Are you interested in investing in Bitcoin? Bitcoin has been around since 2009 when it began trading at US$0.0008, but it did not gain much attention till 2017 when its price soared to nearly $20,000. Its price reached an all-time high again in 2021, as values exceeded over $65,000.
At the moment, an estimated 106 million people worldwide use different types of crypto coin trade exchange to buy and sell Bitcoin and other cryptocurrencies, so it’s safe to say that this is a great time to join the bandwagon.
But is trading Bitcoin actually a smart move? More importantly, is it safe? In order to invest in Bitcoin successfully, you need to trade smartly and safely. In this post, we’re offering 5 tips that will make your crypto trading journey easy and stress-free.
1. Beware of Frauds and Scams
The fact that there’s no central exchange means that the Bitcoin market has fewer regulations. As a result, the chances of scams and frauds are quite high. According to reports, scammers around the world took a record $14 billion in cryptocurrency in 2021, which represents a 516% increase from 2020.
Fraudulent exchanges, wallets, apps, and emails that offer excellent returns are not uncommon and if you are not careful, you can end up with an empty wallet. So, when you are overwhelmed by too much information about Bitcoin trading, take a step back and try to assess the project or coin trade exchange realistically. How many users does it have? Does it offer security measures and insurance policies? Avoid investors or platforms that promise you fantastic results in no time.
2. Have a Clear Goal and Strategy
When making a decision to invest in Bitcoin, it shouldn’t be simply because everyone else is doing it. You need to be clear about why you’d like to do it. Are you planning to carry out transactions using this cryptocurrency? Or maybe you’re hoping it will increase in value over time? Be sure to have planned entry and exit points and know the basics of blockchains.
Setting clear goals is important to keep you focused on the things you want to accomplish and prevent you from flailing around in every direction.
3. Don’t Invest Large Sums
The crypto world is highly volatile, so you need to be very careful when investing your money. Experts recommend that you should invest a sum you’re not afraid of losing; for instance 1% to 5% of your investing capital. By making a smart investment, you are making sure you won’t be completely destroyed even if you do suffer loss.
If you’re buying Bitcoin for the first time, you’ll need to use regular money, i.e. fiat currencies. More experienced investors might choose to trade some of their existing crypto holdings for another type of cryptocurrency; for example, Bitcoin for Ethereum.
4. Select a Safe Wallet
When you buy your first Bitcoins, you need to decide where to put them. A Bitcoin wallet acts as a secure digital vault but also as an app where you can manage your Bitcoin holdings. A good Bitcoin wallet enables you to receive and send Bitcoin, trade between cryptocurrencies, get market updates and news, etc.
Currently, there are five basic kinds of crypto wallets: cold wallets, hot wallets, decentralized wallets, hosted wallets, and paper wallets. There are also wallets that only support Bitcoin, as well as those that support more than one kind of digital asset.
As you can see, many options are available, so you’ll need to take into consideration different functionalities and features such as reputation, security, and fee customization when choosing the one that best suits your needs.
5. Automate Your Bitcoin Purchases
Just as with regular stocks and shares, it can be helpful to automate your Bitcoin purchases. Most crypto exchanges like Gemini and Coinbase allow you to set up recurring buys, i.e. purchase a fixed amount of your preferred cryptocurrency every month; for instance, $200 worth of Bitcoin.
The advantage of automating your crypto purchases is that it takes the stress out of trying to time the market. Through consistent investments at periodic intervals, you’ll be able to gradually grow your Bitcoin wealth over time.
Regardless of the type of Bitcoin trading strategy you decide to adopt, you need to place risk management and security at its core. Use the above-listed tips alongside other trusted resources to make sure you have a good grasp of the crypto market and its pitfalls, and give yourself the best chance of becoming a successful Bitcoin trader.