Cryptocurrencies have been around the block for over a decade and in the small window, they’ve astronomically risen in popularity. Their rise to fame hinges on their ability to net investors staggering returns on small amounts of investment and this has endeared them to an even younger demographic.
Studies have shown that Gen Z and younger millennials prefer cryptocurrencies over legacy financial markets because of their novelty and seemingly low barrier of entry. Despite the glitz and glamor around crypto, investors have to tread with caution because there are inherent risks that could cause severe losses.
Don’t worry! This article offers the top tips that investors should bear in mind before wading into the markets that will help secure a profit. Some of the tips are no-brainers while others are lesser-known but a combination of all would certainly take your trading to the next level.
In cryptocurrency investing, the first decision that traders would have to make is the decision of choosing an exchange or a trading platform. This choice is important because a wrong move could lead to your investment going up in flames. There’s a large pool of cryptocurrency exchanges in the ecosystem with various offerings and choosing one might prove to be a hassle.
In choosing an exchange, investors should keep an eye on the trading fees charged by the exchange as steep fees can eat into your gains. Special attention should be paid to the deposit and withdrawal fees charged by the exchange as this is also an important factor.
Most importantly, choosing a secure platform will save you a fortune in the long run. Hackers and security breaches are rife in the cryptoverse and one exploit on your exchange could see your entire investment go up in smoke. Pay special attention to the security features of the exchange, enable two-factor notification, guard your private keys or opt for a non-custodial crypto wallet or cold storage to store large caches of cryptocurrencies.2. Do Your Own Research
Following the crowd or adopting a herd mentality without due research is often bound to lead to painful losses in cryptocurrency investing. Before putting funds in a cryptocurrency, investors should take the time to scrutinize the finer details of the asset by looking up the founders, reading the whitepaper of the project, and looking at the project’s social handles.
Projects with anonymous founders without social handles are most likely shady projects and all investors should be wary of them. A project with a solid whitepaper, tokenomics, use case, and healthy community around it is often a goldmine but it takes a bit of research to find it.
Identifying the right cryptocurrency project is a sure-fire way to secure a profit in the market. It will also save you the trouble of falling victim to pyramid schemes, pump-and-dump schemes, and other fads that could eat into your hard-earned profits. An example is the Squid Game (SQUID) token that was plagued by rug-pulling in 2021, falling from highs of $2,861 to catastrophic lows of less than a dollar.3. Diversify Your Holdings
Don’t put all your eggs in one basket is an old saying but it still rings true in cryptocurrency investing today. By diversifying your cryptocurrency holdings, investors can limit their risks in the volatile market and increase their chances to secure profits.
Investors can buy cryptos with various use cases like Bitcoin which is primarily a store of value or Ethereum for its use cases in Non-fungible tokens (NFTs) and decentralized applications. Traders can also diversify based on market capitalization or by risk levels which entails allotting a small portion of their cryptocurrency holdings to riskier assets while less risky assets will get a larger share of the portfolio.4. Use a portfolio tracker
Let’s assume that you want to make use of several crypto exchanges, do a ton of research to identify excellent projects, and diversify your portfolio, it might be difficult to keep track of all your holdings across multiple exchanges.
Enter cryptocurrency portfolio trackers! Cryptocurrency portfolio trackers allow traders to manage their crypto and decentralized finance (DeFi) portfolios from one place. It is a game-changer for investors as it allows traders to see the picture of their investment strategy while tracking all the assets across multiple exchanges.
When choosing a portfolio tracker, users should choose one that supports a wide range of exchanges and prioritizes security. A tracker like CoinStats supports all the leading cryptocurrency exchanges with a wide range of wallets and uses military-grade encryption to protect the privacy of users.
So there you have it! All the tips to help any crypto investor regardless of skill level secure healthy profits on their trades. While it might seem like rocket science to consistently net gains, it’s a straightforward process.
Investors simply have to select the right exchange, do a bit of research and not follow the crowd, diversify their holdings and use a portfolio tracker to monitor their assets. As you begin to rack the gains, you might need a tool to calculate your crypto profits. CoinStats has created a nifty tool called the Crypto Profit Calculator designed to automatically track profits with the push of a few buttons!!