Investing in Cryptocurrency can be risky, but it doesn’t have to be.

It’s important to understand the potential risks and put a plan in place to manage them.

Here are 5 ways to mitigate your risk and give you the confidence to invest your capital in Cryptocurrency without worrying as much as you would with stocks or commodities.

I learnt these the hard way, so you don’t have to!

1. Keep your money off exchanges and store your private keys in a hardware wallet. 

Before buying your first Cryptocurrency, it’s important to take its security seriously. Keeping coins stored on an exchange or on a third-party wallet might be convenient, but it’s far from secure. Hacks on exchanges happen frequently and token holders are often the ones left high and dry. Hardware wallets are designed to safely store your private keys to the blockchain without fear of being hacked. These devices secure your keys offline and can be restored if lost or stolen.

2.  Don’t listen to the noise & AVOID emotional purchases 

Don’t listen to the noise and avoid emotional purchases. It’s easy to get swept up in the enthusiasm on social media – vocal personalities that proclaim they have found the next big coin that will go to the moon – so too, popular traders who show bullish charts declaring, “X-coin just made a Jesus Cross pattern!” The Fear of Missing Out, or, “FOMOing” into a position without educated planning is the easiest and surest way to get lose your capital fast. Making investment decisions based on advice from internet gurus is a big no-no. Stick to a sound investment plan and avoid the noise.

3. Avoid using unregulated exchanges

In 2017, there were hundreds of exchanges, but not all of them could be trusted. In the depths of the bear market, it was clear that many were doing the dodgy on their customers by faking volumes and not taking security seriously. By using unregulated exchanges for trading or storing crypto, you’re risking an avoidable hack and entrusting your assets to the people behind the exchange.

4.  Hedge against volatility

Understanding market cycles is crucial for successful cryptocurrency trading. Preserving capital is key, as seen in the 2017 bull market where the total crypto market cap rose from $150 billion to over $800 billion in a matter of months. Smart investors recognized the late stages of the bull market and moved profits into traditional stores of value such as USD and precious metals. 

Before buying or selling cryptocurrency, it’s important to consider if the market is currently bull or bear, if the market has recently experienced significant gains or losses, and if there are any upcoming key dates, such as block reward halvings, that may result in volatility. It’s always a good idea to regularly review and assess the positioning of your portfolio.

5. Choose coins with serious liquidity

When investing in the cryptocurrency market, liquidity is a crucial factor to consider. The saying “liquidity is there until you need it” highlights the importance of being able to easily buy and sell assets.

In 2017, many retail investors experienced the consequences of a lack of liquidity when nearly $700 billion was wiped from the market. It can be especially risky to invest in smaller, less liquid coins, as they may not have enough buyers and sellers to support their value. 

Bitcoin and Ethereum are examples of highly liquid assets in the crypto market, with daily trading volumes of $13 billion and $5 billion respectively. Investors should be cautious when investing in coins outside of the top 10, as they may not have the same level of liquidity and could be more difficult to liquidate in a bear market. 

Overall, liquidity is a key factor to consider when investing in the cryptocurrency market and it’s best to stick with large-cap coins with more depth of buyers and sellers.

Learn the strategies we’ve used to assist many savvy investors in entering this market in a SAFE and SECURE manner.

Find out how to approach the TOP PERFORMING INVESTMENT VEHICLE of all time in a POWERFUL and SUCCESSFUL way.
 

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