Crypto newbie? How to start investing in cryptocurrencies
Crypto newbie? Interested in investing while the bear market has made some bargains? So here are some good starting points.
Despite the crypto winter, interest in investing in cryptocurrency is still growing. The market cap of the crypto market grew exponentially from 2020 to 2022.
Crypto Newbies: Need to Know
What are the basic points that every investor must perform before and during investments in the crypto market?
Max Krupyshev is CEO of CoinsPaid. “First of all, it is important to understand that there are many different types of crypto investors. You should start by getting a feel for the industry to decide what kind of approach you want to take to crypto investing. Whether you end up choosing monthly dollar cost averaging or high-frequency day trades, the most important thing is to figure out which strategy you prefer over time.”
Nicolas Tang is director of internal communications at Phemex. “Investing requires a lot of work and research. It is never as simple as identifying a project whose value has been steadily rising and buying a token or share. There are countless examples of seemingly unstoppable projects that have collapsed within days. Many of these relied on passing hype and trends to produce a facade of success. Fundamental analysis can help determine whether the people and ideas behind a company have enough merit or potential to really succeed.”
For the investment to be successful, the investor must perform the following steps.
Analyze the type of cryptocurrency
The consumer should carefully analyze the type of cryptocurrency to acquire. A stable currency like Tether or a value currency like Bitcoin will not be the same.
Make sure you understand if the cryptocurrency has a backing in a real asset, if its value is determined by supply and demand in the market, and you are able to analyze the volatility levels that the cryptocurrency has.
Crypto newbies: Always study the white paper of the project
After the user has been able to decide what type of cryptocurrency he is interested in, he should study the Whitepaper of the project in detail.
The user can find various key points in the project in the whitepaper such as:
1. Description of the project behind the cryptocurrency
2. The technology behind the cryptocurrency
3. Main characteristics of the project
4. Cryptocurrency market risk
In this example, we will be able to see some of the main characteristics and description of Tether, through the study of the Whitepaper.
Crypto newbies should always research who is behind the project
There are thousands of cryptocurrencies within the crypto market. To avoid being part of a scam or pyramid scheme, the investor should research the project behind the cryptocurrency and who the founders are.
Rodrigo Torres is director of Valora Analytics. – Literature and experience indicate that in the world of investment, the best way to start is to know the market you wish to invest surplus liquidity in. Another recommendation is not to invest the resources you may need tomorrow for things like food, housing or basic expenses . It is recommended to start with low investments and with resources that will not be needed in the short term”.
Crypto newbies should analyze the price and market cap
You need to analyze different variables for the cryptocurrency using a reliable site like CoinmarketCap.
Cryptocurrency price
By analyzing the price of the cryptocurrency, we can see if it is at a moment of low or high, and make a buying decision based on this.
Market value
According to the description of Coinmarketcap, we can understand that the market capitalization is: “The total market capitalization of a cryptocurrency’s circulating supply. It is analogous to free-flowing capitalization in the stock market.”
In other words, the market value = current price x circulating supply.
In the image above, the user will be able to see the total supply of Bitcoin today and that it has a decrease of 3.76 percent. The analysis of said data will help us understand how much dominance of the market the cryptocurrency has.
Crypto newbies should read the recent history of price fluctuations
Perform a brief analysis of the behavior of your preferred crypto. How volatile is it? What are the market trends?
In this graph, the investor will be able to analyze the prices of Bitcoin in different time periods. They can also analyze open market price, high, low price and closing price on different dates.
The investor can study how the price of the cryptocurrency developed throughout a day at different times. In this case, the value of Bitcoin fell over the hours.
Kryptony Beginners: Takeaway
The cryptocurrency market is one of the most volatile markets in the world. Investing is an activity that takes time and commitment. It is important that the new investor spends a good amount of time getting to know the land area before starting. Only invest what you are willing to lose. And have fun!
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Disclaimer
All information on our website is published in good faith and for general information purposes only. Any action the reader takes on the information contained on our website is strictly at their own risk.
