Jan 23: Cryptocurrencies have taken over the financial industry in 2021. Thanks to the recent success that Bitcoin had, the whole crypto industry has risen to a whole new level, and research shows that there may be as many as 7 million crypto users in the world.
The market is now well-developed, and thousands of traders register with each passing day. With that being said, we wanted to share a few interesting things to consider when investing in cryptocurrencies, as they can help you achieve your goal. Let's start diving into the details.
Stablecoins or Highly Volatile Cryptocurrencies?
There are two forms of cryptocurrencies – stablecoins and highly volatile cryptocurrencies. If your goal is to make a profit, then you should invest in highly volatile cryptocurrencies. Why? Because even though they are subject to drops in value, they can also spike and reach thousands of dollars. Take a look at Bitcoin and Ethereum. These two cryptocurrencies are currently valued at around $65,236 and $4,713, respectively.
But, if your goal is to trade online and pay for services or products, then you should resort to stablecoins. As the name itself suggests, stablecoins are not affected by volatility, and their value rarely changes. Two of the most popular stablecoins on the market are USD Coin and Tether.
The Trading Site
A trading site is a marketplace where you can connect with other traders and purchase your desired cryptocurrencies. When choosing a platform, it is important to research and select reputable trading sites. One good example is Bitcoin Trader app, as it supports numerous cryptocurrencies and has a high profitability rate.
The higher the profitability rate and the higher the number of accepted cryptocurrencies is, the better the trading platform is. One additional piece of advice that we can give you is to take some time and read a few user and expert reviews. Reviews are a great way to gain inside knowledge on how your chosen trading site operates and whether its users are pleased with it or not.
If It's Too Good to Be True, Then it Probably Is
Often, you might find articles or sites where you are guaranteed a solid profit or have other offers that just sound too good to be true. We hate to tell you this, but if it is too good to be true, then it is probably some sort of a scam or a false statement.
That is why you should always take some time to analyze the situation and to remember to think rationally rather than emotionally. Decisions based on emotions often lead to mistakes, whereas rational decisions are brought with a calm head.
Speaking of offers that are too good to be true, it is worth mentioning the concept of FOMO. Fear of Missing Out is a common problem for novice traders who deal with highly volatile cryptocurrencies. Often, when these cryptocurrencies experience a sudden rise, novice traders will invest in them, thinking that the chance is too good to pass. But instead of selling their assets and making money, the value of the cryptocurrency drops, and they end up losing money. This is also an emotional decision that can cost you a lot of money, which is why you need to be careful.
Create Emergency Funds
Just as any other investment, there is a certain risk factor included in investing in cryptocurrencies. That means that there is a chance that you will not end up with a profit. That is why it is important to create an emergency fund that will keep you afloat until you get back on your feet. Emergency funds will also prevent you from going broke, which is why they have a massive importance.