We have noticed that a lot of people these days are just diving into investing without even working on a strategy first. We have done an article that will help you with some investment types and tips that you should look into when you want to make an investment.
Why you should have a cryptocurrency investment strategy
Trading crypto can sometimes be a rollercoaster-ride. The cryptocurrency industry is renowned for its volatility. Volatility does not have to be an issue if you have a cryptocurrency investment strategy. For those that will be new to cryptocurrency if they see their portfolio fluctuate they might end up selling as they would have panicked. When you have a strategy you can rest assured knowing that you have formulated and calculated the very best investment strategy for yourself. Having a strategy helps a lot in giving you a chance to make a significant return on investment. Below is a review that tries to explain how you can be able to create the best way that you can be able to invest in cryptocurrency for yourself.
Buying Standalone Bitcoin
The first way that you can invest in Bitcoin is by purchasing a coin or rather a fraction of a coin through trading apps like Coinbase. You will need to provide personal information to set up an account then deposit money you’ll use to purchase bitcoins.
Greyscale’s Bitcoin Investment Trust
Investors that are looking to invest in Bitcoin through the capital markets can access an investment through Greyscale’s Bitcoin Investment Trust. When you use the Greyscale you will be provided with certain advantages that will make you see that investing in bitcoin is a very good choice. You will be provided with a product that will be tracking the value of one tenth of a bitcoin.
Amplify Transformational Data Sharing ETF
BLOK is noted to be an actively managed fund with holdings in 15 different industries and is traded on the New York Stock Exchange Arca. The company invests in other companies that are involved with and developing blockchain technologies. BLOK has a net expense ratio that is set at 0.70%.5
Bitwise 10 Private Index Fund
The Bitwise 10 Private Index Fund is based on the Bitwise 10 Large Cap Crypto Index which is noted to be a basket of large capacity coins in which the company tries to provide security and the ease of use of a traditional ETF. It requires a minimum investment of $25,000 and there will be a fee ratio of 2.5%.
Top winning Bitcoin investment strategies
This is noted to be the most fruitful cryptocurrency strategy there is. It is simple and at the same time very effective for both seasoned crypto veterans and newcomers as well. You can be buying low and riding out the storm and this simply requires minimal effort from you. You have to make sure that you carry out due diligence and risk management as this strategy requires that for the long term, you should have a clear understanding of fundamental analysis and strong hands. This is the best way of removing emotions from investors.
Dollar-Cost Averaging (DCA)
Dollar-Cost Averaging (DCA) is a cryptocurrency investment strategy that allows investors allocate an amount of capital periodically so as to build up a position over time. This is often regarded as the best way to invest in cryptocurrency for those that receive a salary each month. DCA is an easy way for investors to budget and the idea of it is to reduce effects of volatility. When investors use this method they can be able to even out their average entry price and they will be able to steadily build up a portfolio.
Portfolio management is key for any investor there is. Effective portfolio management takes macroeconomic factors into consideration before reallocating parts of a portfolio based on informed decisions. This asset reallocation can sometimes be difficult to forecast as there is not anyone that can be able to predict markets with exact accuracy. This process is fluid and can, with no reasonable doubt become intuitive.
Tips for investors
- Do not go all in
It is very important for you to spread your investments as well as possible. The risk to lose everything will be made small. So you should not invest all your money in Bitcoin alone. There are other cryptos like Ethereum, Litecoin, Ripple and other cryptocurrencies that offer an opportunity to make smart investments that you can look into. You will be able to balance your investment risk.
- Do not be scared
Bitcoin is making waves in both directions. It is not a stable currency at the moment but do not be scared when Bitcoin drops as you are trying to hold Bitcoin over a longer period of time. Fluctuations are pretty normal.
- Chart Analysis
It is nice to see your investment increase in value but you should try to avoid looking at the chart every minute. Your main goal is simple to keep bitcoin for a longer period of time. Daily changes have little influence on the long-term goal therefore you have to try to keep yourself busy with other things.
- Only invest money you can lose
Bitcoin has not been available on the market for that long meaning that no one can really predict how much bitcoin will be worth in 5 years. It is a lot of luck whether you will be successful with your bitcoin investment. You should only invest the money that you are prepared to lose so that you take a lot of pressure off your shoulders.
- Understand Blockchain
The most important tip that we have for you is that you have to understand blockchain very well before you invest in Bitcoin so that you can invest successfully. It is very important for you to have a know-how of how bitcoin works and to know this you have to make sure that you have an idea of the blockchain technology.
There is no way that anyone can just wake up one day and decide on just investing without thinking everything through. To be a good investor you need to have strategies so that you do not end up crying foul if things do not go your way at some point in the long run.