Tips

If You’re A Millennial, Here’s 4 Tips On How You Can Invest Smarter In Cryptocurrencies

The year 2017 has been a phenomenal one for cryptocurrencies. In 2018, there are no signs that show that the market will be slowing down anytime soon. At the same time, millennials are becoming increasingly involved in this frenzy. According to a recent survey done by Blockchain Capital, millennials are more prepared to invest $1,000 in Bitcoin compared to investing the same amount of government bonds or stocks.

In fact, nearly half of millennials are have heard about Bitcoin, compared to those 65 years and above. The older generation tends to have less awareness about cryptocurrencies. In the cryptocurrency world, it is hard to ignore the presence of millennials. However, they are not the only ones who have their eyes set on the cryptocurrency market. Competition is becoming more intense as new entrants are expected to enter the market.

Bitcoin has shown its potential in the past year. Many established investors were sitting on the sidelines in 2017. They were waiting for a sign that says that Bitcoin is a viable investment. The price skyrocketed October 2017 onward, and it finished the year by surpassing the $19,000 mark. It’s safe to say that more institutional investors will be entering the market this year, with their eyes set on Bitcoin. Despite this, Bitcoin is currently facing an issue with demand and supply imbalance.

Given the current interest investors have in cryptocurrencies, this might force the prices of cryptocurrencies to go even higher. As there will only ever be 21 million Bitcoin in circulation, there is a limited supply of Bitcoins available. Furthermore, the holders of Bitcoin are deemed to be long-term holders. This causes an imbalance in the market as the demand is continuing to increase.

The good news is Bitcoin isn’t the only cryptocurrency that you can invest in. There are over 1000+ crypto assets. A few popular cryptocurrencies besides Bitcoin are Ethereum, Ripple, and Litecoin. If you are one of the many who is interested in cryptocurrencies, here are the tips for you to do it right.

Keep an eye out for bots

In the cryptocurrency market, speculation is very common. However, some malicious market participants are using bots to inflate the coin prices artificially. In other words, this is market manipulation. Experts state that bots can seriously cause harm to your investment. These trading bots function to create artificial price decreases.

Although this artificial price can benefit the organizing party, it can cause real damage to investors. Trading bots are also not easy to track. You will need to have some experience in the market before you can discern abnormal trading partners. Some of the necessary parameters that you need to keep an eye on to spot market manipulation are price and volume. You can also keep track of the cryptocurrency movement by using a cryptocurrency trading analytics platform.

Allocate your assets based on your risk tolerance

When trading, set a stop-loss level. This is essential because it can help you avoid any extreme losses. By having a stop-loss, you will minimize the amount of loss you make on your trade. In other words, you are managing your risk when trading.

Invest in more cryptocurrencies

Next, invest in more cryptocurrencies in the market. This is a good strategy because you can hedge against the downfall of any other cryptocurrency you have in your assets. Depending on your trading strategy, you can allocate more funds toward less volatile coins. If you are a risk taker, you can allocate more towards less risky coins. However, you should always consider diversifying your portfolio.

After some time, you will realize that there is a correlation between Bitcoin and alternative coins. When Bitcoin decreases in value, people tend to rush to buy alternative coins. For inexperienced investors, this environment may not be suitable.

Don’t overtrade

Regardless if you’re a novice or seasoned in cryptocurrency trading, these are two mistakes that investors often make. People tend to feel like they are not doing enough in the cryptocurrency market. Due to the hype surrounding cryptocurrencies or a recent announcement about a possible partnership with a corporation, they believe that the price of the cryptocurrency is going to go up.

This is even more apparent with the exponential growth of Bitcoin as more people were flaunting what they managed to achieve from the Bitcoin boom. In fact, people often feel the need to buy more of a certain coin when the price continues to rally.

You shouldn’t sell your cryptocurrencies immediately because you see a price spike in the market. If the market shows a price spike of 20%, you shouldn’t be tempted immediately sell your assets. Sometimes, this is the market’s tactic to make it possible for the smaller account holders to sell their coins. Determine your strategy when you are trading. Determining whether you are a short-term or a long-term investor will dictate how you trade. Generally, passive investing will help you make more money in the long run as you do not panic when there are spikes or decreases in the market.

Wrapping it up

If there’s one thing that we can learn from the cryptocurrency market it’s that it is filled with uncertainty. The nature of the market itself requires anyone who chooses to trade in the market to take lengthy precautions. With the volatility that comes with crypto assets, traders must do their research before trading in the market.

Above all, don’t let your emotions overpower you. The market may do quick dips or rises, and you will have to decide which strategy you are going to follow in the long-term. Whatever strategy that you may choose, best of luck to you and may 2018 be a great trading year for you!

Tags
Show More

Related Articles

Skip to toolbar