Cryptocurrency has been a rage all over the world in the last few months. So much so that the crypto exchanges in India and elsewhere are brimming with new customers looking to make money and own a handful of these digital coins.
With cryptocurrencies’ prices going up at full throttle at the beginning of the year to running out of gas and falling sharply, the year 2021 has seen it all already. But if you, too, have been a part of the hype that believes you can make some quick money out of it, it is vital first to take a back seat and understand things you need to do to invest long term in cryptos.
This article discusses things to keep in mind while aiming for long-term investment in cryptos.
How to go long on cryptos?
From El Salvador recognizing Bitcoin as a legal tender to Elon Musk tweeting about Dogecoin going to the moon and then taking back his take to allow the usage of cryptocurrencies for buying Tesla cars, there has been a lot of hype built around it.
Here are tips to help you invest long-term in cryptos:
Most people only know about a handful of top cryptocurrencies, whereas there are over 4,000 of them (as estimated at the beginning of 2021).
So if you are planning to hold cryptocurrencies and do it well, it is imperative for you to diversify your portfolio by investing in other coins, such as BCH, ETH, and MATIC. It will help you mitigate risk and stabilize gains.
Have a goal
We invest because we expect something from our investments, but most crypto traders fall victim to the hype and lose money. Therefore, it is vital for you to pump in cash, keeping in mind the end goal and an approximate timeline.
Gauge your risk tolerance
Cryptos are highly volatile. So take note of your risk tolerance and invest money you are willing to lose. The primary purpose of investment is to add value to your existing wealth and not the other way round.
Learn technical analysis
Technical analysis is a crucial indicator of price. It provides insights, such as resistance zones and support levels. Given the high volatility in top cryptocurrencies and others, it is imperative to analyze them technically before buying.
Don’t fall victim to the hype train
If you are looking to invest long-term, the first rule would be to not fall into hype-driven decision traps. If you want to make money, you will have to be cautious and seek advice from relevant people or do your research.
Make use of stop losses
Unlike the traditional stock market, crypto exchanges in India and worldwide run 24*7. So you cannot have an active order in place and go off to sleep. Therefore, it is imperative for you to use stop loss and limit order to mitigate risk.
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