Beginner’s Guide to Learning the Basic Crypto Investment Strategy

When you are investing, too many strategies will confuse you especially if you are a beginner. It is crucial that you know at least one strategy and make it happen, that is smart options. You have to master one basic strategy to be successful in the crypto market. Cryptocurrencies are basically digital currencies. Since it is a currency, it can be used as a form of exchange.

Introduction to cryptocurrencies

There are different cryptocurrencies in the world. As of April 2018, it came to 1,565. Cryptocurrencies are categorised based on the type. Types include transactional coins, platform coins, utility coins, security coins, and asset-backed tokens. Transactional coins are basically used for transactions; Bitcoins, Litecoin, Monero, and Dash are common examples. Platform coins allow the creation of applications like Ethereum, NEO, and Cardano.

Introduction to cryptocurrencies

The utility tokens, on the other hand, are designed for a particular task. Security tokens do not have an inherent use but companies issue it to raise funds. Lastly, the asset-backed tokens represent the underlying value of assets like fiat currencies and gold; it presents smart options to the investor because it is another way to invest in other assets.

So, what is the strategy?

Now that you know the basics, it is time to know the basic investment strategy. It is called “buy the dips”. This strategy is safe to utilise in a stagnant market – when the trend is going up.

Explaining the “buy the dips” strategy more

“Buying the dip” happens when there has been a significant plunge in the price of a particular cryptocurrency. For investors purchasing cryptocurrency after there has been a plunge, it is like buying it at a discounted price. However, it does not mean that you have to go all in when the price of the currency is going down.

How to do it?

If you consider this, you should purchase incrementally as the prices go down. Aim to buy more as the prices decrease further. You should also wait until the price of the crypto settles before buying – this is to ensure that it shows signs of recovering.

As you go along, you will also begin to understand the importance of a balanced portfolio. While others are focusing on one type of cryptocurrency, you should consider balancing your portfolio based on different types of cryptocurrencies. This is to mitigate your risk. Browse through smart options for reference or inspiration.

Whether it is a traditional or alternative investment, strategies are crucial in the implementation and success of the investment. Do for forget to set your goals before indulging because it will serve as your guide.