Mitigating the Risk: How to Invest in Cryptocurrency Safely
As the world continues to accept the idea of a cashless future, cryptocurrencies have continued to gain popularity all over the world. Investing in this industry has been highly rewarding, but also very risky. That depends on how and when you join the crypto industry. For example, at the beginning of 2018, the cost of a single bitcoin was about $17,000. Today, the price continues falling after a month of poor trading in major exchanges around the world, trading at less than $6,000.
While the blockchain and cryptocurrency markets are up-and-coming, the technology is still at its experimental stage. That makes the crypto market to be highly speculative and very unreliable as a short-term investment option. Moreover, there are a couple of other hurdles and problems that one has to overcome. Price manipulations, scalability, tax, legislation, criminal activities, and energy consumption are just a few of them. However, there are great rewards for sure.
So, what’s the Best Investment Strategy in Cryptocurrency?
Having in mind that the blockchain technology is still in its infancy, the best way to invest in cryptocurrency is to diversify your portfolio. This strategy may not help you to make any profit, but it will help to minimize your risk. The well-known maxim of buying low and selling high is the most straightforward strategy to make a profit and the most ideal for everyone. However, most people do the complete opposite, for fear of missing out or losing their entire investment.
When it comes to buying and selling cryptocurrency, exchanges such as ezbtca, Bitstamp and Coinbase are the best for an average person. However, you risk losing your investment if you trade using the wrong strategy. That said, the most relevant investment plan in this situation involves diversification and risk management.
To mitigate the risk, investors are highly advised to spread their investment across different types of assets. This strategy is designed to minimize the volatility of your financial portfolio and help you reach your long-term investment goals while reducing the risk. Of course,no approach can guarantee maximum profits and zero losses, but this is the safest plan because:
- The cryptocurrency technology is still in its infancy.
- Mass adoption of digital coins hasn’t started yet.
- Most government policies are hostile to the blockchain technology.
- The crypto market is volatile and can be manipulated.
- Nobody knows which cryptocurrency will become a massive success in the future.
Considering these factors, investing small amounts in various cryptocurrency portfolios is the safest approach. Over time, this approach will help you get rid of the psychological pressure to buy high and sell low. Investing with a long-term goal also helps you to see the market trends much easier and gain the much-needed experience.
The Bottom Line:
Cryptocurrency is one of the hottest markets right now, with venture capital firms and investors being confident that it’s here to stay. That’s despite the rocky path that Bitcoin and other cryptocurrencies have had in 2018. For an average investor, there are multiple ways to get into the digital coin market. This includes the Canadian based exchange, ezbtca, andCoinbase for those in the US, among others.
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