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This year has seen a significant increase in interest in stocks, trading, and finance from people of different walks of life. This has made the investment industry one of the most profitable ways to earn money passively, making it very attractive for a whole new generation.
Among the major facets of this industry is investing in cryptocurrencies. This is investing in different digital assets that can be used for different transactions, and these assets are slowly becoming the next big thing and are expanding their reach and are entering new industries. This expansion is cementing its potential to be an amazing investment. And, now is the best time for you to start.
Here are a few things you need to know and understand about these cryptocurrencies and how you can start your cryptocurrency investment journey.
Investing in cryptocurrencies is a highly speculative activity but is also very lucrative. And, that is what makes it so attractive for new investors. The prices in this industry are very volatile, and the risks surrounding it are very different from investing in traditional assets.
Nowadays, there is a significant rise in interest in investing in these digital assets, which makes jumping on the bandwagon better than ever. However, there are certain things you need to know before choosing which asset to invest in. These include what crypto investing is, the tools you need, and how to get started, among many others.
What Is Crypto Investing?
Crypto investing is the buying and selling of digital assets used as a medium for exchanges through digital, encrypted, and decentralized means. What makes it different from investing in traditional assets is that these currencies function almost like the usual fiat currencies, but there isn’t a central authority that manages and maintains their values.
Another significant difference from conventional investing is that the assets you buy will typically be stored in a digital wallet, making them prone to being stolen from hackers. However, numerous cryptocurrency exchange platforms have made steps to alleviate this problem and make these investments safer and profitable.
How Can Trading Volume Analysis Help in Crypto Investing?
Trading volumes are the total number of shares of the digital asset that were trading during a certain amount of time. It represents the overall activity of the asset in the market, and it is often used to confirm the existence of different trends and momentum.
Trading Volume Analysis will help you, as a crypto investor, decide whether to buy or sell the asset. These also help in choosing whether to speculate on the bullish or bearish side of the spectrum to help you see profits from both ends of the spectrum.
What to Know Before Investing in the Crypto Space?
Before everything else, here are a few terms you need to know. However, it is best to read about these in more detail before starting your cryptocurrency investment journey.
- Exchange – The platform or website where you can buy and sell cryptocurrencies.
- Whale – This is an individual who owns a lot of cryptocurrencies.
- Bear or Bearish – When an asset's price goes down in a certain period.
- Bull or Bullish – When an asset’s price is going upwards.
- Blockchain – is the permanent database that stores all the data that blocks mined in a day.
After knowing a few more terms, the next thing you find is a well-regulated and credible exchange where you can safely buy digital assets. There are numerous cryptocurrency exchange platforms in the market, and choosing which one to use will be based on different factors.
Among these factors are the payment method, safety, security, anonymity, location, etc. While most trusted exchanges offer everything you need to thrive in the market, it is best to look for an exchange that offers different guides and courses to its users. Especially if you are new to the cryptocurrency investing space, these features will help you a lot.
What Do I Need To Start Investing in Crypto?
Starting to invest in cryptocurrencies may seem difficult, but there are generally just four steps you need to do to start profiting from these assets. Here are the four essential steps to help kick off your crypto investing journey.
- Pick and Exchange to Trade on. As said earlier, the first thing you need to do is find an exchange to trade cryptocurrencies on. Once you find an exchange and register an account, you can start buying and trading cryptocurrencies.
- Choose a wallet. As a cryptocurrency trader, you will need to find some there to store your assets. Generally, most cryptocurrencies have official wallets linked on their website, but you can also look for a private wallet. Regardless, these are tools that will help you store and send cryptocurrencies to and from your wallet.
- Find information. This is a very volatile industry, and different factors can affect the price of the asset. Some of these may be a sudden rise in interest, news, legal battles, predictions, and analyses. All of which can affect the price of the asset you own.
- Familiarize Yourself with Tools. Make sure to learn more about the different tools and instruments that your exchange offers. These will help you make better investment decisions and form a trading strategy that will give you better chances in the long run.
How Much Does the Average Person Start Out With Investing in Crypto?
There isn’t a minimum amount that you need to invest in cryptocurrencies before you see profit from your investment. However, for the average person who wants to start earning in these digital assets, it is recommended to invest 5% to 35% of your capital.
For beginners, 5% is recommended to test the waters and slowly navigate through the trading environment without risking too much. While if you are comfortable with risking losing money, 30% to 35% of your capital will help you profit from your investments faster.
However, it would be best to consider how much the exchange platform charges as a trading fee before finalizing your investment. If you invest too little, there is a chance that all of your profits will be negated because of the fees you need to pay afterward.