Crypto investment strategies that beginners should know

Similar to the success stories of people who won lottery jackpot prizes, several individuals as well had their lives changed by making millions of dollars from selling cryptocurrencies when the prices were high. Among many effective ways to make money from crypto is investing, resulting in many investors jumping into the market due to the growth of their value in the long run.

Crypto investment refers to the long-term strategy of buying and holding digital currencies for a long period of time before selling them into the market. It is considered to be a much safer approach than trading because crypto assets’ extreme volatility in the short term and terrific long-term value are ideal for the buy-and-hold strategy. Or, in the context of what is mostly mentioned in crypto investing news, people who practise it are called hodlers (‘hold on for dear life’).

Interested in how hodlers make money from crypto? Remember, not all attempts in the market end up successful. Some give up along the process, others lose capital because they either underestimate or do not properly understand the nitty-gritty details of the approach. 

Crypto explained

Earning money from crypto entails a lot of assessment of various strategies, especially on how much to start investing in crypto. That is why before anything else, learn more first about the basics of this alternative form of payment and understand why it is a great investment.

Crypto is a digital currency that functions as a means of exchange through a decentralised computer network using cryptography. As such, it is an alternative form of payment using encryption algorithms that are not supported or maintained by any central authority, such as a government or bank.

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Why crypto is a great investment

2021 was quite a significant year for the crypto industry. Many global events like the unfortunate COVID-19 pandemic have impacted several industries (e.g. airlines and leisure facilities) but not crypto. While it may run in an ebb and flow system due to extreme market and political volatility, it has actually undergone a series of breakthroughs. These include more investors jumping into the scene to benefit from the growth of digital investments’ value in the long run. 

Crypto investment vs. crypto trading

As mentioned above, there are several ways to make money from the crypto market. The most popular paths are investing and trading. Although both have the same end, their approaches to achieving it are completely different.

Investors’ returns are typically over a longer period of time than traders. It could be, months or years—whichever works best for you and your strategies. Since they have a longer time horizon, their expected capital gains on each investment are often higher.

Traders, on the other hand, strive to profit from the market's turbulence. They are more likely to join and leave positions more often, and they may seek lesser profits on each trade due to the fact that they are regularly making several transactions daily.

So, which one is better or more suitable? Well, that is your call to make. As there is always room for improvement in the crypto market, you can always try several methods and strategies until you find your niche that fits better with your financial situation, goals, and personality.

If, on the other hand, you see yourself making profits over a longer period of time, keep in mind that crypto investing for beginners isn’t child’s play.

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8 crypto investment tips and strategies every beginner must know

Prevent your crypto investing from failure by learning the concept and applying the following crypto investing strategies for beginners here at Gamdom. These may help you sustain in the crypto market in the long term.

Set an investment goal

It is critical that you have a reason or goal for investing in cryptocurrency. A purpose is always necessary to drive you towards your goal, whether it is to hold for years or to wait till the market is bullish.

Choose the right storage

There are two general options for storing your crypto in order to keep it safe: a hot and cold wallet. A hot digital wallet is one that stores your assets online, whereas a cold digital wallet is offline, typically on a hard drive.

To prevent hackers from obtaining access to your personal details and crypto wealth, experts recommend storing them in a cold wallet. However, it is also helpful to keep some of them in an online hot wallet so investors who are also traders may swiftly enter and exit positions. Either of the two choices, here are four important qualities when choosing the right wallet: 

• Risk tolerance and goals → Cold storage, for example, may be the ideal option if you want to retain your money for a long period and don't want to trade them. If, on the other hand, you are a beginner who is worried about the cost of the money you invest, you may prefer the simplicity of purchasing and keeping your coins through an exchange.
   
• Security → When looking for the best crypto wallet, security is definitely critical, especially since the market has been shared between honest and unscrupulous individuals and institutions. Keep an eye out for customer reviews and licences. These features will assist you in making a quicker and more informed choice.
   
• Multiple payment options available → Having a variety of payment options helps you to fall back on the next best choice if one fails. You can be certain that your transactions are entirely safe with this option.
   
• Multiple digital currencies available → Check to verify if the wallet you are interested in supports many digital currencies. Although Bitcoin is the most popular and valuable coin in the world, it is not necessary for it to be your first option. Since diversification is a key strategy supported by many experts, you should also invest in other assets. As of February 2022, other leading assets out of the 6,000 and more digital currencies circulating today are the following:
   
• Ether (ETH)
• Tether (USDT)
• Binance Coin (BNB)
• USD Coin (USDC)
• Cardano (ADA)
• Solana (SOL)
• Ripple (XRP)
• Terra (LUNA)
• Polkadot (DOT)

Focus on liquidity

When it comes to determining how to invest in the crypto market, liquidity is a crucial element. Since the market changes swiftly, crypto traders must quickly enter and exit positions. This implies that there must be a demand for digital currencies so that all market players may acquire at the best price and sell at a profit should they wish to sell any of their holdings.

Follow a crypto trading strategy and stick with it

The crypto industry quickly moves, with some strategies outperforming others in a particular market. As a result, as the market evolves and you gain experience over the years, you will certainly want to adjust your strategy. 

However, you will probably want to avoid going long for most of the year. It might be tempting to alter an approach to the current market (i.e. the market is bearish and trading in a narrow range), but this can lead you to serious problems if you don't make extremely careful movements.

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Don’t invest more than you can afford to lose

This is probably the most real and humblest tip in crypto investing. In fact, even in traditional markets, the rule of thumb is to never put your money you know you can’t afford to lose. This is because there will be many great investments in your lifetime. Avoid the phenomenon of FOMO (‘fear of missing out’), and always be cautious in taking your next steps in the market. 

Don’t be afraid to take profits

Although some investors consider the term 'taking profits' to be derogatory, it is a prudent practice overall. This is because taking profits may result in you generating less money than if you did nothing and just 'let it ride', but this is only true if crypto continues to rise in value over time. If you have a large profit margin, consider taking it off the table and waiting for a cheaper price later.

Have an alternative personal email

Using a standard email account might expose you to the danger of a data breach which, of course, is the last thing you want to happen. To mitigate this risk, we highly recommend that you create a separate investing account, preferably with two-factor authentication password security. Also, make sure your email address and password are unique and contain no personally-identifying information that would-be hackers may use to track you down.

A diverse crypto portfolio is key

Spread your investment across multiple digital currencies, just like traditional investors would with equities and shares. This means you won't be overly compromised if one of them loses value, which is especially important given how unpredictable these assets' market values are. As such, always do your due diligence to learn more about digital currencies as there are over 6,000 of them circulating in the market today.

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Words: Antoinette Laraze