7 things you need to consider before getting into cryptocurrencies
For more than a decade, Bitcoin and countless other cryptocurrencies have become assets lots of people have invested in. However, with a lot of great choices to choose from, it becomes difficult for investors to pick which of these cryptocurrencies to invest in.
To help you learn how to choose the right cryptocurrency, Bitcasino has prepared this guide for you. So keep reading to begin your cryptocurrency investment journey today.
Know the purpose of the cryptocurrency
Before you start investing in a cryptocurrency, you need to understand two important things about it: its revenue model and economic impact. The revenue model speaks of the ways the cryptocurrency network will keep or raise the asset’s value. Meanwhile, the economic impact of a cryptocurrency speaks of its usefulness in society.
Once you’ve learned the nature of these two essential aspects of a cryptocurrency and have found them excellent, then it’s safe to say that it’s an ideal token to invest in.
To help you better understand these two cryptocurrency aspects, Litecoin’s revenue model and economic impact are discussed below as examples:
For Litecoin’s revenue model, its blockchain network ensures it has fast and secure transaction processing services, with a high market capitalization of $9,466,116,090 (as of January 19, 2022), making it a reliable investment because of the large number of people investing in it.
Meanwhile, Litecoin’s economic impact is characterized by being a currency that you can use for your day-to-day transactions. Because of this, you can transact wherever you are as long as they accept LTC.
Observe market trends for certain cryptocurrencies
If you’re eyeing a certain cryptocurrency, follow the market trends it’s associated with. By knowing its history, from the beginnings and rising and dropping of prices to its current demand, you will have a better understanding of whether the cryptocurrency you want to invest in is an ideal purchase or not.
This is because if you simply relied on its hype, you might end up making an investing mistake and lose your investments with millions of other investors.
Set limits on yourself
In this digital age, cryptocurrency is a lucrative and exciting asset to have. With literally thousands of choices, you can enjoy not just investment benefits, but also technological ones.
But as tempting it is to invest all your money in a certain cryptocurrency you trust, it’s best not to do so. This is because with the volatile nature of cryptocurrency, your high-valued investment today may be only worth crumbs tomorrow.
To avoid this from occurring, it’s best to set a certain investment limit for yourself. Ensure that you only invest money you can afford to lose because if not and prices significantly drop, you can end up with more losses than gains from the cryptocurrency market.
Or, you may also have a diverse portfolio by purchasing multiple, high-quality cryptocurrencies. That way, should one token fail, you have other ones you can rely on and maybe even recuperate your losses.
At the end of the day, regardless of the two methods shown here, practising self-control and proper financial management is how you will earn through cryptocurrency.
Don’t buy a cryptocurrency for its affordability alone
One of the biggest mistakes you can make, especially if you’re a beginner, is buying a cryptocurrency simply because of its affordability. Though some currencies start small then blow up to become a big-time investment, this is never assured. After all, cryptocurrencies are highly volatile investments whose prices could change at a moment’s notice.
Additionally, there could be a logical reason why certain tokens are low in value, such as being undesirable to the market and having unideal services. No matter what it is, take the time to look over the reasoning for the token’s low price by going on forums, checking the crypto’s site and researching about its creators, among others.
The easiest way to see if a coin is worth it is by checking its user rates. If the rates are low, refrain from investing in them regardless of how affordable their prices are. This is because there may be few buyers willing to buy once you sell for profit. As a result, you can have liabilities in your hands instead of what are supposed to be assets.
Finally, the token must be a useful asset for you. This is because if not, no matter how affordable it may be, it can end up being another expense rather than an asset.
Consider cryptocurrencies with strong followings
The value of a cryptocurrency is based on the demand of its followers. That’s why before investing in a cryptocurrency, find out if it has a strong and active userbase. This is because if the token is popular, its chances of increasing in value rise just as more people buy, sell and trade it.
An example of a cryptocurrency with a strong following is Dogecoin. Since it was endorsed by the CEO of SpaceX and Tesla, Elon Musk and gained a lot of investors, its value went from $0.0005588/coin to $0.20/coin.
Additionally, with its strong Reddit community of 2.3 million active users, it’s clear that many invest in Dogecoin. This is best seen as Dogecoin has become part of the top 11 most bought cryptocurrencies as of January 19, 2022, with an attractive market cap of $21,946,558,149.
If your wanted token has this kind of following, it’s most likely an excellent cryptocurrency with a highly active market.
Visit Coin Market Cap
A lot of blogs will tell you contradictory things about the value of certain cryptocurrencies. That’s why it’s better to see a token’s value for yourself in addition to listening to others’ advice.
To do this, visit Coin Market Cap and see the thousands of cryptocurrencies you can invest in. On this website, you will learn about the entirety of the crypto market as you see the most trending cryptocurrencies, biggest gainers, each token’s price, market cap, circulation supply and much more.
Whatever data you find on Coin Market Cap, analyze them well, make cross-references to other analyses and finally decide if they’re worth investing in or not.