3 strategies that make you a better crypto investor
So you finally decide to buy cryptocurrencies, but you hear words like "market crash," "prices plunging," "market is down." For those of us on the outside, who've probably never even traded in traditional markets, cryptocurrencies can look like a sector only for professionals. So, if you're new to the world of trading, here's how you can invest in crypto while avoiding these common risks.
#1 Understanding volatile crypto prices
Ups and downs in prices have been a phenomenon in crypto for several years. Most of the time, these price fluctuations are because of people's emotions. Take crypto project Yearn.Finance for example. After the project's founders said they were leaving, investors sold their Yearn.Finance (YFI) crypto assets out of fear that the currency will no longer be valuable. It's worth noting the crypto project doesn't require the founder's approval for changes, it will continue to work as deployed.
How to manage volatile crypto prices
Instead of reacting to short-term events, crypto investors are often better off waiting for prices to recover. It can be hard to sit tight when negative economic news prevails, but a rational response could spare you the pain of a permanent loss. Likewise, avoiding overhyped trends can prevent you from making overpriced investments.
#2 Finding the best time to buy crypto
You've probably heard several crypto influencers advising you to "buy the dip," a popular investment strategy where people buy crypto at low prices, during a market crash, in hopes of a market recovery. But crypto prices may not rise consistently in the short term. In this case, investors can borrow old trading methods to minimize losses in the long term. Dollar-cost averaging is one such classic investment strategy that people apply to trade stocks, which you can also apply to crypto investments.
What is dollar-cost averaging?
Most experts agree that over time, crypto prices may eventually rise in price. Dollar-cost averaging helps you stay on the course rather than suddenly selling your assets due to fear or greed. With dollar-cost averaging you invest a fixed amount of money in the same crypto asset on a regular basis over time, regardless of the price. In other words, you could make small purchases of the crypto throughout the year, which will spread out your investment and help you avoid catastrophic losses.
#3 Including more than one crypto in your portfolio
Some cryptocurrencies fluctuate more than others. In this case, distributing your funds across several coins, or diversifying your portfolio is another profitable trading strategy. That way you can always break even with the help of other crypto assets instead of suffering the damage of a single coin's losses.
Any other risks to consider?
In addition to limiting the size of your investment in one asset, another way to avoid big losses is to strive for safety. Cryptocurrencies exist on the internet and although crypto is strongly encrypted, it is still vulnerable to hacking and cyber fraud. To learn how to trade cryptocurrencies safely, visit BitOasis, the region's most trusted crypto exchange to buy and sell over 40+ crypto assets.