Bitcoin is touted to be the next lucrative investment in the post corona era, as per Bitcoin Lab CEO Tetsuyuki Oishi. A financial analyst with financial company Fisco, he has predicted that the stock market will lose its charm for most investors owing to the slumped performance of the stock as demand for company products is down. Also, long term investors are looking for a haven for their money, and gold is also losing its sheen owing to an increase in currency levels. The idea is to invest in asset classes with less relation to corporate consumption and profits.
Grayscale Investments’ Q1 2020 earnings report indicated an inflow of $503.7 million into various cryptocurrency investment products. It is one of the latest inflows, and approximately $388.9 million has flown into the Grayscale Bitcoin Trust for BTC.
Thus, as a prudent investor, it is necessary to look for some guidance before investing in this market. Bitcoin is going to sustain a significant impact on the world, but it is, however, new to follow the strategies for this market. Let us seek some ideas and mechanism to trade in this market:
Understand the History of Bitcoin Movement
A significant collapse in bitcoins in December 2017, caused a drastic financial loss to many of its investors. It happens when investors give in to knee-jerk reactions out of fear and confusion. Bitcoin investment requires a proper study and understanding so that you will not end up in debts. If your stakes are high and churning profit from it, you are supposed to conduct in-depth research on cryptocurrency. The research will aid you to gain the required knowledge about your investments and recognize its value in the cryptocurrencies market. Investing all your money without knowing about the market is like gambling which will result in disaster. Read about the various factors affecting demand and supply of Bitcoins – Cryptocurrency regulations around the world, Mining Reward in comparison to other currencies (amount paid to minors creating each Bitcoin), user adoption and even the rate of popularity through media publications. A good way to monitor the Bitcoin Movement is by using an automated tool like the Bitcoin Pro trading software that has a superior algorithm and has a rate of 99.9 % accuracy rate at predicting price movements.
Secure your Bitcoins
Securing Bitcoins from theft should be the primary concern, especially with instances of various cryptocurrency exchanges having been hacked from time to time to time. No security is secure – especially if it is online – There are different secured hardware wallets available in the market which generate a secured private key for your Bitcoins. They should only be stocked in wallets the one you can control. As Bitcoin is in the webspace, they are vulnerable to stealing and searching and acquiring them again is hard. Invest smartly in Bitcoin security. For this, you are required to understand the concept of hot and cold wallets. Cold wallets are better for storing bitcoins as they work offline. Therefore, it is difficult to hack. In the case of hot wallets, it is easy to access and convenient but vulnerable to cyber theft issues.
Go for an Alternative Email
It is advisable to use a separate new email id while registering for the crypto marker. The risk of a potential data breach is remarkably acute. To overcome this risk, it is highly suggested to create a new email account just for trading that is secured with strong and unique user id and password, and two-factor authentication security. Try to avoid providing any personal information strictly.
The Holy Grail of Diversification
As said, “Don’t put all your eggs in one basket,” This teaching applies in the world of the cryptocurrency market as well. There are many crypto options available in the market. It is always wise to spread the investment across different options. Investing in a single coin may cause disaster as the market is extremely volatile. You may squander all your money if the value of a coin degrades. Using diversification in investment is enormously important to construct a prosperous crypto portfolio.
Analyse the Bearable Loss
Investments come with a risk. Similarly, in the case of bitcoins, risk is involved due to the volatility of the market. If you see this as an opportunity, it is highly advisable to analyse the loss you can bear beforehand. Most of the time things did not go as planned so as in the case of the crypto market. Therefore, it is necessary to limit your investments as per your loss bearing capacity.
Use your Wisdom
Many people are prospecting Crypto Currency as a financial investment option while some are considering it as an over-hyped investment idea. However, if you are convinced to invest and trade in Bitcoins, to be a successful investor in the crypto market, you must avoid such views and use your wisdom instead.
Calculate and analyse your risk, construct a healthy portfolio of various cryptocurrencies, and maintain a constant watch over them to generate wealth and extract profits. Depending on sentiments or what crowd is speculating crypto may lead to a drastic loss. Therefore, maintain a vigilant watch on the portfolio and use your wisdom and knowledge significantly.
Do not fall in the trap of “Pump and Dump”
Do not offer your ears to what communities of traders and financial guru speculate. By this they are seeking to artificially inflate the price and cause the outside traders to buy the coins.
This is commonly known as “pump and dump” and a crypto trader must avert this. This will lead you towards losses, but you may also get fined as this is illegal and prohibited in the crypto market.
Bitcoins are here to stay as per the technical strength indicators. While no one can predict the future, you can surely look at various technical factors affecting the indication of price movement for Bitcoin. Ups and Downs are a part of the trading cycle and ensuring your tokens remain safe, should be the priority for all South Africans looking to invest.