The cryptocurrency is under the spotlight right after its introduction, but the preceding year of the pandemic has been a crucial one in this regard. The traditional market was locked up to avoid disease spreading, resulting in all eyes on the digital market, register today. Many people put their money into it. A few of them came off with flying colors, while some of them landed in hot waters. The people who lost their money would have saved themselves from this loss had they followed some investing strategies. This article discusses experts’ advice about the best investing strategies to gain potential benefits from cryptocurrency.
Strategy # 1: Using a blend of hot and cold wallets
One of the experts of Polka Dot platforms suggests using a blend of hot and cold wallets. Hot wallets are referred to as online wallets, while cold wallets are termed as offline wallets, in the form of hardware, drive, etc. A hot wallet is always prone to scammers’ attacks. So, it is suggested to store nearly 80% of your digital cash in a cold wallet and the rest of it in a hot wallet. The money kept in a hot wallet can be used for instant trading or exchange on any software. For long-term strategies, choose a cold wallet, and for short-term movements, go for a hot wallet.
Strategy # 2: Measuring the trading volume and calculating the liquidity rate
It is one of the most significant steps in the investment strategies of crypto. Experts insist that you cannot rely on the market for your decision. Never buy a digital coin and keep waiting for it. Instead, look out for trading volume. The currency that is highly traded in the past weeks should be selected for capitalizing money. A high trafficked currency will always give potential gains. Its price increases regularly. So, a high-traded currency must be chosen to commence trading as it will benefit the investor to a great extent.
Strategy # 3: Manage the volatility risk
Volatility in the decentralized financial market refers to sudden price swings. The value of digital cash changes instantly, resulting in high profits or considerable losses. Daily volatility is not risky, but high price surges can be dangerous for investors. Healthy volatility, on a daily basis, is suitable for short-term traders as they invest for a bit of period and encash it right after the rate escalation. Therefore, the volatility risk can be managed by keeping a bird’s eye on the trading volume. It can also be controlled by keeping your financial goals under consideration.
Strategy # 4: Determine your risk tolerance and invest the money you are ready to lose
If you are interested in investing your money in the digital market, then this is the best advice for you. By defining your risk tolerance, you can save yourself from big troubles. Risk tolerance can be determined by thinking of an amount to capitalize. If you are in fear of losing it, then you should reduce it. Keep on reducing the sum of capital until your fear diminishes. Investing this much money will help you in several ways. If the value increases, you will have profit. If it decreases, then you will not be left empty-handed. This is how this suggestion by an expert can help you in banishing misfortune.
Strategy # 5: Do not gamble with the same kind of coins
There are many digital coins, such as Bitcoin, Ether, Litecoin etc., in the digital market. Experts insist on not putting all of your eggs in one basket. Instead, one must opt-out for putting money into different coins so that with an increase in any of the coin’s value, you will be benefitted. The market is full of digital currencies, so one can quickly lookout for the best opportunities to invest in.
It is indeed said that it is better to be safe than sorry. Playing safe in the digital market can lead you to no regrets in future. The aforementioned strategies are pretty simple yet precisely helpful and can save investors from considerable losses. If you are looking to invest in the digital market, you must consider these five valuable experts’ advice.