4 things you should keep in mind before investing in crypto currency

Cryptocurrency has gained so much popularity over the past few years. People are investing their whole life savings in crypto to get rich overnight.

It has worked for many people but not everyone has a golden fate,right?

There are some strategies that most successful traders follow to get decent profits by investing in cryptocurrency.



So, To get started with crypto, here are the 4 things that you should keep in mind before making your first investment.

The first thing you must know about cryptocurrency is the basics I.e. How it works. The coins available in the crypto market are digital currencies that are created using blockchain technology and algorithms. They don’t exist physically nor are backed by any government, unlike real currencies. You can buy these coins by making an account and getting yourself registered on cryptocurrency exchanges.



A crypto coin can be created by anyone who knows the process of mining and blockchain. And if people start to buy their coin, its price will go up and when they start to sell its price will go down just like stocks and forex.

The interesting thing about crypto is that its transactions cannot be traced, which makes it a comfort for hackers or drug dealers who don’t want to be caught buying or selling their stuff.



Though cryptocurrency isn’t actual money, you still have to pay taxes for the coins you hold in your crypto wallet.

For investment plans, you can buy and hold coins for either a long or short period of time. Holding a coin for a short period, I.e. Days or weeks, can offer you a small profit compared to long-term investments that last for years. This also requires research as a coin that performs well in the short-term might not be a good investment for the long term and vice versa.

You will have two options for trading spot and futures. In spot trading your asset will remain with you until you choose to sell it. For futures, you can get leverage from the exchange but that comes with a liquidation price and if it’s triggered, the number of coins you were holding will be liquidated I.e. They will be completely vanished from your crypto wallet. It is recommended to hold a coin in spot wallet if you are planning to hold it as a long-term investment so you don’t lose your money over price retests.

Bull and bear cycles are another factor that you should have in mind. A bull cycle is a time period in which the prices of most cryptocurrencies tend to reach their all time high and in a bear cycle, the currencies tend to reach their lowest prices.

Both bull and bear cycles last for approximately 2 years. Currently in 2022, the bear cycle is in action and the bull market is expected to return in early 2024.

The question that comes into people’s minds when they are about to invest in crypto is which cryptocurrency should they buy that will make them rich overnight. They start asking people for ideas or searching the internet without even knowing whether the coin you are being suggested is even a good investment or not. Yes there are many experts who know more about crypto than you do, but let’s be honest, no one actually knows what exactly will be the next move for a coin.



So, the cryptocurrency that you should buy is what “you” think is the best for you.



Yeah, I know you are new to crypto and you wouldn’t know which coin is a good investment. This is why you have to do your own research before putting your valuable money in an unknown asset. You should start learning about the fundamentals of a coin along with technical analysis, listening to experts' podcasts for better ideas and joining trustworthy communities on the internet.

You also have to look for your risk-to-reward ratio. Which means how much you can afford to lose for a certain amount of profit. Coins like Bitcoin and Ethereum are a lot safer than other risky coins, as they have been in the market for a while now, but they offer less reward compared to other risky coins. It depends on you, whether you want to play safe or risk it all for a potentially huge profit.

It is entirely possible to be rich by investing in crypto. Many people have changed their lives with the help of this virtual currency. But that’s not always the case.



Investing in crypto requires following a set of rules. If your research is accurate and you can manage your risk-to-reward ratio along with a good investment plan, there are chances that you will make a good profit out of it. But that’s also not guaranteed as no one exactly knows which cryptocurrency is the best to buy. Therefore, you should always invest what you can afford to lose so that you can stay financially stable even if things ever go sideways.

Investing in crypto can make you rich, but it can also do the opposite. So, it’s important to know what you are putting your hard earned money into. Just put some time into learning how the crypto market works, do proper risk management, follow a plan for short-term and long-term investment and you are good to go.



I hope these tips helped you in increasing your knowledge about cryptocurrency and giving you a brief idea about getting started with it.

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