Some people have been investing and trading in cryptocurrency for more than a decade. Others just heard about the potential for cryptocurrency yesterday. Cryptocurrency is certainly an exciting and relatively new investment opportunity, and many who have engaged with crypto have earned amazing returns.
However, many crypto investors and traders have also made devastating mistakes. Beginners in the crypto environment would do well to listen to the lessons of crypto experts, which include some of the following key pieces of advice.
Research, Research, Research
Many if not most crypto investment opportunities sound amazing — to beginner investors looking only at the asset’s marketing materials. Crypto creators tend to be excellent at advertising the advantages of their assets while obscuring the risks, which is why so many investors new to crypto fall victim to scams that deplete their savings and scare them away from crypto investment entirely.
The key to seeing a return on a crypto investment is fully researching the asset before putting any money into it. In addition to pursuing any marketing materials, investors should dive deep into the DAO or organization responsible for producing the cryptocurrency or asset.
It is possible that the people behind a current asset have a history of failed crypto endeavors, which should indicate that their current offering is less likely to succeed. If investors can find trend lines showing the historical values of a particular currency or asset, they can also use that information to make informed decisions about investment.
Research is easily the most important step in any investment journey, but it is of particular significance when working in a volatile market like crypto. Beginners would benefit greatly by taking cryptocurrency courses that provide more information about research and evaluation methods for different crypto opportunities, though it is worth noting that such courses do not offer investment advice directly.
Develop a Guiding Crypto Strategy
Most traditional investors develop different strategies to guide their investment decisions and achieve their financial goals. For example, an investor who employs the value investing strategy is typically in no rush to increase their wealth.
Thus, they will look for undervalued securities that are poised to gradually increase in value, and they will hold onto those securities for years or even decades as their value rises. In contrast, an investor using the growth investing strategy is eager to increase their wealth quickly and will buy and sell stocks fast to make the most of advantageous economic conditions.
Beginner crypto investors should think critically about their goals for crypto investment. Those eager to make money quickly within a speculative market might adopt a trading strategy, which requires constant analysis of new assets and a high volume of transactions to take advantage of fluctuating prices.
Then again, those intrigued by the fundamentals of cryptocurrency might adopt an investment strategy, which involves holding onto relatively stable cryptocurrencies or assets for months or years as their value slowly increases.
Without a strategy, investors will struggle to understand and align their investing decisions toward their goals. Investors can alter their strategy as the market changes — or as their goals shift with time — but any alterations to an investment strategy should be made consciously to ensure consistency in investment decisions.
Specialize in a Crypto Field
The crypto landscape has expanded significantly in recent years, and crypto investment opportunities have become almost as diverse as traditional investments. Today, a beginner investor is faced with three major categories of crypto assets: DeFi, NFTs, and games.
DeFi, or decentralized finance, is what most people imagine when they think of crypto — namely, cryptocurrency.
Coins like Bitcoin, Ether, Litecoin, Solana, Avalanche, and others fall into this category.
NFTs, or non-fungible tokens, are unique assets that are held in the blockchain. There are almost countless examples of NFTs, but some of the most popular include digital artwork, virtual fashion items, original videos, domain names, and more.
Crypto gaming is a new type of video game in which rewards and items earned in one crypto game can be used in other crypto games or exported to the real world. Investors can put money toward game development, invest in gaming coins or play the games themselves.
Instead of trying to develop a deep understanding of all three, experts advocate specializing in just one area of crypto — at least to start. By focusing attention on one field of crypto investment, investors can develop more advanced knowledge and skill in that field, which allows for better investments that provide bigger returns. After obtaining sufficient experience in one field, investors might dabble in another field, but only if they have the time and interest.
Crypto experts know what it takes to make money in this new, exciting, and volatile investment landscape. By adopting some of their simpler strategies, beginner crypto investors have a better chance of achieving success.