Today this post wants to share what exactly you should pay attention to when investing in cryptocurrency?

Bitcoin has a history of just ten years since its inception, with an annualized rate of return of up to 70%, defeating the stocks people know well, and it is the world’s best-returning commodity.

Still, many people have a skeptical attitude towards cryptocurrency. My opinion is that the high probability of cryptocurrency can become a tool to influence the future financial world, and there is unlimited room for imagination.

Here are 10 suggestions on investing in cryptocurrency

1. Choose a large professional exchange

Because cryptocurrencies are too popular now, there is much deceptive information on the Internet, or many companies with too small capital want to make money from exchanges. When there is a problem with a small exchange, you are prone to bankruptcy when the funds are not enough.

2. Don’t All in

Cryptocurrency is indeed the asset with the best return in history. For the past seven years, Bitcoin’s annualized return rate is 69%, which is far greater than the 10% of stocks.

But we know that high risks must accompany high returns. The biggest retracement of Bitcoin in the past occurred in 2018, 2019, and what is currently happening, all of which are more than 50%. This rate is also far greater than that of stocks, and the stock market crash is 8~10. Only once a year, cryptocurrency has experienced more than three bubbles in just seven years.

Many people on Youtube who get rich by cryptocurrency are enviable, but you haven’t seen more people losing money because of virtual currency.

3. Start investing from mainstream currencies

Cryptocurrencies can be divided into mainstream currencies, stable currencies, and altcoins according to their nature.

Mainstream currencies generally refer to currencies that rank in the top ten in terms of market value and have been around for a long time and are relatively well-known currencies.

Currently, Bitcoin and Ethereum are ranked first and second in market value. These two are cryptocurrency veterans, and they are also coins that novices must know and configure when they first start investing.

Stable currency refers to those currencies that are linked to actual assets. For example, USDT is a cryptocurrency linked to the U.S. dollar. Its exchange rate will maintain the same value as the U.S. dollar and has the characteristic of maintaining value.

Configuring stablecoins allows you to invest in crypto or currency assets faster and more conveniently, so it is also known as the cash of the cryptocurrency world.

4. Don’t buy small coins that you haven’t heard of

Small coins refer to coins that have just been launched but whose market value and value have not yet been widely recognized, commonly known as altcoins.

Small coins are speculative in nature. Unless you have thorough research on him, it is not recommended for novices to invest in small coins for a long time.

Moreover, the characteristic of small coins is that they often skyrocket when they are first launched and then plummet immediately afterward. Many people speculate on small coins, but they are cut off as leeks because of the timing.

5. Understand the necessary knowledge points.

Buffett said that we should not invest in things we don’t understand.

The same is true for investing in cryptocurrency. When investing in stocks, we must at least understand the company’s business model. When investing in cryptocurrency, we also recommend that you learn some necessary knowledge points, such as decentralization and blockchain technology. , What are miners, encrypted wallets, etc.

6. Treat the money invested as lost

The risk of cryptocurrency is quite high. When you invest in cryptocurrency, you have to know that its opponents are the legal currencies of the world, especially some strong currencies such as the US dollar, Japanese yen, euro, and British pound, which have a short-term position in the financial world. It’s hard to shake.

Even if you are sure that the future belongs to cryptocurrencies, you have to know that in short to medium term, cryptocurrencies will encounter a lot of resistance, which may lead to large volatility and retracements.

If you cannot afford the 50% annual fluctuations, then you should not invest in cryptocurrencies.

7. Less short-term speculation

Novices should invest in mainstream currencies as much as possible in the long term and avoid short-term investments.

It’s not that I haven’t done short-term. When Dogecoin was popular before, I also participated in a wave of the market for a short time, but I only used 1% of the total funds and finally made about three times the money and closed it.

Because Dogecoin is fun and speculative currency, it doesn’t matter if you touch it occasionally, but you should never use it as the main investment force.

8. Just hold the spot

For novices who are just starting to invest, just holding the spot can get a good return.

The so-called holding spot refers to investing in real currencies rather than derivatives such as futures, contracts, and options. The risk of investing in spot is great enough, and the risk of currency derivative investment is not something newbies can play.

9. Adopt the method of entering the market in batches

To get an average cost, don’t use up all the funds simultaneously, but enter the market in batches.

For example, your total assets are 1 million, and you plan to allocate 50,000 to buy bitcoins. Among the 50,000, I recommend dividing them into five equal parts and investing 10,000 each time.

In this way, you are able to ensure that your investment will not be at historical highs.

You can use some technical analysis to help you reduce costs when the Bitcoin price pulls back.

10. Technical analysis indicators that can be referred to

When looking at the currency trend, I will use only one technical analysis indicator: the moving average or moving average for short.

And I will set two, one long period and one short period.

Grasping 20 weeks in the long-term is mainly used to judge the long-term trend; Grasping 2 weeks in the short term to judge the short-term support and resistance levels.

From history, entering the market below the 20-week moving average can get pretty good rewards.

Summarize

Mainly invest in mainstream currencies, try to hold spot long-term investment, regular fixed investment can create better returns than stocks. For asset allocation, the reward is proportional to the risk. To control the risk of the overall asset, it is recommended to reduce the position of the cryptocurrency to less than 5%. Choose a large and secure exchange.