There are many different takes on the best ways to invest in cryptocurrency, but a few basic rules can set your crypto portfolio on the right path. Of course, every investor has different goals in mind for their crypto portfolio, but it's essential to have the ability to see financial opportunities when it comes. Cryptocurrency is a fast-moving financial sector, and you'll need to think and act quickly. In addition, if you exercise proper due diligence, you'll always be prepared for the market's volatility.
If you want your portfolio to develop over time consistently, it will take consistent effort on your part to make timely investments. An example would be you taking 3% out of every paycheck and investing it into Bitcoin or any other cryptocurrency you may have interest in. No matter what stage your portfolio is in, it's crucial that you stay up to date with the latest news on your investments. You want to always be prepared to protect your assets, which is why many traders will initiate a stop-loss as an extra security measure against potential loss in value.
Bitcoin is currently the most popular cryptocurrency and has been for quite some time. It is also the cryptocurrency that is attracting the most attention amongst investors and institutions alike. Bitcoin has a firm hold on the cryptocurrency market, and it's wise to allocate a substantial portion of your portfolio to the coin. If you also want to invest in alt-coins, these should be included in your portfolio in considerably lesser amounts as they don't carry the reliability and security of Bitcoin.
Most cryptocurrencies that have entered the market in the last decade have plateaued or vanished entirely for various reasons, such as an unsuccessful business model or even fraudulent activity. Considering the volatility and unpredictable nature that's prevalent with crypto, your investment could easily take a deep plunge in short order.
Aside from this, it also matters where you decide to buy cryptocurrency. There are many different crypto exchanges online, but not all are the wisest choice for your investments. There has been plenty of talk about nefarious activity from various exchanges over the last three to five years. Whether they're prone to hacks, lack of security measures, no customer support, or even hosting fraudulent cryptocurrencies, you need a crypto exchange you can rely on. At the moment, there are a few well-known exchanges on the market, such as CoinBase, Binance, and Gemini.
Another aspect to consider is where you store your cryptocurrency. Many exchanges will offer a wallet on the exchange itself in your account. However, even with multiple layers of security, many don't advise doing this at all. This is because there have been many occasions where investors' portfolios were getting drained by hackers. So, many crypto experts recommend putting all of your cryptocurrency on an external wallet that only you have access to.
To explain in more detail, an external crypto wallet is software that contains the private and public keys that allow you to access the blockchain where your cryptocurrency is stored. This is the safest approach for your crypto portfolio. Many stress about the importance of securing your cryptocurrency investments as there is no getting them back once they're gone. Many investors have lost thousands, and even millions to some of the worst hacks the crypto market has ever seen.
There are also different kinds of crypto wallets to choose from, whether hardware, online, or a desktop wallet. Whichever you decide to go with will have its own list of pros and cons. As previously stated, this is why due diligence is so necessary. Some may think you just buy Bitcoin with cash and watch it grow. In some instances, this will be true, but with any long-term investment, you're going to encounter ups and downs in your portfolio.
If you’re still skeptical about cryptocurrency or Bitcoin, in particular, consider that Bitcoin was only around $130 per coin in 2013, and now in 2021, it’s sitting around $55,000 per coin. The track history of Bitcoin wasn’t always pretty as it had a lot of down-time as well, but if you’re in it for the long-term, you can see that investing in Bitcoin in 2013 would have paid off quite well.
So, even if you're just getting started with investing in cryptocurrency, you can only imagine where your crypto portfolio might be in five to ten years from now. The crypto market will inevitably fluctuate drastically over time, but if you exercise due diligence and properly hold your investments, your portfolio will come out much healthier in the end. Continue to buy low and sell high, even more so if you have a more short-term trading strategy, and it's crucial to make sure you've covered all of your bases before making an investment.