Important Things To Know Before Investing in Crypto

Important Things To Know Before Investing in Crypto

Crypto is the “IT” thing in the financial world today. People all across the globe are embracing it and crypto related companies are rising in popularity every day. Such is their rising influence that sites like crypto.com have bought the naming rights to the home arena of the storied NBA franchise, the Los Angeles Lakers. Their home arena used to be called the Staples Center, it’s now called the Crypto.com Arena. Getting into crypto seems like the sensible thing to do today. However, entering this market without knowing what cryptocurrencies promise is nothing but gambling. Seeing cryptocurrencies as a means of getting rich quickly in the short term brings great financial risks. If you are a new investor, try trading with an amount that you can afford to lose.

Recently, we have been witnessing sharp up and down movements in cryptocurrencies after the decisions taken by some countries and large funds regarding Cryptocurrencies And The Tweets Of Tesla CEO Elon Musk. From that day to this day, we have seen similar movements from time to time in the virtual currencies that emerged after the global economic crisis in 2008.

So, what should those who have a certain investment and those who want to enter the crypto money market pay attention to? How much of their savings should they trade in the cryptocurrency market? According to what and how should they choose the cryptocurrency to buy? Should they look at their investments in the cryptocurrency markets as a long-term investment tool or as a short-term investment tool? In this post, we will try to find the answers to all those questions and more. Let’s get started.

Read This Before Investing In Crypto

Where to start with crypto?

Investors who will invest in cryptocurrencies should first understand their own risk profiles, as in other investments. They must determine how much risk they can take, how long they can invest, and what return they aim for. After that, it is important for the health of investments here to first understand what Bitcoin Is And What Its Value Proposition Is. If you perceive Bitcoin and other types of cryptocurrencies as a shortcut to getting rich quickly, then you will expose yourself to a lot of financial risks.

Entering this market without knowing what blockchain technology is, what it brings, what it changes and what the cryptocurrencies that emerged in this financial revolution promise is nothing but gambling.

Investors entering the crypto money world for the first time should give importance to being informed before stepping into the sector. Unfortunately, there are many people who think that they will buy crypto money and get rich quickly. However, the crypto money sector is an investment area that needs to be taken after careful research. In addition, it’s recommended that they do detailed research on the projects they will invest in and follow only the sources they are sure of when obtaining information, because there is a serious information pollution in this area. Finally, it is very important that they carefully choose the exchange they will use. It should be ensured that the service provider to be used is as reliable as the crypto to be invested. Information such as the stock market’s history, security measures, and transaction volume can be easily found and are prominent indicators of reliability. 

How to choose the right cryptocurrency?

It would be unrealistic to expect beginner investors to understand all the technical aspects of cryptocurrencies. However, following the value proposition they offer, their teams and whether they have achieved their goals in their development from the past to the present can be beneficial in the investment decision. If you believe in the business model that crypto money targets in the future, it would be right to invest according to your risks and knowing that there may be high volatility. In addition, tracking a large number of cryptocurrencies will be very difficult and risky in the 24/7 market.

It is recommended that investors entering the world of crypto money should first read the white paper about the crypto money they will invest in, that is, the summary texts that describe what they promise. In addition, it will be useful to follow the news about the cryptocurrency carefully, to be aware of the issues such as whether the technology is falling behind and the partnerships they have made, at the point of whether the invested currency will do what it promises. As a result, certain cryptocurrencies will live and others will perish, so it would be right for them to choose the one that will actually exist in the future that is functional.

It is recommended that investors make a basket, and ensure that there is money that uses both their own blockchain technology. Coins using the infrastructure of other blockchain technologies may not fulfill what they promise due to the blockchain disruptions they use, so there is no certainty in this market, so we recommend that they make baskets.

Since the risk appetite of each investor is different, it is not possible to talk about general rules here. However, whatever their profile, it’s highly advisable to carefully examine the project they plan to invest in. Today, nearly 9000 coins are listed on the crypto money markets. Only a small fraction of these are truly worthwhile and promising projects. Investors should consider key factors such as the scope of use that creates the intrinsic value of the projects, what problem it solves, whether it is scalable, the developer team behind it, and the prevalence of use.

What is the right amount of money to invest in crypto?

In general, Bitcoin stands out as a new generation value storage tool. With its limited number, transparency, anonymity and decentralization, Bitcoin can create value in portfolios in the medium-long term. Taking a very short position in markets with high volatility and 24/7 trading can be quite challenging from time to time. For this reason, a more medium-long-term perspective and limited short-term trading position can yield healthier financial results. Bitcoin trading can be carried out efficiently using tools such as bitcoin prime.

Investing more than 20 percent of your savings in cryptocurrencies would be risky for amateur investors. After all, we are talking about a market where the stones are not settled, manipulations and speculations are intense, and there are regulation risks. Of course, this amount can be slightly increased or decreased according to your knowledge and experience in this field.

According to the research; Short-term investors definitely lose in cryptocurrencies. Therefore, it makes sense to invest long-term in currencies that you trust, that you believe will deliver what they promise and whose technology you believe.

Not only in cryptocurrencies but also in any investment decisions, one should first know himself, that is, he should weigh what level of risk they are willing to take. They may consider allocating an appropriate portion of their total investment budget to crypto assets to match their risk appetite, it’s a good idea to spread the risk when investing. Since cryptocurrencies are high-risk investment instruments, especially if you are a new investor, it’s recommended that you trade with an amount that you will not be upset if you lose. The duration of crypto money investments is also an issue that the investor should make a decision according to his own risk appetite by researching.

Can the volatile transaction movements in crypto markets be prevented?

Many different dynamics work together in Bitcoin and crypto money markets. The fact that the transactions continue without time and space limits, the assets can be moved within minutes on all global platforms, the continuous News flow, and the fact that the market value has grown rapidly in recent years, is still relatively small, increasing the volatility in these markets. The further expansion of global financial markets with the pandemic brought serious cash inflows and volatility to this market. The size of the volatility in financial markets, including all bitcoin and cryptocurrencies, is expected to remain quite high in the near future.

If you know what Elon Musk will announce tomorrow, you can consider yourself blessed with foresight in the crypto money market, or if you know which country will ban what, you can have foresight. Of course, technical analysis and fundamental analysis can be done, but the unknowns we mentioned above are proof that this market will continue to be volatile and risky for a longer period of time. Whenever we talk about mathematics, then we will be able to talk about a stable market, but not now.

Unlike traditional markets, crypto money markets are still in the maturation stage. There are rapid exits as well as rapid entrances to the market. This causes volatility in prices. However, many experts have predicted that with the increase in crypto money regulations, significant progress will be made, so that with the entry of more new investors, the depth in the markets will increase and this will reduce the volatility in prices in the long run.

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