If you are new to investing in Bitcoin and Cryptocurrency in general, it is highly recommended that you do your homework before putting all your money into the crypto-sphere. In this article, we will discuss things you need to know before you invest in bitcoin.
Here are some tips that will help you minimize mistakes that most new investors make while trading Bitcoin.
Things to know before you invest in Bitcoin
1. First, learn how to protect your Bitcoin
It is important to learn to run before you can run. First, get familiar with the basics of Bitcoin buying and selling mechanics, and how to open and fund a bitcoin wallet in Nigeria.
Bitmama is a great starting point for any beginner thanks to its intuitive user interface.
As with any financial investment, it is important that you learn how to protect your wealth. In this case, you need to make sure that your digital assets are fully protected against the threat of cyber-attacks and fraudsters.
There are specially designed Bitcoin wallets that prioritize security. Ledger Nano is the world’s most secure Bitcoin wallet, while TREZOR is also popular because it generates private keys for your offline Bitcoin wallet without prying eyes.
2. Keep an eye on the market capitalization
A common mistake beginners make with crypto traders is to make investment decisions based solely on the price of the coin.
In reality, the value of a cryptocurrency is only valid if the currently circulating supply has been taken into account.
When buying Bitcoin, don’t focus too much on the current value of the coin and instead consider the percentage of the total market cap that you are buying. The closer a cryptocurrency gets to its market capitalization, the greater the demand for a subsequent sale.
3. Diversify your investments in cryptocurrencies
It’s too easy for Bitcoin investors to fall in love with cryptocurrencies.
The reality is that Bitcoin is just one of thousands of other cryptocurrencies that can be invested in to offset some of the risks associated with Bitcoin.
Investing intelligently in cryptocurrencies is like trading in stock markets or currencies: it requires a risk management strategy.
Don’t put eggs in the basket! Instead, protect your bets by investing in some of the emerging altcoins that are growing at the same rate or faster than Bitcoin.
4. Set a profit target for each open trade.
Since Bitcoin is still a relatively new market to invest in, it is very difficult to know when the right time is to buy and sell Bitcoin. Bitcoin value volatility is unlike anything you have likely experienced before in any financial investment. Therefore, it is important to set clear profit and loss goals when opening a Bitcoin transaction.
Most Bitcoin beginners fail because they fall in love with their investments and don’t know when to exit a bad position. By setting an exit point for profits and a stop loss in case the trade is against you, it will be easier to minimize your losses and survive another day. Usually, the most extreme daily movements in Bitcoin value can reach 3%.
5. Prepare for the thrill of FOMO
Another rookie mistake among Bitcoin traders is the dreaded fear of missing out (FOMO). If those new to Bitcoin trading gain access to their chosen cryptocurrency exchange and Bitcoin experiences double-digit growth in the past 24 hours, they will start investing regardless of the fear of missing other price movements.
What these investors fail to take into account is that on this day they often lost the value of the price movement – they are buying the asset high instead of the old adage of buying low and selling high.
The most profitable Bitcoin investors agree that they cannot capture all of the positive moves in the Bitcoin market. Instead, they will bid their time and attack when market conditions are most favorable. The price has hit bottom and is ready to go up.
6. Accept that investing in Bitcoin involves risks.
If you want to mentally invest bitcoin, you should be aware that it will be a bumpy ride. Bitcoin’s volatility is enough to deter even the most seasoned traditional investors.
However, if you are ready to pursue a rigorous risk management strategy and consider diversifying into other cryptocurrencies as needed, there is no reason why you cannot turn this investment opportunity into a high-risk into a profitable opportunity.
While there are so many successful investors in the crypto world, there are also people who have lost thousands of dollars in hopes of making a quick buck. For this reason, it is important to have a solid idea before seriously investing in the world of cryptocurrency.
We hope these tips give you what you need to invest safely in cryptocurrencies.
These may not guarantee that you will become a millionaire overnight, but they can reduce the risk of losing money.