Currently, there are thousands of cryptocurrencies with different characteristics, many of which are illiquid and therefore riskier. A smaller number of these cryptocurrencies have the advantage of being more like a bet than an investment. However, there are some very liquid cryptocurrencies that are suitable for owning and investing in the medium and long term.
The important thing is to choose the particular asset you want to track and invest or speculate in. Each investor has a different profile that reflects their approach and understanding of the market, as well as their trading or investment goals, so it is important to determine your maximum loss tolerance to evaluate the risk you are willing to take. It is also important to define time horizons and ask yourself questions like:
Should I invest in the very short term? Or in the medium term? Or for the long term?
Example:
For example, in the profile of an individual investor who is not a full-time investment guardian, it is better to prefer the medium/long term to avoid strong short-term fluctuations (days/weeks).
Then sort the stocks according to the profile:
As with stocks in the stock market, there are many fundamentals. The top cryptocurrencies (in terms of valuation) as of today (January 2023) are: Bitcoin ($320 billion), Ethereum ($150 billion), Binance ($41 billion), Ripple ($17 billion) and are roughly equivalent to the major stock market indices.
While the nature of the project also includes different types and variants of digital currencies, such as :
Ethereum, which presents itself as a global IT project where different projects and networks can be managed, is something that many projects have already taken advantage of, such as: BNB (former), OMG, Augur, CHSB SwissBorg, etc.
These project cryptocurrencies can usually be traded on the Ethereum blockchain. For example, there are digital currencies aimed at confidentiality, and others aimed at improving communication....
Each digital currency has its own acronym or index, e.g. Bitcoin symbolized by BTC, Ethereum ETH, Ripple XRP, which are all major digital currencies, while there are digital symbols that do not have their own blockchain but are based on a host blockchain such as Ethereum or the Binance blockchain.
2- Determine your investment strategy.
Based on your profile above, it is important to determine your ability to analyze projects, research their fundamentals, and then choose a solid investment strategy. The most important thing here is that you know the basics of money management. Therefore, it is important to answer some questions before you make an investment in the cryptocurrency market:
Based on these criteria, it is important to choose an optimal money management strategy. The most important thing is also to get oriented, especially for beginners. It is also advisable to invest in the cryptocurrency market gradually. It is very important to gain experience over time to reduce the risks that remain high in the absence of experience. To gain experience in the cryptocurrency market, it is necessary to monitor the market, books, registries and websites regularly.
Caution is required when entering the cryptocurrency market, and one must be careful with levers and other instruments that are considered advanced for beginners in the cryptocurrency market, etc. Getting started in the cryptocurrency market will allow you to improve your strategy as much as possible over time.
3- Consider the risks of the cryptocurrency market.
When investing in the cryptocurrency market, you have to be careful and take the phrase "what you invest in the cryptocurrency market, you can lose completely" as a motto. This phrase should always be kept in mind so that it does not hurt when you lose the entire amount of your investment because you are aware of it and know how much you can lose. Following this rule is a matter of safety.
Cryptocurrencies do not follow an exponential price line and their volatility remains high, which in itself is not necessarily bad for trading. A negative economic situation can negatively multiply the volatility of cryptocurrencies, which can be costly.
Cryptocurrencies do not follow an exponential price line and their volatility remains high, which is not necessarily a negative aspect in terms of trading. A negative economic situation can negatively multiply the volatility of cryptocurrencies, which can be costly.
Therefore, personal capital creation needs aimed at the cryptocurrency market, especially the younger audience the industry focuses on, should not be foregone.
Cryptocurrency trading is great, with money you don't need for the most part.
4- The cryptocurrency market is not a haven for the rich.
Because cryptocurrencies have generated a very large number of rich people, who have made many promises to become rich very quickly, there are many offers that promise to become rich in a short time using cryptocurrencies.
In this case, you need to be careful and know that a good deal that comes with a perfect suit is usually not a good deal at all. Be wary of sites that promote the idea that your cryptocurrency investments will make you rich in a short time. And be sure to check out the blacklist of major cryptocurrency projects to see how much risk surrounds the market.
Although short-term trading is often presented as a quick way to get rich, for the inexperienced it is one of the riskiest tactics. Doubling positions without sufficient expertise leads to a systematic doubling of risk.
There are no miracles when it comes to cryptocurrency prices. On the contrary, cryptocurrencies must be managed in such a way that they can account for a fairly large portion of your income, through capital management techniques and other skills.
5- Divide your portfolio into different cryptocurrencies.
As we mentioned at the beginning of the article, each digital cryptocurrency has certain characteristics, some of which enjoy liquidity, some of which are highly volatile, and some of which are memes in nature....
For example, Ethereum, relative to its valuation, is one of the most liquid cryptocurrencies, which also offers high performance. Bitcoin also remains one of the largest and most liquid cryptocurrencies and offers a particularly attractive annual performance. Again, it is important to distinguish between utility cryptocurrencies (BTC, ETH, etc.) and digital tokens and purely speculative currencies.
Based on these parameters, you will need to ensure a good diversification of your portfolio, which will be one of the pillars of your strategy. It often pays to mix highly liquid and safer crypto assets with less liquid assets and longer-term cryptocurrencies. In addition to the above tips, it is also important to choose a reliable trading platform that features high liquidity; there are already many reliable platforms, such as the Binance platform, Coinbase, and Kraken, and all have been taken as examples but not limited or recommended, as they feature high liquidity that allows users to trade at high speed, as well as relative safety compared to other trading platforms and support for many digital cryptocurrencies.
