With the growing popularity of cryptocurrencies, one could ask what kind of investment strategy works in this new market. In our previous article we have talked about how to invest in commodities and now we want to focus on some of the aspects related to cryptocurrency investing.
Is there any difference to other markets?
The answer to this question is no. Cryptocurrency investing should be treated like any other investment, with one particular mention: One must take into account that the cryptocurrency market is still in its early phases, volatility is higher than in other markets, and a lot of sudden and important changes could appear any time and completely change the rules of the game.
How can someone invest successfully in cryptocurrencies?
Given these complicated conditions, you might ask how you could invest in cryptocurrencies in an efficient way. That is why we want to give you some pieces of advice about how you should treat crypto investments.
We assume you already know how to invest online, so we will skip all the very basic concepts. Firstly, when it comes to cryptocurrency investing, the best way to do it is by focusing on those tokens that have a few years in the market and have established a good reputation. You probably know them already: Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Ripple, and Dash, all of them have been performing well in the past and all are part of a mature market, as compared to the other recently-launched coins.
A market in its early phases is very easy to manipulate, given the small liquidity and reduced number of participants. A developed market is where professionals are putting their money in, so there’s where you need to be as well.
Buy low and sell very high
As with other investment, timing and pricing are two of the most crucial aspects. You need to buy at a cheap price and sell them as high as it is possible. At the time of writing, in July 2018, the cryptocurrency market as a whole is in an oversold condition. That means the valuations are low compared to the end of 2017, so investors across the globe might have already started to see where some cryptocurrencies will bottom out, in order to anticipate a new bull run.
Last, but not least, you need to take regulation into account. Make sure to invest in cryptocurrencies that comply with the regulation, as it could save you from unwanted situations in the future.