Do you think about quitting your 9-5 job to become an investor? Are you sick of your friends repeatedly telling you to try cryptocurrency trading and want to see what the hype is all about?
Do you want to see whether those influencers you follow on Instagram made their fortune through trading in cryptocurrency?
If the answer to these questions is yes, you’ve come to the right place. This article will not only dispel some myths about cryptocurrency trading but also introduce you to a few key points regarding this fascinating era of currency.
This article will be enough to introduce you to the key points you should have in mind before you consider cryptocurrency as an avenue of investment.
Many people are misled into thinking that cryptocurrency can suddenly change their life. This may have been true for some lucky investors who built their portfolios in the early years, but it became more challenging as the market’s capitalization increased.
So, if you are one of those who like to draw comparisons between the early and contemporary investors, you might want to stop doing that. There is no fair comparison here, honestly.
Moreover, if you are not serious about investing, it will only be a while until you start searching “where to sell bitcoin” on Google.
The intelligent thing would be to understand what you’re getting into before you even start putting in money.
With that said, here are a few things you should know about cryptocurrency if you consider this an investment option.
- It is just like any other investment:
Cryptocurrency is not a magic wand, and it will not suddenly dispel your financial woes. It is similar to any other investment in terms of the traditional approach.
You pour in money, make smart moves, and reap dividends. However, some aspects of the market and the dynamics surrounding trading make all the difference, and we will get into the details later.
So, before you start investing, the first thing you should do is get rid of any misconstrued notion of cryptocurrency you may have been harboring for a while. Let the facts make their way into your mind.
- You are unlikely to get rich fast:
Considering that it is similar to other investments and the golden period of investing is already a thing of the past, there is a very low probability that you will make a fortune instantly.
Of course, there are exceptions to this case, and some people are fortunate to reap significant benefits early on.
But these cases are sporadic, and this certainly does not apply to the majority. Therefore, you need to be very clear about this from the beginning. Treat this like an investment option and not a scheme to get instantly rich.
- The more you invest, the more money you make:
Considering that market capitalization is already high enough, the only way you can reap good returns is if you invest heavily.
Of course, you may argue that the recent crash has allowed many new investors to get a share of the pie. This is true, but the situation will not be the same for those who invested early on.
Many new currencies can offer good returns in the future if you invest right now, but there is a high probability that they may not be able to perform well either. But then again, those who supported early on took risks.
- The risk is always there:
As mentioned above, those who made a fortune investing in cryptocurrency in their early years took a significant risk because of the uncertainty surrounding it.
While the technology backing cryptocurrency appeared promising, there were speculations about it not being a safe investment option. Acting on the side of caution, many people subsequently pulled out their money.
Those with a higher appetite for risk wanted to see where the dust would settle and eventually made a lot of money as the market boomed.
While there are no parallels to be drawn here, one thing that has remained consistent across these years is the risk factor in this sector.
- Market volatility can be dangerous:
The cryptocurrency market crashed recently due to several factors, including the rise in interest rate, prompting many people to reconsider this as a good investment option.
The cryptocurrency market is renowned for its volatility, which means that it can often be unpredictable and does not stay stable for extended periods.
While this allows some people to make money, it also causes financial losses to others. Intelligent investors, who understand this point, tend to take steps to minimize the risk they face.
That said, there is no way of risk-proofing your investments in this sector.
- A timely response is critical:
Timely response to market trends is the key to doing well in the cryptocurrency sector. If you act on time, not only can you save your investments, but you can make some gains as well.
However, you cannot act timely if you do not understand the various factors that influence the cryptocurrency market.
There are various approaches to developing the right understanding, including keeping up with the news and making small investments initially to get the hang of market behavior.
Once you thoroughly understand the market and its behavior, you will be in a better position to make decisions. This will help you play it safe and perform better than other investors.
The points mentioned above dispel various myths surrounding cryptocurrency and can help you make more informed decisions.
However, you still need to examine each of these extensively and conduct research before you can start investing.
The pre-requisite knowledge of trading is a must and should not be ignored. Patience can minimize risks and even help you make money in cryptocurrency.