Things You Should Know Before Investing in Crypto for the First Time

The growth of the cryptocurrency market has entered full swing during the past couple of years. Thanks to the decentralized finance revolution and the NFT craze, cryptos have penetrated into the mainstream investor’s mindset. And with financial institutions doubling down on their involvement in this niche, it’s only natural that you might want to partake in this market as well.

However, getting started with cryptocurrency investing is not as straightforward a venture as it may seem. To help you avoid making costly mistakes, we have compiled this article as a guide for first-time crypto investors.

We will attempt to cover all the basics you need to master so that you are successful in your crypto journey. Moreover, we will give some tips on how to assess the viability of cryptocurrencies as an investment, and the factors to watch for to ensure maximum profits.

Where to Begin

Before you even begin investing in your first cryptocurrency, there are a few prerequisites that you will need to fulfill. This will ensure that your crypto experience remains smooth and secure.

Get a Cryptocurrency Wallet

Cryptocurrencies require a special kind of wallet for storage. A cryptocurrency wallet will allow you to store the private keys that will allow you to access and spend your crypto.

There are different types of wallets, covering various uses, including:

• Mobile wallets, which are smartphone apps and are great for smaller quantities of crypto and daily spendings.
• Desktop wallets, which encrypt your keys onto your desktop computer and can be used for larger amounts of crypto storage.
• Hardware wallets, which are the ultimate secure way to manage and store your crypto, as they remain offline at all times. While these devices come at a cost (starting at $50), it’s a small price to pay to ensure the security of your funds.

All in all, while mobile wallets can be handy for daily payments, we recommend that you purchase a hardware wallet for your major holdings.

Select a Trustworthy Crypto Exchange

Your next step in your crypto journey will be to select the exchange that will provide you with your crypto and allow you to trade. There are a few key characteristics an exchange should possess to justify your business:

• Exchanges should have no history of hacks and provide the latest security features available in the industry.
• It’s essential that the exchange offers its services to your country of residence.
• Check which cryptocurrencies the exchange offers and the trading pairs available on it.
• If you are trading often, fees can quickly add up. Compare the fees of various exchanges to see which one suits you best.

After choosing your exchange, make sure you take the necessary steps to secure your funds.

Ensure the Safety of Your Funds

You do need to understand that in crypto, you have full responsibility for your funds. There’s no intermediary that can recover your money in case you get defrauded, so you need to be extra careful.

Follow these tips to make sure you stay on the safe side of things:

• Always use two-factor authentication whenever you log onto crypto exchanges or wallets.
• Use strong passwords, and never use the same password twice.
• Never, in any circumstance, share the private keys to your wallet. Exchanges will never ask you for your private key. If someone does, it’s always a bad actor trying to steal your money.
• Keep multiple copies of your mnemonic phrase that will allow you to recover the contents of your wallet in case of theft or accident.

All of this should ensure that your funds stay as safe as possible at all times.

How to Choose Lucrative Crypto?

Your next step in your crypto journey will be to choose cryptocurrency that you wish to invest in. However, this is usually the most challenging step, as it requires some objectivity and thorough research of the project. Before you invest, make sure you:

• Research the project’s fundamentals. Try to assess whether it brings something new to the table and how it improves on existing technologies.
• Check the team behind the cryptocurrency. Research the members that created the project and their history with similar projects.
• Assess the project’s valuation. Try to assess whether a cryptocurrency is undervalued or overvalued. Compare its fundamentals with the current price and try to assess a realistic price it could reach, considering its total supply.
• Don’t succumb to FOMO (fear of missing out). Always keep a cool head and stick to your research. While it can be tempting to splurge on a coin that is “pumping”, this can be a recipe for disaster.

Being successful in the crypto markets requires discipline and hard work. You will need to follow the news and be able to connect the dots if you want to be profitable in this niche.

Tips to Follow for Safe Investments

While doing proper research is essential, there are some additional guidelines you should follow to maximize your profit-making capabilities. For example, you should:

• Never invest more than you can afford to lose. Cryptocurrencies are volatile, and while they can bring incredible profits, they can drop in value even faster.
• Diversify your portfolio. Don’t “put all your eggs in one basket” – spread out your investment across different coins and tokens. This way, your portfolio’s value will be less dependent on the volatility of a single crypto.
• Learn technical analysis. If you plan on trading regularly, you should learn how to read crypto charts and interpret the meaning of various trading indicators. This should allow you to optimize market entries and exits and provide you with more consistent results.
• Find an investment strategy that suits your risk profile. Do you wish to be a day trader or invest sporadically? How much risk are you willing to take? Try to answer these questions and search for an investment strategy that will suit you best.

With all that in mind, note that cryptocurrencies are high-risk, high-reward assets that won’t suit everyone.

Key Thoughts to Remember

The crypto markets have grown into a huge ecosystem that can be quite daunting for a beginner. However, if you play your cards right, it can be a fruitful and exciting adventure that can bring in dazzling profits. The volatility of cryptocurrencies is a risk that you need to embrace and take advantage of to make profits in this market.

By following some of the tips in this article, you should be on the safe side when investing in crypto. That being said, you should always trust your own judgment and do thorough research before investing.