Looking at the current situation of digital currency market, thinking of investing in cryptocurrency for long term is nothing less than an act of courage. As they say, higher degree of risk attracts higher profit. However, it has been a dark period for all the investors as it is the lowest market capitalization of Blockchain, as observed in past nine months. When you talk about Bitcoin, the monarch of digital currency, has been unsustainable for the past few months. Being a cryptocurrency investor, I too have experienced both rise and fall in Bitcoin prices. I recall the moment when I first invested in Bitcoin, when it was around $800 per BTC and sold a fraction of it when it touched $18000. But, a lot happened between this price range that taught me the key to invest in cryptocurrency for long term success.
The only thing that holds your steps to go for long term is ‘you’. Well, I don’t blame you, it took me a good time as well to understand and not fear the temporary bumps on the path. When you accept the fact that this market is volatile, you must also know that even the best of the investors fail to buy the currency at its lowest and sell at its peak. So, it is okay to miss the best opportunity. Based on my experience with crypto market, in this blog I will share with you how to build a strategy to invest in digital currency for long term.
What is the Strategy to Invest for Long Term?
Before you jump on the bandwagon, it is important to form a strategy prior to investing in cryptocurrency as you will not be day trading. Blocking an amount for a long term that too in a highly volatile market requires you to be calm and patient. You should consider the below points before deciding to go long term:
This is the most important entity of your investment. Personally I have invested a sum that I can bear to lose. Hopefully, I prefer not to lose my hard-earned money to a market that doesn’t guarantee assured profits. . It is important that you don’t take high risks and invest only as much as you can bear to lose. The reason being that higher amount invested would directly affect your risk taking and decision-making skills.
2. Selecting the Exchange:
Don’t take it lightly! Your chosen exchange plays a big role in your long-term investment in cryptocurrency. You must learn that from the scams that make the headlines every other day. You surely don’t want to lose your money to a non-trustworthy exchange, which may shut the business overnight and runaway. Always go for the trustworthy organization and check for big countable names associated with it. Do your homework before investing, no matter how small or big the amount it is!
3. Don’t Predict:
This is the most common mistake that people make. And I say that from experience, as I did that too. But, with time, I got to know that it is not a share market and those beliefs and assumptions wouldn’t work here. So, don’t predict and draw a conclusion without a careful analysis. Unlike, share markets, if you see a severe economy crisis in some Asian country, don’t panic and sellout your digital asset as you may end up losing your own economy.
4. Go with the Flow:
Again, don’t rush into making decisions. Don’t let the temporary bumps and bubbles affect your decisions. It is good to grab the opportunity but it has to be done wisely. I remember selling all my currency when it hit the highest of all the time and then regretting moments later when it rose to $4000 more to what I had sold on. Not just that, I repurchased on the increased prices and then, it collapsed. Yes! That really did hit bad!. Had I followed my instincts and not shown any cupidity, although less but I would have some agreeable units.
Control and Convince Yourself to Face the Fear:
I understand the waves of thoughts and ideas that hit your mind when you see Bitcoin price fluctuating. It is obvious to feel this way. But, you ought to control your moves. You are not supposed to let your decisions be price-centric. Be informed that the biggest hurdle towards long term investment in cryptocurrency is ‘you’. Also, you must control your emotions and take a look at the following:
1. Don’t Invest in Something you Don’t Know:
Cryptocurrency includes thousands of digital currencies and counting. There’s a new asset added almost every day. But, you must know and understand the digital currency you’re investing in. Don’t go after the fancy names and the advertisements about how great they are and how soon they are going to occupy every bit of the market. If you’re really carried away by a currency, hold your steps, research and then make a decision.
2. The Unfelt Fear of Bubble:
Bubble is the most common incident that takes place in cryptocurrency. It means a peculiar rise in the prices of a currency. This is when the most of investors lose their cool and end up selling off or buying more at higher prices to ensure they do not miss this “opportunity”. Before investing in cryptocurrency for long term, it is important that you don’t let your instincts get affected by temporary bumps. If you have to make profit out of this bubble, sell off a fraction but control buying them at higher prices.
If you are thinking of overtrading, you are about to open a can of worms. Remember, digital currency is not sustainable and frequent changes in its price are highly expected to influence your trading skills. You must restrict your trading to a specific limit as it may turn to something you never wanted.
4. Spread your Investment:
Now that the market is unpredictable, it is good to spread your investment among various currencies and not go after just one. In an unlikely event of a currency failure in future, you would still have some hope in the form of other cryptocurrencies and you hopefully will not lose your entire investment. For example, if the Bitcoin price falls, you would have Ether to help you. On the other hand, dividing your investment in multiple currencies may also help you gain the best results due to their improvements over time.
Research your Project:
When it’s about investing, you must not join the rat race. It is good to hear the “success stories” of your friend’s friend who claims to have earned in millions. But, don’t let entertaining stories influence your investments. It has to be done carefully and after all the necessary researches. Before putting money into a currency, make sure of the below points:
1. Project Owner:
Before handing your money to someone unknown, find out the person behind the project. You must know whose venture is that you’re interested in. If the person has a clean record and possesses goodwill in market, it’s a go-go. On the other hand, if the person is new to this industry or has some charges against him, you would probably want to rethink.
2. White Paper:
White paper of a currency is a guide or an authorized set of policies and methodologies of the unit. If you’re planning to block a large sum, you must go through the white papers of it and ensure the potential of this digital asset. The white paper reveals almost every information which nobody would tell you.
As we are dealing with cryptocurrency, it has its own way of working. Every cryptocurrency has its set of rules and algorithm that it follows. You may not be a techie, but going through its art of working may help you cultivate the trust, if it deserves.
Once you have sufficient information about the path you’re going to follow, it makes the journey pleasant and less hectic. Although, above suggestions don’t promise any return, but they’re helpful in avoiding any possible loss. Make sure you start with a tiny amount and increase it to up to your bearable loss limits and don’t cross it. The rate of volatility of cryptocurrency is dramatically high. It may become zero in no time. You must know and be ready to accept any repugnant situation.
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