10 Ways to Safely Invest in Crypto To Minimize Losses

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In 2017, the world saw Bitcoin rise from $900 USD to $20,000. And by November 10, 2021, it reached an All-Time High (ATH) of $69,044.77. It was unexpected.

Takeaways:

  • Start small, don’t be carried away by the boom, it’s speculative, so diversify your investments.
  • Use a reliable crypto wallet that has been tested and trusted.
  • Don’t collapse your business finances because you want to invest in cryptocurrency
  • Cryptocurrency is volatile, invest with caution.
This graph shows the volatility of investing in cryptocurrency
This graph shows the volatility of investing in cryptocurrency

When there is a boom in the crypto market, you just have to moderate your excitement because it may crumble within seconds just as we can see in the present price of BTC at $37,705.11 at the time of publication.

If you don’t know how crypto works, you might be wondering how possible it is for BTC to drop from nearly $70K to less than $38K within two years.

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So, with this kind of price instability and fluctuation, how can you safely invest in crypto to minimize losses?

While cryptocurrency investments offer the potential for high returns, they come with their fair share of risks. However, there are steps you can take to invest more safely.

1) Start Small

As a beginner, it’s wise to start with a small amount that you can afford to lose. The volatile nature of cryptocurrencies means there’s always a risk of loss.

If anyone tells you that your investment is guaranteed in crypto, they’re probably not telling you the truth. So, only invest what you can afford to lose.

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2) Buy low, sell high

Buy when the price is relatively low and sell when it increases. But you have to do your due diligence perfectly right, to sell when the price favors you.

3) Keep an eye on the crypto market

Analyze the market, monitor the trend, learn from what happens in the market, and monitor live prices.

4) Diversify Your Investments

Don’t put all your eggs in one basket. Consider investing in a mix of cryptocurrencies, as well as other types of assets. This can help spread out potential risk and follow industry experts.

5) Use Crypto News and Analysis Platforms

Staying informed about market trends, news, and analysis is crucial in the dynamic world of cryptocurrency. Websites like Cointelegraph, CoinDesk, and CoinMarketCap can provide valuable insights.

6) Do Your Research

Whether you are investing in Bitcoin or Altcoins, it is advisable to take the time to understand it. What problem is it trying to solve? Who is the team behind it? What have experts said about it?

Don’t jump on crypto freebies on social media platforms without due diligence. Just because a lot of people are jumping on a particular coin doesn’t mean it is legit. Remember the collapse of BitConnect?

7) Use Crypto Market Trackers

Be familiar with websites and apps that provide information on the current prices, market capitalization, trading volume, and other relevant data of various cryptocurrencies. CoinMarketCap and CoinGecko are examples of such tools.

8) Protect Your Investments

Make sure your investments are secure. Use hardware wallets, strong passwords, and enable two-factor authentication where possible.

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Sign up and use a reliable and safe bitcoin exchange to reduce losses. You could lose your investment if the exchange you use is hacked or compromised.

9) Consider Long-term Holding

Given the volatility of the cryptocurrency market, some investors choose a long-term holding strategy, also known as “HODLing,” where they hold onto their investments through market ups and downs, betting on long-term growth.

10) Use Cryptocurrency Investment Tools and Platforms

Getting started with cryptocurrency investment is easier when you have the right tools at your disposal. Here are a few essential resources that can help:

Cryptocurrency Exchanges

Cryptocurrency exchanges are platforms where you can buy, sell, and sometimes store your digital currencies.

Some popular exchanges include Binance, Coinbase, Binance, and Kraken. Each platform has its pros and cons, so make sure you do your research before picking one.

Digital Wallets

A digital wallet is where you store your cryptocurrencies. Wallets can be online (web wallets), offline (hardware or paper wallets), mobile (smartphone apps), or desktop (software installed on your computer). Remember, safety is a key factor to consider when choosing a wallet.

Future of Cryptocurrency Investment

The world of cryptocurrency is rapidly evolving, and its future is a topic of intense discussion. Here are some perspectives to consider:

Increase in Mainstream Adoption

Ralph Lauren accepts crypto payments in-person at its Miami Design District retail store); AMC Theatres allows you to buy movie tickets; at Ace Jewelers, you can buy watches and jewelry online using crypto etc.

More and more businesses are accepting cryptocurrencies as a form of payment around the world.

Also Read:  Coinbase May Add 19 Additional Cryptocurrencies on Exchange Platform

Similarly, several financial institutions are exploring ways to incorporate cryptocurrencies into their operations. This trend could potentially drive increased demand and value for these digital assets.

Regulatory Developments

As cryptocurrencies continue to grow in popularity, governments around the world are likely to introduce more regulations.

These could shape the future of cryptocurrency investment significantly, either positively by providing more security and legitimacy, or negatively by imposing restrictions.

Technological Innovations

Advancements in blockchain technology and the development of new cryptocurrencies could create more investment opportunities.

Concepts like decentralized finance (DeFi) and non-fungible tokens (NFTs) are recent examples of such innovations.

Potential for Market Stabilization

As the cryptocurrency market matures, it may become less volatile. This could make it more attractive to traditional investors and large institutions, potentially driving further growth.

While the future of cryptocurrency investment is uncertain, one thing is clear: it’s a dynamic and exciting field with the potential for high rewards, as well as risks

Author

  • Opeyemi Quadri

    Ope is a finance writer and researcher with 10+ years of experience in content creation. His interests cut across decentralized finance, investment, foreign exchange, government policies and politics.

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