Cryptocurrencies are unique in the world of tradable assets due to the fact that they exist within a medium that is fully decentralized. They are based on the blockchain and don’t exist in real life, which is something that has made many feel apprehensive about them. Many avoid them altogether due to price fluctuations and volatility since they believe that they’re much more likely to lose money rather than gain it. However, there are also plenty of people who are starting to familiarize themselves with the marketplace and who have given crypto a try. The main motivation behind their desire to integrate these coins into their portfolios stems from the wish to diversify their holdings.
If you’re looking to build your list of holdings further by including cyber assets, Ethereum is one of the best choices since it is an established digital asset with relatively stable price action. Some of the alternatives you can consider if you want to diversify your list of holdings include Bitcoin and Solana, as they are similarly reliable and not as susceptible to fluctuations as the newer assets that haven’t had enough time to mature just yet. If you’ve already started looking for ways to build and grow your portfolio, here are a few things you should have in mind.
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Be responsible
This should be a fundamental rule regardless of the asset class you’re investing in. Never put in more money than you can afford to lose, and don’t invest with the money you’d use for your mortgage or rent, groceries, or other basic necessities. Moreover, you should never invest the money in your savings. Although you might say that it is something you only do once, so it’s no trouble, it can be a slippery slope that leads you to make it a habit in the future. If you end up losing a substantial amount of money on top of that, your financial security and well-being will be in serious jeopardy.
So, it’s best to steer clear of these practices altogether and only invest money you wouldn’t suffer if you lost. Since cryptocurrencies are still relatively new, they remain very volatile and can lose or gain a lot in a single day. The long-term trend has been bullish, but that doesn’t mean that corrections don’t occur as well. On top of only investing as much money as you can afford to lose, it is also preferable to make crypto no more than 10% of your portfolio, at least when you’re a beginner. It’s enough to gain exposure and record gains, but not so much so that you could end up being impacted by losses to the extent of losing a lot of value from your portfolio overall.
Do your research
The cryptocurrency marketplace is quite complex. Most investors feel somewhat intimidated by it, which is why they avoid it altogether or at least take a long time to become involved with it. Doing your research is crucial so that you can have a comprehensive view of the market and everything it entails before you start investing. Take as much time as you need to become familiar with the concepts in order to ensure that you only make the best decisions and only invest in programs that suit your financial goals.
The technical specifications, community engagement, volatility, and how the coin measures up against its competitors are some of the most important aspects you should consider before you put money into a project. Then, ones that are time-tested and have a large number of people investing in them are much more likely to be a good idea, as widespread adoption is generally a sign that an asset is easier to deal with, and its fluctuations are not so extreme. The ones that are tied to speculation in their entirety are much more likely to be highly changeable and more difficult to keep track of.
Since crypto coins are entirely digital, you must also look into the security provided by the platforms you use and their ability to provide transparency and scalable transactions. The coins you pick should offer some competitive advantages compared to their peers, or your investments won’t be as profitable as you’d like them to.
Storage solutions
You will need to set up and use an e-wallet when you’re a crypto trader since you need to have a place that stores your holdings. Leaving the coins on the exchange is possible but not recommended for the long term. Instead, you should look for a trustworthy custodian and browse the different wallet solutions in order to find the one that’s best for you. Software-based wallets are typically more popular because they’re easier to access since they operate more or less like a regular app on your phone.
Yet, they also come with a major drawback: their Internet connection. This otherwise positive feature makes them more susceptible to cyberattacks. Crypto wallets are frequently targeted by hackers who want to extract the coins given their high value. Once the assets have become compromised, the victims have pretty much no way of getting them back. This is why hardware storages are preferred instead, especially if you plan to be serious about crypto and hold many coins.
However, even in the case of the wallets that aren’t connected to the web you must still be careful when you’re trying to connect to them. Don’t enter your data on any device whose security you’re not entirely confident in, and definitely not on any devices that use public wi-fi networks or which are generally used by many people, such as the computers in Internet cafes.
The bottom line
The cryptocurrency market is incredibly popular at the moment, but it’s still essential to approach it in a disciplined and thoughtful manner. While the potential for gains and revenue is huge, so is the likelihood of dealing with debilitating losses. The only way to avoid a negative situation like that is to approach the market in a disciplined way and have a strong strategy that you can rely on.
Assess your financial goals from the very beginning and determine what you need to do to achieve them so that you are successful in your ventures.