Smartly Investing in Cryptocurrencies in 2023 – A Quick Guide

ByEdward Thompson

May 19, 2023

Cryptocurrency has been quite successful in gaining considerable traction in recent years and they have managed to cause quite a frenzy, particularly in the investment sector. Even though much of it is still shrouded in mystery, cryptocurrency has definitely become the talk of the town. Therefore, there has been a significant rise in cryptocurrency investment and people are making good profits from it. However, this doesn’t mean that they are not incurring any losses. It is understood that you would want to minimize the losses as much as possible.

The problem with the cryptocurrency market is that the price swings tend to be frighteningly and massively volatile, as opposed to standards of the traditional bonds and stock markets. As a matter of fact, the recent developments are the epitome of exactly how volatile the crypto space really is. The first week of 2021 turned out to be a roller coaster for Bitcoin, the pioneer cryptocurrency. It managed to reach a new record high of $42,000, but its value tumbled on January 11th by more than 20%, and some other cryptocurrencies declined even further.

Unfortunately, this is nothing new as after experiencing a monster rally in 2017, Bitcoin crashed hard in 2018 and wiped out almost 80% of its value. Similar events have occurred in 2021, as Bitcoin surpassed the $60,000 mark, only to lose more than 50% of its value, as it fell below $30,000. The gist of the matter is that cryptocurrency investing and trading is no child’s play. Sure, it is easy to jump on the bandwagon and you have done so, but you need to learn how to invest smartly in 2021 if you want to continue making profits. What should you do? Let’s find out:

Invest what you are willing to lose

Even if you are an experienced investor, it doesn’t mean that you can take big risks without having to worry about consequences. No, you still need to be watchful because, as mentioned above, the volatility of the crypto space is unlike any other. You have invested in the crypto market for adding value to your existing wealth, not lose it completely. Therefore, you should only invest the amount you can stomach losing. This way, even if you suffer losses, you will still have some wealth and it will not damage your lifestyle completely.

Maintain a healthy crypto portfolio

Who hasn’t heard of the old adage ‘don’t put all your eggs in one basket’? Every investor needs to keep this in mind, regardless of what they are investing in. This applies to the crypto space as well. You have already invested in the crypto space, but have you diversified your portfolio? You need to invest in more than just one coin because this can help in maximizing profits and minimizing losses. When you spread your capital across different cryptocurrencies, you can hedge potential risks, which ensures that you are not too exposed to just one investment.

Winning some and losing some is much better than losing all. You can stabilize your gains through diversification. Granted, you may not be able to take advantage of a skyrocketing coin, but you will certainly not lose everything in case its value plummets.

Use trading programs

If you are using a trading platform, then you should check out the trading programs it offers. These are used by investors and traders for raising profits due to the highly volatile market environment. These programs usually utilize Artificial Intelligence (AI) algorithms for getting trading signals. A number of these programs also come with auto-trading options, which allow users to benefit from their investment without even having to actively participate in the trading process. This is an excellent way of making money on the side and you can explore this option if you don’t want to monitor your investment round the clock.

Don’t fall for the hype

Now that you are part of the cryptocurrency market, you will hear a great deal of noise about different cryptocurrencies. However, where your investment is concerned, you should remember not to make your decisions based on hype alone. It is essential for you to learn how to filter the noise, so you are not tempted to fall for it and make a mistake.

The information provided on this website should not be interpreted as financial or investment guidance and may not embody the perspectives of Forex Tools Trader or its contributors. Forex Tools Trader does not hold responsibility for any financial setbacks experienced due to the use of information provided on this website by its writers or patrons. It's essential to thoroughly investigate and make informed decisions before entering any financial commitments, particularly concerning third-party reviews, presales, and similar ventures. The content you are viewing may be sponsored content, read our full disclaimer to learn more.

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