Cryptocurrency Investing

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Cryptocurrency investing has generated lots of interest over the years, as more people worldwide continue to catch digital currency fever. Despite this growing trend, cryptocurrency remains a mystery to many people. But this has not stopped them from trying to build crypto portfolio, hoping to make a kill.

Cryptocurrency Investing - What You Should Know

You can use cryptocurrency as a form of payment to buy goods and services from traders that have embraced it. But unlike other currencies, cryptocurrency relies on cryptography to provide safe online transactions. But most people want to use these unregulated currencies to make profits as speculations continue to drive their values skyward. Before you can plunge headlong into the tricky world of digital currencies and build a cryptocurrency portfolio, you must arm yourself with adequate knowledge to make informed decisions. Like any other investment venture, cryptocurrency has its fair share of risks. Here are some essential questions to guide you when investing in digital currencies, There are nearly 7,000 different cryptocurrencies trade publicly. They continue to proliferate, raising finances through initial coin offerings (ICO). The most popular and valuable digital currency is the Bitcoin, followed at a distance by Ethereum.

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Cryptocurrency Portfolio Strategy

Bitcoin and Ethereum are the most popular crypto, and they experience heavy trading daily. If you ventured into this field, you would consider these two to trade quickly on the market and attract lots of interest. Diversification is a key investing principle that applies as much to cryptocurrency as it does to stocks. We'll build a solid cryptocurrency investing strategy by building around the two biggest cryptocurrencies (Bitcoin and Ethereum) and filling in the rest with altcoins. Start by putting around 50% of your initial investment in Bitcoin and around 25% in Ethereum. Bitcoin is the major coin everyone thinks of when they hear cryptocurrency, and it's currently on a bull run. Ethereum is the next largest coin and allows for exposure in the emerging DAPP and Defi protocols. Altcoins are like small-cap stocks that are riskier but can potentially make huge returns. Put the approximately 25% of your remaining funds in one of the larger altcoins like Chainlink. Large cap cryptos with a greater than $1 billion market cap will be safer than smaller market cap cryptocurrencies. Remember, the smaller the market cap, the greater the risk. It's up to you to decide how much risk you want to take. Some of the altcoins we recommend are as follows:

How do you buy and sell cryptocurrency?

Buying cryptocurrencies, such as Bitcoin and Ethereum, can be an exciting way to the world of cryptocurrency investing. But like any other investment, it should come with a warning label. Although their values keep skyrocketing, volatility is crypto's second name. One moment, they hit a record high, and the next, a record low. One rule of thumb is to never invest more than 10% of your portfolio in risky assets like digital currencies. Avoid investing what you cannot afford to lose since these currencies are primarily experimental and are more volatile than the traditional tried and tested investments such as mutual funds and stocks. To buy and sell cryptocurrency - and hope to make a profit, follow these simple steps:

Getting Started With Cryptocurrency Investing

The minimum amount needed to start cryptocurrency investing is $500 to preferably $1000. Anything less than that amount will see your initial investment eaten away by platform and transaction fees. Once you've decided how much you're going to invest, the next step is getting your initial investment amount into a cryptocurrency exchange. There are two main types of cryptocurrency exchanges: fiat onramps and altcoin exchanges. A fiat onramp allows you to exchange $USD in your bank account for crypto assets like Bitcoin and Ethereum. Some popular fiat onramps include Coinbase and Kraken. An altcoin exchange allows you to take some of the Bitcoin or Ethereum you purchased from a fiat-to-crypto exchange like Coinbase. Here you'll be able to exchange it for altcoins like Filecoin and Celsius. Altcoins are lesser-known forms of cryptocurrency that can be much more volatile than Bitcoin. Cryptocurrency investing should ideally allow investors to achieve a balanced cryptocurrency portfolio. Altcoin exchanges like Binance allow crypto investors to achieve some diversity in their crypto assets. Modern cryptocurrency exchanges like Coinbase, Kraken and Binance allow individuals to build crypto portfolios with ease. But crypto exchanges do get hacked, and crypto's recent history is unfortunately littered with failed exchanges. The only way to safeguard your cryptocurrency is to take all of them off of exchanges when you're not actively trading them. It's best to use a crypto wallet like BRD or Atomic to ensure you own the private keys to your crypto.

The Altcoins

Altcoins are like small-cap stocks that are riskier but can potentially make huge returns. Put the approximately 25% of your remaining funds in one of the larger altcoins like Chainlink. Large cap cryptos with a greater than $1 billion market cap will be safer than smaller market cap cryptocurrencies. Remember, the smaller the market cap, the greater the risk. It's up to you to decide how much risk you want to take.

