What makes a good crypto investor?
The cryptocurrency market has been big news for a while; with stats showing the industry will be worth $23.3 billion by 2023. From Bitcoin to Chainlink, the chances are that if you haven’t yet delved into the world of cryptocurrencies then someone you know has. It’s been a buzzword for a while, with posts on social media every 3 seconds about Bitcoin alone, it’s also hard to escape. And while the outcome has been promising for many, it’s also a pretty big risk with which you could be playing with fire if you don’t do the right research to support your crypto investments.
So what makes a good crypto investor? Can anyone invest? And how can you best prepare yourself so that it’s doesn’t all go up in flames? Below, we’ve outlined the top five aspects that will set you on the best path for being a successful crypto investor.
- Make sure you have somewhere safe to keep your cryptocurrency
So you’ve done your research on cryptocurrencies and you’re ready to dive in. But did you think about where you’re going to store it? One of the biggest mistakes that first time investors make is choosing a bad storage space for their cryptocurrency. Just like with physical money, your cryptocurrency is no different and can easily be stolen in cyber security attacks in you don’t take the right precautionary measures. Be sure to do some thorough research on the most secure crypto wallets before you invest to save yourself time and energy in the long-term.
In addition, be aware that some wallets only enable you to store one type of cryptocurrency, which could be quite restrictive as the market goes up and down. It’s best to opt for a wallet with more flexibility; enabling you to invest in the cryptocurrency that will most benefit you at any given time.
- Have a risk management strategy
Investing in cryptocurrency is a bit like a mental game of poker. Before you go putting all of your eggs in one basket, you need to consider the risks involved and have a solid game plan set out. While investing in a cryptocurrency is exciting and can be incredibly advantageous if you get the right balance of luck vs. strategy, the truth is that even when you do everything right, sometimes it can all go wrong.
Just like poker, when investing in cryptocurrencies, you need to be sure that you’re in it for the long haul. By being thoroughly researched and self-aware of your own tendencies and habits, you’ll be more likely to avoid the common pitfalls that many first time investors make.
- Don’t dive straight into the deep end
Investing in cryptocurrency can be all too exciting when you see all of the news articles about how much people are making from it, yet it’s one of the most volatile markets out there and what could be going swimmingly in the first few weeks could turn out to be a disaster after a month or so.
The key is to make sure you understand the market and make smart decisions without diving straight in with the first crypto provider you find on the Internet. With a wealth of information available at your fingertips in the digital era, there really is no excuse for ignorance, especially when it involves your financial wellbeing. Research as much as you can before you invest in order to ensure you’re making the best choices for your personal situation and protecting your financial future.
- Be safe
While investing in a cryptocurrency may feel very safe as you have nothing to physically lose, the internet can be a dangerous place if you don’t protect yourself properly. With one small business being hacked every 19 seconds in the UK alone, it’s essential that you take the time to find out how you can keep yourself and your crypto assets safe. Some simple best-practice procedures include using a different email address to your usual personal one, enable multi-factor authentication (MFA), ensure you’re using a randomly generated password that is different to your other accounts, and keep a track of any suspicious texts or emails that you receive as these could be social engineering scams and phishing attacks.
- Choose your timing carefully
As mentioned above, the cryptocurrency market is highly volatile, in which it could be doing incredibly well one day, and terribly the next. Rather than focusing too much on the value of the currency you are investing in at that time, try to adopt a supply and demand mind set by considering the overall market cap of that particular cryptocurrency. The closer a cryptocurrency gets to the market cap, the more likely it is to tell at a later date, so make sure you’re on the ball.
Overall, similarly to poker, investing in cryptocurrencies can be a challenge. It’s incredibly important to be well researched, optimistic and show good judgement in order to get the best possible outcome.