So you have heard about cryptocurrency and you are wondering: How can I profit from cryptocurrency?
You need to be careful essentially. Here are 9 points that will tell you exactly where you need to be careful to ensure you are taking the right precautions.
How to invest safely
If you aren’t investing safely then you run the risk of losing your funds, either through malicious action, due to negligence or just due to investing a project that goes down in price and doesn’t recover. You can’t profit from cryptocurrency if you aren’t investing safely!
Ensure you are using well respected FIAT on-ramps and exchanges and you are using 2FA at any opportunity.
Don’t blindly follow advice from anyone, even if they are well respected in the scene. Always do your own research.
What to invest in
The best way to profit from cryptocurrency long term is to invest safely.
In order to ensure you are investing safely you have to do your proper research of the team and the projects background and history to make sure it is a worthwhile investment.
If you are not investing in a solid project that you are knowledgeable about you run the risk of it not being a safe investment. No one knows how the cryptocurrency space is going to develop over the next few years, but investing in projects you believe in is definitely the safest way to invest.
How to store safely
When you have decided what project to invest in you need to be sure that you are storing your coins safely. If you don’t store safely you may lose your coins – and then you definitely won’t profit from cryptocurrency! Better be safe.
If the coins are ERC-20 tokens this is easy, use Myetherwallet or metamask for safe storage.
You should also consider investing in a hard wallet as these are the safest way to store currency at the moment.
For other coins, make sure you do research for your particular coin to find the most popular wallet – this is the best way to stay safe. Using Reddit to find the suggested wallet is a great way to do this.
Use 2FA whenever you can.
When to buy
It is very hard to time the market of crypto – no one really knows what is going to happen no matter what they say. Buying at the right time will help you profit from cryptocurrency.
News can come out at any time and affect the market. The best ‘time’ to buy is over an extended amount of time using dollar cost average. Spread out your investments to reduce the impact of volatility on your purchases.
If you aren’t prepared to use this method, which is fair enough, just make sure you are not succumbing to FOMO – Do not buy at all-time high. That is the main tip. Don’t buy when the coin is at its highest. Also, don’t consider the all-time highest in this, also take into account the highest in the last month or two. If the coin is having a substantial price increase it is probably not the best time to invest. Wait for the inevitable pull back.
When to sell
You need to understand when is best to sell to best profit from cryptocurrency.
Similar to buying, no one knows what’s going to happen.
So the best thing you can do it take periodic profits. Failing this, make sure you HODL. The best tactic I think at the moment is to buy solid projects and wait for the adoption and progression of the space. If you believe cryptocurrency and blockchain is going to grow you believe the price is going to increase over the long term – so just wait it out at the moment.
Do not get scared of decreases – these are natural and have happened many times in the past. Have strong hands, the space still has a lot of room to grow. The price has changed, the view of the project hasn’t.
Importance of events & announcements
Naturally, there is a lot of development happening within the cryptocurrency scene at the moment. You need to know their effects to profit from cryptocurrency.
A lot of projects are announcing partnerships. These will have an effect on the price. The problem is it’s hard to know when they are coming and what effect they will have. Sometimes people buy the rumour and sell the news – this means the price rises up until the announcement then shortly after it will fall. Other times, the partnership may be so good it will raise the price.
So, these two things are obviously very conflicting. Will the price go up or down? I think the best way to look at it is that development is happening, just ride the wave and HODL. Development works towards adoption, and these short term price changes won’t matter in the future.
Regulation events can also majorly affect price. This is good to keep in mind.
Overall, you just need to know that the price can be affected by events and announcements, but it is recommended not to try to trade off the price changes if you believe in the project.
It always has to come up in discussions about crypto. You need to know the market is extremely volatile to profit from cryptocurrency. This is because you should not get scared by negative movement of your funds – this will happen inevitably. If you believe in the tech like you should, the development will continue and so will adoption.
To profit from cryptocurrency you need to understand realistically how far away mainstream adoption is. Most people don’t know what a ‘bitcoin’ is. They have never heard of altcoins. There is a long way to go, so holding will be for a long period of time. However, this is a good indicator in terms of future profits.
No one knows what’s going to happen
To profit from cryptocurrency you need to know that NO ONE knows what is going to happen in the long term, or the short term. Prices can go up, prices can go down. Fake announcements can be made. You have to make your own judgments do not just blindly follow others. Knowing this will help you profit from cryptocurrency.
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