Keep On Top Of Your Portfolio

You'll want to regularly check in on how well your portfolio is doing and do some regular housekeeping. Regularly rebalance your portfolio by exchanging cryptocurrencies to maintain your desired cryptocurrency ratio (50% Bitcoin, 25% Ethereum and 25% other altcoins). You'll want to rebalance your portfolio at least three times a year. You don't need to do it weekly as cryptocurrencies fluctuate quite a bit in the short term.

Know When To Stay On The Sidelines

When there's mass euphoria in the markets, it's usually a sign to be wary. Bull runs are great for your portfolio's value but always keep a steady eye on the inevitable correction ahead. The good news is that you won't need to cash out to $USD: you can keep your money in a $USD-tether stablecoin when you expect price movement going against you. The more you invest in cryptocurrency, the more you'll be able to anticipate market conditions and protect your portfolio accordingly.

Why are cryptocurrencies so popular?

Despite their volatility, crypto are so popular, pulling in anyone that stumbles on them. Some reasons for the popularity of these digital currencies include the following: Most crypto supporters think it is the future currency and that it will replace traditional money. It removes central banks from the money equation, effectively bringing inflation under control. Crypto are more secure than traditional payment systems. Their value seems to be always on an upward trend over the long term horizong.

Practical Steps in Building Solid Cryptocurrency Portfolios

As we have mentioned earlier, while the cryptocurrency market is largely volatile, investors can make tremendous earnings from this market. The brightest young minds are embracing the market as they work to grow their investment profile. Are you looking to create a well-balanced crypto portfolio that stands the test of time? Here's how you can create a solid optimal cryptocurrency portfolio.

Perform Enough Background Checks

The cryptocurrency market offers phenomenal rates of return. However, uninformed investors can become victims of collapsed crypto exchange or scams, leading to unprecedented losses. The industry's risk exposure is extended thanks to its unregulated nature. Educating yourself on existing market conditions can be helpful when creating a crypto portfolio. Try to keep abreast of the market news to get the best returns from your investments. Price fluctuation is commonplace in this volatile market. Staying informed on market trends helps you make the most of opportunities while minimizing your risk exposure. You could also familiarize yourself with emerging currencies to make significant returns.

Diversify your investments

Create a well-balanced crypto portfolio to make the most of available options. Include a good mix of cryptocurrencies in your portfolio. A diversified crypto portfolio reduces your risk exposure from low-cost options to solid cryptos like Ethereum and Bitcoin. In case one side of your tokens experiences a sudden dip, your other coins can buffer you from massive losses. With a diversified cryptocurrency portfolio, you can also earn tidy sums when low-cost cryptos have increased valuations. Diversification helps you spread both rewards and risks within your assets. Work on creating a portfolio that cuts across different securities, geographical regions, and economic sectors.

Create a Digital Wallet

You'll need a digital wallet to buy different cryptocurrencies like bitcoin or ethereum. A digital wallet helps you store information about your diverse investments. You could choose to store your wallet online for simplified access. For a safer and secure wallet, investors can use a hard drive or USB stick to store the digital wallet. If you opt to exploit less known currencies, you may have to find compatible digital wallets for easy trading. With a digital wallet in place, you can work to pick your exchange. Start with a local exchange, then use your bitcoin to trade on global exchange platforms.

Manage your risk appetite

Cryptocurrency investors have different tolerance for variability in their specific assets. As you create your portfolio, try to identify the risk levels that you'll be comfortable with. Create a goal for your different crypto holdings to guide your investments over time. While high risks often result in high returns, overstretching your risk may lead to unprecedented losses. With a largely unregulated market, cryptocurrencies tend to have a higher baseline risk level. The risk levels, however, are different depending on the specific currency in question. Less established currencies, for example, may have a higher risk level.

Set Stop Losses

Given the crypto market's volatile nature, you may need to set guardrails around your diversified investments. Stop losses help you dispose of assets automatically in case they drop to certain prices. Such measures protect you from facing big hits when market prices drop considerably, ensuring that you limit your losses. Stay informed about market trends to set appropriate set losses for different investments.

Make Small, Regular Investments

For a start, make small investments with regular incremental investments over time. As you begin your crypto investment journey, don't fall into the temptation of investing big to gain larger returns. Wise investors keep within their affordability limits and grow their risk appetite and investment as they better understand the market. Only opt for larger trades when you have a deep understanding of cryptocurrency investing.

The Bottom Line

If you are looking to make the most out of your cryptocurrency investment, you could consider working with us at Macroaxis. We are the world's leading portfolio optimization platform with investment professionals and Fin Tech enthusiasts around the globe. If you need any help with your crypto investment, please contact us today.