Investing in highly volatile bitcoins and other cryptocurrencies is risky business. These currencies are all electronic or virtual in nature, and thus have no physical presence. They dont even have intrinsic value. However, no one can deny that right now these cryptocurrencies are extremely valuable and those who invested in the early days, and held on to their investments, are living the high life now as multi-millionaires, and even billionaires!
If you want to be like these wise investors sometime in the future, then follow these 4 investing strategies to increase your chances for success.
1 Prepare For Volatility
Its basically a given for cryptocurrencies that they are going to be extremely volatile. One minute the price is sitting at 5 digits, and the next its at 4 or even 3 digits! Its absolutely unpredictable, and if you dont take its volatility seriously, you could get in a lot of trouble. You could panic and sell off your crypto so you can minimize your loss.
However, if youve braced yourself for scenarios like this, then youd probably just shut down your computer, or turn off your TV, and lie down and sleep off your doubts. Tomorrow is a different day, the price could go back up, and all will be fine with the world. Being prepared for volatility is tough, but its definitely doable.
2 Proceed With Caution
Do your research before you start investing in bitcoins and other cryptocurrencies. When youre dealing with hard-earned money, you dont want to lose everything in one day. Youre investing to make a profit sometime in the future. Dont go all in without studying what youre putting your money into.
3 Diversify Your Portfolio
Dont put all your eggs in one basket, so to speak. Dont just invest in bitcoins. If possible, invest in other cryptocurrencies as well as traditional assets like stocks, bonds, and mutual funds. At least if bitcoin prices drop, then youre not going to be totally in the red. Your other investments will help keep you afloat.
4 Store Your Virtual Coins In Cold Wallets
Investing is a long-term game, and it is not advisable to keep your cryptocurrencies in online wallets such as your exchanges wallet, or even your mobile app wallet. Keep your private keys in cold wallets such as paper or hardware wallets since these arent connected to the Internet. You can keep small amounts in your online wallets, but the bulk of your investments should be offline.