It’s a winter that’s starting to last a little too long. The “crypto winter” (annual period with sharp decline in crypto) drags on, much to the annoyance of investors.
Bitcoin is collapsing, Ethereum is fighting, and these two giants are taking the entire market with them. For some, it’s a bit of a cold shower. But in such a situation it is necessary to take some distance and go back to the basics.
To get through this crisis without panicking, here it is 5 Important Tips When Investing In Cryptocurrencies.
do not panic
This is necessarily rule number 1. When the curves tip over, we tend to want to sell on to limit breaks. If this reaction seems natural, it is based on an emotion. And when it comes to investing, emotions often lead to bad decisions.
Remember that as long as you have not converted your crypto into euros or dollars, you have not yet lost your investment. Think long term. This downward curve that scares you may be just a small downturn over 10, 15, or 20 years of investment.
Invest only what you are willing to lose
This is the basic rule of investing, whether it is in cryptocurrencies or stocks. When investing in high-risk stocks, it is best to invest only what you are prepared to lose.
When we see the fortunes that some have won, we are tempted to put all our savings on crypto. This is a big mistake. Like all high volatility stocks, investing in crypto requires taking a step back from the start.
You should always first see what you can lose instead of what you can gain. Considering the worst is still the calmest way to invest. And it’s not just for crypto.
Trading is a profession, not a hobby
As in the heyday of stock market trading, some small investors got some pretty good shots when the crypto market was born. That does not mean they are traders.
Trading is a profession and a way of investing that is not recommended to the general public. Broadly speaking, trading is investing in the short or medium term. This requires expertise and, above all, colossal sums to influence or quickly adapt to market volatility.
For the general public, we recommend investing over several years. Always buzzing as we are ready to lose (as explained above), a bit like saving. Except that this saving can either pay off or collapse.
By investing over several years, you will not be exposed to sudden market fluctuations. It is therefore better to invest 50 euros every month in one or two cryptocurrencies for 15 to 20 years instead of improvising as a trader by placing all your savings in cryptocurrencies. Humility remains a fundamental value in investing.
Do not invest in exotic cryptocurrencies
The crypto market today has hundreds of values. And as in the stock market, not everyone is created equal. Some projects are even based on dubious plans, including Ponzi plans that ultimately only enrich their creators.
We therefore advise to invest in known currencies, a maximum of three or four to spread the risk slightly. Bitcoin and Ethereum are must-haves. You can also add a token to your wallet as well as a stablecoin to provide some security in the event of a crisis.
Better to avoid exotic cryptos. If you are not a professional, there is no need to take big risks. You can already get good investment returns with safer stocks.
In general, it is advisable to diversify your portfolio with a little crypto, a little stock, etc.
Do not follow the advice of “gurus”
They are increasingly visible on the internet and social networks. Pseudo-experts, crypto-influencers, financial gurus: many of these content creators promise you mountains and wonders.
If anyone knew how to become a millionaire by putting 300 euros a month in a crypto, they would not give away their secret. Avoid all these risky advice.
Most of the time, these profiles play more with your money than theirs. Trust yourself, stay informed and base yourself on the basics of investing: bet only what you are ready to lose, on safe values and for years to come.
By following these few pillars, you should handle crises more calmly and reap the fruits of your wisdom years from now. Are we not saying that caution is the mother of security?