Its never too late to start investing in crypto. In fact, it’s probably a bit too early. The markets are dwarfed by other commodities and financial instruments. Yet, the growing interest of what you could call titans of the traditional financial markets shows that there’s more to crypto than meets the eye. Here are some important cryptocurrency investing tips to keep in mind.
It’s tempting to value cryptocurrencies in dollar but many a times it’s best to value virtual currencies in bitcoin. As the primary and most liquid asset in the cryptosphere, bitcoin moves the prices of altcoins. This means its usually best to price alt coins in BTC. Bitcoin is the go-to cryptocurrency in times of slumps. Many alt coins derive their initial value from ICOs and other schemes, after which they are exchanged for BTC which can then be transferred into dollars.
Investment Cycles or Coincidence?
An appreciation of the cycles in which cryptocurrencies move can help to alleviate fears as well as provide insight into potential future price trends. Cryptocurrency, despite the volatility and drama that ensues, follows patterns. Layers of patterns marked by news and sentiments on use cases. Some have cited a rotation that has previously taken place in more than one instance:
- New Money Goes To BTC
- BTC Bubble Pops
- Money Goes To Altcoins
- XRP Bubble Pops
- Money Goes To ETH
- ETH Bubble Pops
- Deep Correction
- BTC at All Time High While Most Altcoins Stay In Correction.
- BTC Dominance Gets Over 50% Again
- Repeat
Having a sense of the general mood of the markets through technical analysis, news, and even social media can reveal a lot. Still, the crypto can easily prove the best “analysis” wrong. A simple hack, new competitors, and even new regulations are enough to put a halt to the dreams of would-be crypto millionaires.
Study the Teams
Studying the teams behind cryptocurrency projects and even exchanges can reveal a lot about the direction of a project. Several projects, due to the lack of regulatory supervision and due diligence have individuals with questionable characters and histories. There’s nothing wrong with a second chance but there could be something wrong with collusion between cryptocurrency projects. A simple review of the twitter profiles of those behind projects and exchanges can reveal more about the type of leadership that could make or break your investment.
It may be a surprise to some that many projects don’t carry out their own due diligence on partnerships. Just recently, Coinbase admitted to a failure in due diligence after its users complained of a new acquisition of an entity consisting of an ex-hacking team with very high political risks.
Mobile Penetration and Distribution Channels
Selling losses in stocks can seem like the right move to make. With crypto, it’s more complicated. The prices are rarely a solid indication of true potential. Bitcoin has shown this. More important is the technological adoption and the channels by which such adoption will take place. Brave and Electroneum are examples of how adoption streams can raise prices. With the digital assets being available on mobile phones, more people (including those who may be new to digital assets) are able to easily access them. The potential for adoption through mobile penetration is simple yet powerful. With time, after cryptocurrencies become more practical and user-friendly, there may be a growing trend in relation to mobile phones.
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Calvin Ebun-Amu is passionate about finance and technology. While studying his bachelor’s degree, he found himself using his spare time to research and write about finance. Calvin is particularly fascinated by economics and risk management. When he’s not writing, he’s reading a book or article on risk and uncertainty by his favourite non-fiction author, Nassim Nicholas Taleb. Calvin has a bachelors degree in law and a post-graduate diploma in business.