Are you looking to get into the crypto market? If so, there are some important things to know before investing in cryptocurrency, that is if you want to make money and not lose your hard-earned money.
Talking about losing money, lots of people have lost money in the crypto market to fraudulent crypto exchanges and projects – I’m sure you must have heard about some of them.
A lot of beginners have also lost so much money, and you can say it is due to a lack of knowledge.
You don’t want that for yourself, do you?
What you will learn in this post will set you on the path to making money in the crypto market, while avoiding the same costly mistakes made by a lot of beginners in crypto, that cost them their hard-earned money.
You should be in the crypto market to make money, not to lose money.
This post will also help you not to end up with fraudulent crypto projects and exchanges that will disappear with your money.
It will provide you with the same mindset as people who are succeeding in the crypto market.
Let’s get to it.
5 Important Things to Know Before Investing in Cryptocurrency
1. Bitcoin is not The Only Cryptocurrency
Maybe you know this, maybe you don’t, but Bitcoin is not the only cryptocurrency.
Cryptocurrency is also much more than Bitcoin, Ethereum, Litecoin, XRP, Dogecoin, and Shiba Inu coin.
If you know this, then congrats because you are better than hundreds of millions of people who do not.
As of the time this post was published, there are over 21,000 cryptocurrencies in the market.
2. A Diversified Portfolio is Key to Long-Term Success
Investing only in one cryptocurrency like Bitcoin may not be enough if you are such a person who is looking to make a large profit from the crypto market.
Unless you just want to preserve your wealth, to use the Bitcoin investment as a hedge against inflation.
But if you are something like me, who entered the crypto market to make profits, then investing in different coins will help you to make a large profit from the crypto market.
And when it comes to investing in different cryptocurrencies, don’t be deceived, no one truly knows all the coins that will be worthless in the long term or all the coins that will make them a millionaire.
No one knew Luna was going to crash, but if you want to fly, you must spread your wings.
Diversification will help you, both to minimize loss and to maximax profits.
3. Not all Crypto Exchanges are Safe
Crypto exchanges are where you buy, trade, send and receive cryptocurrencies like Bitcoin, Ethereum and others.
But they are not insured like banks, meaning you will lose all your money if a crypto exchange gets hacked or disappears.
I don’t know how that sounds, but many crypto exchanges have been hacked in the past, and crypto exchanges have collapsed in the past, and customers lost their money.
So, before investing in cryptocurrency, you must be certain you are choosing a secure exchange where you can store your coins and trade them without losing sleep.
You are right to be scared if you are, but there are secure crypto exchanges out there.
You can also store a larger portion of your crypto in a hardware crypto wallet where you have 100% control of your cryptocurrency.
But as a beginner, the best way to start in the crypto market is through a crypto exchange, because crypto exchanges are both easy to use and easy to access.
While there are so many of them out there to choose from, you must choose an exchange that is legit and secure, not one that can get hacked or disappear with your funds.
You can check out my recommended crypto exchange.
4. Never Invest Money you Cannot Afford to Lose
New people who come into the cryptocurrency market focus most on what they can gain from their investment and less on what they can lose.
This is why so many times, a lot of beginners lose so much.
As a new investor/trader, you must keep to the golden rule – to invest only what you are not scared to lose. This way – you are safe when there is a loss and on the better side when there is a gain.
You must have it in mind before investing in cryptocurrency, that cryptocurrency is a high-risk investment.
As I stated in our post – 7 hard lessons from the crypto crash, “it does not matter if you bought the best cryptocurrencies, if you are registered to the best and most secured crypto exchange, or if your coins are stored in the best hardware wallet.”
Many coins have crashed, and many more will go to zero.
Many crypto exchanges have collapsed, and many more will collapse.
While you can minimize these risks through diversification, storing your coins in a crypto hardware wallet and trusted crypto exchange, that is not the reason to invest your entire life savings in the crypto market.
The best investors/traders always set aside emergency funds.
5. Crypto Influencers are Not to Be Trusted
I have a blog post where I wrote about the 25 best Twitter influencers to follow, they are good for keeping up with what is happening in the industry, yet crypto influencers in general are not to be trusted.
While some of them are good, a huge number of them do not have your best interest.
The majority of them do not trade for a living, rather they make money from paid sponsors and clicks. So, they can shill Ponzi coins and fraudulent crypto exchanges to you.
It doesn’t matter if the influencer has a blue tick, if you don’t want to lose your money, then you must do your own research before following anyone’s recommendation.
Maybe you heard the news that the SEC fined Kim Kardashian over 1 million dollars for promoting crypto without revealing the $250K payment she received.
The SEC Chair Gensler has also warned investors not to make investment decisions based solely on the recommendations of a celebrity or influencer.
Be safe out there.
These are some of the most important things to know before investing in cryptocurrency market.
Ignore them and you may be making a big bet with your hard-earned money.
That is not something you want to do, to open the door to losing your money by yourself.
People come to the crypto market to make a profit, to protect their wealth, not to lose them.
IMPORTANT; you must never send money to anyone you meet online asking to help you invest in cryptocurrency. They are scammers. Crypto is easy, and you can do it all by yourself.
The information presented here should not be used as the sole basis of any investment decisions, nor should it be construed as financial, tax, legal, or accounting advice. I will also advise that you invest in cryptocurrency only what you are comfortable living without, at least temporarily.