(Newswire.net — September 18, 2019) — Unless you have been living under a stone for the past few years, only then you might not have heard about the sudden rise and dominance of cryptocurrency in the financial world.
Cryptocurrency is a virtual or digital-based currency which is backed by blockchains. It is decentralized and unregulated which means no country, or a central bank has control or authority over it. It acts as a medium of exchange and is also referred to as simply ‘cryptos.
So, what makes it highly popular? Is it the unregulated and highly volatile nature where investors who are looking to make an overnight fortune can double or triple their investments, all within a short duration?
Since cryptocurrency is relatively new in the markets and their trading is not so common, which means that there are fewer correlating assets that can act as a drive for price changes within this small and deregulated market. Also, since it has been designed as decentralized in nature it means it does not react to profoundly to central banks’ regulatory control, data releases, exchange rate changes, oil prices, and political upheaval, unlike fiat currencies.
Though it is price-sensitive to potentially greater regulation, security breaches and flaws and rumors or news about countries banning its trade altogether.
So, what are the biggest cryptocurrencies?
Here we list down, the world’s most traded and most sought cryptocurrencies which account for the largest share of online trading done within the realms of cryptocurrency.
- Bitcoin: It was the first cryptocurrency to enter the market and it still the market’s most valuable coin.
- Bitcoin Cash: It is a standalone cryptocurrency created by the original Bitcoin Blockchain.
- Ethereum: It is gaining momentum and happens to be the second most valuable cryptocurrency after Bitcoin.
- Litecoin: Aims to support faster transactions whether it’s cross-border or locals.
- Ripple: It was created to address issues such as versatility and speed of international payment solutions.
Now that you have a fair idea of cryptocurrencies used globally, here are some tips you should keep in mind when you go for crypto trading.
1. Invest in What You can Lose
When the value of cryptocurrency crashed in January 2018, hopeful investors took their frustrations out on their monitors, laptops, etc. Although people are easily seduced by the charm of cryptocurrencies, they forget the rule that you should only invest in those that you can afford to lose. Bugs, hackers and government regulations can affect the value of the digital currency and force your hard-earned money down the drain.
2. Monitor the Progress of Bitcoin
Majority of altcoins are linked with Bitcoin the same way Asian currencies were to USD during the Asian Crisis. If the price of Bitcoin jump the price of altcoin may fall as people will exit to profit from Bitcoin although if the price of Bitcoin rises the value of altcoins still falls. The best time to invest in altcoin is when the price of Bitcoin is stagnant or show steady growth or fall over a while.
3. Diversify Your Portfolio
Your chances of earning increases if you invest in one currency but the risk is also maximized. The best way to increase growth is by diversifying your assets in the market compared to sticking to one currency. For example, the value of Corgicoin increased by sixty thousand times and that of Verge by thirteen thousand times in two years. Bitcoin meanwhile rose by 34 times. Although the profits were high, you could have earned more if you invested in other cryptocurrencies.
4. Do not be Greedy
This is one of the fundamentals taught if you ever took a cryptocurrency class. As the value of the coin rises so does our greed with it. Instead of taking profit, people wait too long and lose the profit because the value of the currency declines and they even end up making a loss.
5. Invest with Caution
Just like investing in a stock market, your loss is another person’s gain. People can go to any lengths to make profits so they often try to feed wrong information so that they can exist and earn profits. A good investor will always do his research before investing.
6. Set Stop Losses
This will help to minimize your losses which you can use to earn profits by selling if the market drops even further.
7. Categorize Your Investments
By doing this you will be thinking in the long run hence would not make any panic decisions. If you think an asset has potential in the long term, you will not panic sell it if the price falls in the short term.