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How to Manage Crypto Investing Risks for New Investors
Feature, Finance

How to Manage Crypto Investing Risks for New Investors

You hear crypto today and the first few phrases that come to your mind might sound like, “how to buy cryptocurrency”, “how to buy bitcoin”, “best clubs to invest in 2021”, “how to mine cryptocurrency”. If you take a survey of the most popular cryptocurrency-related searches, a popular theme you could come across would be based on investing in cryptocurrency. 

It’s in the news and social media everywhere, with people making massive profits from several crypto assets and investments. It’s painful to be left out and this makes it easy to dive into investments, without fully understanding how to invest, and the important risk management to understand that can minimize losses. This article will be educating you on how to manage risks when you finally decide to invest in crypto. 

HOW CAN YOU INVEST IN CRYPTO?

Since the appearance of bitcoin in 2009, hundreds and thousands of different cryptocurrencies have emerged from the growing crypto ecosystem which has an estimated market capitalization of two trillion dollars. Although Bitcoin remains the most dominant, there are still hundreds of altcoins that are available to both amateur and professional investors. 

There is a large market of crypto assets available for every form of investment. The difference between a record of losses, and that of massive gains might just be a guide on how to approach crypto investments to both new and old investors:

LIMIT THE SIZE OF CRYPTOCURRENCY INVESTMENTS IN YOUR FINANCIAL PORTFOLIO:

As tempting as the possible returns from a crypto investment might be, it’s extremely important to set limits to how much you can invest. It’s highly recommended that your crypto investments should not be more than 10% of your total financial portfolio. Crypto is still in its early stages and still extremely volatile. It is so easy to lose so much in a very short period when dealing with crypto. In summary, only invest what you can afford to lose. 

DON’T PICK EVERY CRYPTOCURRENCY YOU SEE:

As much as you can, avoid picking every cookie in the pot. The crypto space has thousands of coins and more are still getting added every day. It’s recommended to new investors to always keep things simple, stick to a choice list of coins, and always “Do your own research (DYOR)” before you buy a new coin. 

CHOOSE A REPUTABLE SOURCE TO BUY YOUR CRYPTOCURRENCY:

Despite the global developments in the crypto space, there are still significant government bans in various countries. It’s important to buy cryptocurrency in India using exchanges that are legalized in the country like Remitano. 

STORE AND SECURE YOUR CRYPTOCURRENCY:

After buying your cryptocurrency from verified channels, the next step is to store and secure it from attackers. There are several types of wallets available for storing cryptocurrency: hardware wallets, desktop wallets, and mobile wallets depending on your preference. Crypto wallets have both a public key and a private key for security. When using exchanges like Binance, users only have their public key – wallet address while their private key is stored and protected by the exchanges. Decentralized wallets provide improved privacy, and users have access to both their public and private keys. You can easily create a crypto wallet in less than 5 minutes on Remitano.

RISKS YOU SHOULD WATCH OUT FOR WHEN YOU INVEST IN CRYPTO:

With every investment comes risk but with proper risk management, maximal profit is achievable. The risks associated with crypto are somewhat similar to that of any other investment and this section will be pointing out the ones every investor should watch out for:

  • EXTREME VOLATILITY: The volatility of the crypto market is both a blessing and a curse to investors. The fluctuations in the market provide opportunities for making profits to traders but it also leaves them exposed to massive losses. For example, between January 2021 and April 2021, the price of Bitcoin rose from $33,000 to hit an all-time high of $63,000. Also, bitcoin dropped drastically from its all-time high to as low as $30,000 within the first three weeks of May. The same volatility that was a blessing to early investors was an eyesore to new investors.  
  • FRAUD AND THEFT: Cryptocurrencies were created to be fully decentralized – an open, unregulated currency that is open to all. This lack of regulation leaves the crypto community open to fraudulent persons and their activities. Do not trust anyone with your wallet keys and always research before buying any coin or token. 
  • HEAVY RELIANCE ON TECHNOLOGY: The blockchain, which supports cryptocurrency, is built on the internet. Bitcoin is literally internet money, and trading and mining coins require special software and hardware. This reliance on the technology places a serious limitation on cryptocurrencies, as your assets can be inaccessible in remote areas. 
  • LIMITED USAGE: Crypto might be the future of money as we know it but there’s still a limited number of sites where it’s accepted as a means of exchange. The blockchain ecosystem is constantly evolving to improve the functionality of crypto and enable more practical applications of the technology. As a new investor, numerous coins promise future applications, it’s essential to do adequate research before buying.

As a new investor looking to buy bitcoin in India, it’s important to remain extra careful to avoid irrational losses. It’s essential to have a deep understanding of risk management in cryptocurrency investment and maintain a perfect balance between fear and greed. While greed pushes you to ape into promising coins with so much prospect, fear will keep you in check from losing your money in search of the next moon token.

As an early investor, it’s extremely essential to ensure that cryptocurrencies do not make up more than 10% of your financial portfolio. Due to the volatility and fluctuations with cryptocurrency, you could see your crypto assets lose value faster than you can respond.

The market is filled with fraudsters and opportunists advertising promises too good to be true, and hackers who are desperate for the next wallet they can steal from. It’s encouraged that you only buy cryptocurrency from verified exchanges such as Remitano, and store your private wallet keys away from strangers.

Lastly, Do your own research! before you buy any coin or token. It’s important to research thoroughly before you invest in cryptocurrencies that promise massive returns. Research can also assist you to separate coins that are expected to give short-term profits from those which are long-term holdings.

Also, It is important to know that Remitano is offering a coin-back policy for both new and current crypto users on the platform. With each coin swap transaction on the exchange, users have the opportunity to receive a refund of up to thousands of dollars and a series of special incentives

There are many risk-free ways to make money in the crypto niche and one of them is through Remitano. Remitano crypto exchange is allowing crypto enthusiasts in India to earn free coins by mining RENEC on their mobile phones. 

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