is recommended to stay in the investment for at least six months.
Select your Digital wallet to save your cryptocurrency
You need a digital wallet to hold the purchased cryptocurrencies. There are many wallets for cryptocurrencies. As much as possible, try to use cool wallets (offline such as hardware or paper wallet).
Sell your cryptocurrency in the digital exchange and make a profit
After the investment period, you can sell your cryptocurrency in a reputable exchange and make a profit.
When is the best time to start investing in cryptocurrencies?
There is no general rule for determining when to buy cryptocurrencies. The price of these currencies rises or falls according to supply and demand. But you should keep in mind not to buy when the market is emotional and the price of the cryptocurrency is at its peak, and also when the price of a cryptocurrency is falling sharply, it may not be wise to buy that cryptocurrency.
In general, the best time to buy is when the price has stabilized at a lower level. In fact, it is the art of the trader to recognize when the cryptocurrency is in a bubble state and when the price has reached its bottom. However, buying cryptocurrency at the price floor is very difficult and the price caps and ceilings cannot be easily identified.
Sometimes a cryptocurrency grows beyond imagination and everyone thinks it is in the price range, but still, the currency experiences more growth and reaches higher prices. Therefore, one should not look at the market with fixed intellectual background and anything can happen.
For example, when the price of Bitcoin reached $ 1,000, everyone thought that the price had risen sharply and was unlikely to grow further, but then we saw that the price even reached $ 20,000. It was then that everyone realized that the $ 1,000 price tag was actually a good opportunity to buy.
There are basically two important things to consider when choosing the right time to invest in cryptocurrencies. First, do not compare the price bubble of cryptocurrencies with the bubble in the financial markets. In fact, a 10 percent increase in the price of a cryptocurrency per day is not a bubble and has become a common occurrence in the cryptocurrency market. But 100% growth in a day can be a bubble, although there is no guarantee that the price will not rise more than that!
Second, take the time to look at prices and market behavior. In fact, do not buy just because there is a slight price reduction. Maybe the price drop will continue. Do not buy because you are afraid of losing a big profit, just watch the market, raise your awareness, and shop when you think it is appropriate. On the other hand, do not sell too soon, keep the currency that is growing, or sell part of it when you make a profit and keep another part. Maybe the bullish rally has just started.
Finally, we suggest that you also read the article N Common Terms About Cryptocurrencies to gain a more comprehensive understanding of the term by becoming more familiar with common terms in the currency market.