The most appropriate way to make an investment in cryptocurrency is to analyze the price and also examine the cryptocurrency’s price forecast. In this educational piece, we go over the 4 cryptocurrency investment tips for long-term investors.
AtoZForex – With the prices of Bitcoin and Ethereum exploding, one would be tempted to jump right into the market and buy some cryptocurrency. However, investment in cryptocurrency is not that easy as we think. The prices of coins go up and down. With the lack of sufficient knowledge of the coins, it may drag you into the loss.
If you are looking to establish yourself in the cryptocurrency market in the future, you have to be cautious about the investment. If you are seeking long-term cryptocurrency investment, I advise you to follow these tips which will help you to make the right decision. Here is a collection of cryptocurrency investment tips, which will be useful to long-term investors.
Top 4 Cryptocurrency Investment Tips
1. Focus on market cap rather than the coin price
Usually, what happens to us is that sometimes we just look at the price of the coin and jump into buying it. However, the market cap gives more information about your buying decision than just the price, or both.
To find the total market capitalization of your cryptocurrency, you should multiply the supply of cryptocurrency i.e. the number of coins in circulation by its current price. That is the value that matters to you. For an example, the current price of Bitcoin Cash is above $1000. The price of Ethereum is just $449. But Ethereum’s market capitalization is above $43 billion, which is almost twice higher than BCH’s market cap, standing a little above $23 billion.
It is important to keep in mind that higher price of the coin doesn’t make its capitalization higher than another coin with the lower price. This means investing in the lower price of the coin gives you a higher chance of survival in the future than the higher price of another coin.
Moreover, the price of a cryptocurrency depends on its market capitalization in relation to other coins, which means it is also linked to the supply of the cryptocurrency. So, it doesn’t seem like a good option to buy the coin by seeing the prices only. For long-term investors, if the price is good and market capitalization is best, then it is good to jump into the investment.
2. Don’t sell coins immediately if prices increase
Moving on to the second advice on the list of cryptocurrency investment tips, we want to mention one of the Russian proverbs:
“The slower you go, the farther you will get.”
We all know the prices of the coin fluctuate largely in the market. Most investors try to sell their coins when the prices of their coins go up.
So, if you consider yourself a long-term investor, you have to identify certain cryptocurrencies that have a longer lifespan and which are bound to rise again after falling. At that time when Bitcoin jumped from $1,000 to $4,500, many holders decided to sell-off under the notion that cryptocurrency was doomed. However, with Bitcoin hitting $10,000 now, it would seem that they acted a bit too hastily.
Cryptocurrencies in the market continue to fall and rise. It is not recommended to rush the decisions, while it is most certainly useful to carry out the in-depth research about the coins you would like to invest in, like this one.
3. Be careful in diversification
We have seen many investors diversifying their investment. If you are a long-term cryptocurrency investor you should only expand based on certain parameters i.e. the cryptocurrency’s current price and its market capitalization.
You should be careful in spreading investment in the coins – do not diversify your portfolio just for the sake of diversification. It is vital to actually analyze and read about the cryptocurrencies you are looking to invest in. If you are not sure how to do it, this guide on the Promising Coins to Invest in December 2017 can give you an idea.
4. Choose a real coin which lasts
In the cryptocurrency world, coins die all the time. Some coins stay alive for long in the markets due to their potential. For example, Bitcoin, Ethereum, Ripple, Monero are considered to be the ‘real’ cryptocurrencies due to their purposes.
Such kind of cryptocurrencies solve certain problems when it comes to long-term survival. If you are taking long-term investment you choose those coins which offer you advantages and provide better solutions beyond trading platforms.
Cryptocurrencies are rising and falling constantly. You must do due diligence before investing.
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