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Bitcoin Investment Tips For New Investors: Stay Safe While Trading

Crypto investments are constantly growing, despite the recent crypto crash last year. Investors are motivated by a general sense of optimism in the crypto market, which they feel is going to replace traditional financial markets in the much longer term.

Luke Evans
Apr 12, 202390 Shares1947 Views
Crypto investments are constantly growing, despite the recent crypto crash last year. Investors are motivated by a general sense of optimism in the crypto market, which they feel is going to replace traditional financial markets in the much longer term. Additionally, many investors also embrace the possibility of a global open market where national currencies become irrelevant.
As a result, the crypto market currently counts over 420 million users around the globe. In the US, 16% of the population has used crypto currency, either as part of an investment strategy or for trading.
Moving forward, it is estimated that more new investors will join the crypto market in the upcoming years. Yet, if there is one thing the global crypto crash of 2022 taught investors, it’s that inexperienced crypto users are more at risk of high losses. Granted, crypto billionaires have also faced devastating losses. However, to put things into perspective, the ten thousand and hundred thousand USD loss value that affected small investors, changed their lifestyles and financial stability for the worst. While, on the other hand, someone such as CEO Changpeng Shao, whose net worth drop amounted to 82 billion USD, still remained the wealthiest crypto investor even after the market collapse.
So how can new Bitcoin investors approach this volatile market as safely as possible?

Price Prediction Knowledge

Fluctuations are to be expected in this market. But while you can’t prevent currencies from fluctuating, you can prepare your strategy by studying Bitcoin price predictionand crypto currencies.
Before you buy crypto currencies, you need to have a good understanding of their past price activities. This can also provide valuable information to where it could go in the future. Needless to say, price prediction projects are based on machine learning. They carry some level of reliability based on the relevant analysis. However, with insufficient analytical support available, predictions should only serve as indications of the most plausible behaviors.

Research The Latest Crypto Opportunities

One of the most significant signs of growth in the crypto market is not necessarily the volume and value of trading that occurs every day, but the launch of new opportunities. Keeping up-to-date with the latest news and projects, through the crypto community, can be a game-changer for your strategy.
While there is some information available online, via newsletter or digital community, it can be beneficial to also attend regular workshops and meetings in your area. This could include joining a crypto group for meetups or even following classes on investment tips and tricks.
Meeting with experts can be highly beneficial for new investors:
  • You can benefit from their mentoring and experience
  • You can ask questions about specific problem areas
  • You can hear about upcoming trends before they go big
  • You can find the guidance you need from experienced investors
  • You can share insights with others

Understand The Difference Between Blockchain Safety And Device Safety

Blockchain technology, the technology underneath crypto trading, is considered a safe foundation through the decentralized and distributed ledger recording all transactions. Blockchain technology relies on advanced cryptography to secure its records and network. As such, new investors refer to it to reassure themselves that crypto is safe and impossible to tamper with.
But, contrary to common belief, blockchain technology does not necessarily protect your crypto investments. The network itself proves impossible to manipulate.
However, the device you use for trading is another thing. Nowadays, you can start trading directly from your smartphone, using crypto trading apps. While it makes sense to add trading to the numerous mobile functions available, it also poses a serious safety threat. Hackers can find it a lot easier to break into your mobile than to find weak spots in blockchain technology. So, protecting your transaction through a safe mobile app wallet and a VPN are necessary protection measures.

Not All Crypto Currencies Are The Same

Bitcoin is the most well-known crypto currency and it was also the first currency to be introduced in January 2009. However, the crypto market is not regulated like any other currency market. Any user can create their own currency. As a result, there are over 20,000 different crypto currenciesin circulation. As tempting as it might be to diversify your crypto investment with multiple currencies, here are some things you need to know:
  • Many small currencies are short-lived
  • They are not suitable for long-term investment strategies
  • Small crypto currencies are also more volatile
That being said, experienced crypto traders can also drive profits through non-Bitcoin currencies, as long as they deploy the best approach.

Diversify Your Investment Portfolio

How much of your portfolio should be dedicated to crypto investments?
The key to financial stability lies in a diversified portfolio, which protects you if one asset were to collapse.
For instance, crypto investors who survived the global collapse in 2022 were able to recover thanks to the other assets in their portfolios. As a rule of thumb, experts recommend sticking to the 2% to 5% crypto assets and dedicating the remaining of your portfolio to a mixture of long-term and short-term assets, depending on your risk tolerance.
Experienced investors are confident with 10% to 30% of crypto in their portfolios. However, it is worth mentioning that they are also able to face greater losses without putting their lifestyle at risk.

Focus On Hodling

Hodling, or hold on for dear life, is the name given to the long-term crypto strategy. Investors can overcome the volatility of the crypto market by focusing their efforts on long-term hodling, which means keeping their crypto assets for at least a year or more before selling.

Practice With Demo Trading

While hodling is the long-term approach, knowledgeable investors can also gain profitable outcomes through effective trading best practices, aka short-term strategies. If you are tempted to try short-term, experts recommend practicing with crypto demo trading platforms that enable you to gain a better understanding of trading pace and signals.
Yet, patient investors frequently report higher gains through hodling only.
Every investment strategy brings a level of risk. The belief that high risks accompany high gain potentials is inaccurate. More often than not, inexperience and lack of practice can drive higher losses than gains. As such, if you are a newcomer to the crypto market, make it a priority to reduce risks as much as possible as you bring your investment strategy to the next level.
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