Diversify into multiple cryptocurrencies
The saying “don’t put all your eggs in one basket” is very relevant in cryptocurrency investing. One of the rookie mistakes the most common is to “bet” all your money in just one or two cryptocurrencies. You would be exposing your entire investment to crypto risk.
For example, many investors who believed that Dogecoin will reach $1 invested in this memecoin when its price was at its highest. If you had invested all your savings in DOGE, you would regret it bitterly.
However, if you spread your capital across many digital currencies, even if Dogecoin drops by 70%, the effects on your portfolio will be mixed.
Apply the “Dollar Cost Averaging” (DCA) method to crypto
Like diversification, this crypto tip aims to reduce volatility in your portfolio. It consists of repeatedly buying cryptocurrency for the same amount. This has the advantage of smoothing out your entry points, rather than searching for the “best” entry point.
For example, you can buy 100 euros Bitcoin every month for 2 years; instead of investing 2400 euros at once in Bitcoin.
Most cryptocurrency exchanges allow you to set up recurring purchases to apply the DCA method.
Learn to read cryptocurrency charts!
There are times when fundamentals drive the market. For example, when Coinbase announced the IPO and when PayPal announced the adoption of cryptocurrencies, the markets were buoyed by these announcements.
However, there are periods of calm or the markets are quite calm. At these moments, it will be necessary to refer to alternative methods of analysis, especially technical analysis.
Market psychology means that cryptocurrencies, especially the most liquid ones, obey technical configurations that can sometimes be exploited. Therefore, it is important to learn technical analysis and read the cryptocurrency price chart.
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Please exercise caution and consult your financial advisor before making any investment decisions. Mirror-Mag cannot be held responsible for bad investments. Before using any third-party service, you should do your own research.
Alm Maye has been a trader and analyst since 2013. He is an expert in stock markets, Forex and cryptocurrencies. He is the creator of Almvest.com and Imveste.com, two sites dedicated to personal finance. He participates in the development of feature articles on specialized sites such as Actions-boursieres.fr, as well as on the international network Finixio.com.
