Bet on cryptocurrencies? Be aware of these risks before committing your hard-earned money

This is probably an obsession of the highest order. Despite the extreme volatility inherent in their nature, regulatory obstacles, scams, questions raised by fund managers worldwide about their future as an asset class, and other factors, global interest in cryptocurrencies is nearly unprecedented. Otherwise, it sounds crazy that something super speculative, purely digital, and only a decade or so old company has a market cap that, according to available data, is higher than that of legacy financial services companies like Visa, JPMorgan Chase, Mastercard, and more at CompaniesMarketCap. “It’s a store of value like gold, which is more religion than the solution to any problem,” billionaire entrepreneur Mark Cuban told Forbes in December last year. While it’s true that bitcoin and other cryptocurrencies can make you filthy rich, it’s no surprise if you lose all your money. So, before anticipating a possible windfall, what are the main risks associated with investing in cryptos?

Different Strategies — Strategies to make money can vary from buying and holding cryptocurrencies, which represent enterprise solution platforms and promise robust adoption for various enterprise use cases and cryptocurrencies, which are popular and have a large following backed by some fundamentals supporting them Giving momentum, Ashish Mehta, co-founder of crypto trading platform DigitX to Financial Express Online.

Detailed Study – Important pointers to keep in mind include a detailed study of the projects to assess their future value, track communities and the growth of community participants on social media platforms like Twitter, Reddit, Medium, etc pursue, said Mehta. In addition, following and investing according to the chatter flow related to cryptocurrencies on social media and various community circles related to cryptocurrency investing etc. is also important.

Investing and Dollar Cost Average (DCA) – The crypto market is very volatile and therefore investors should only invest money that they can afford to lose. Do not invest with debt or take leveraged positions. When investing, use the DCA methodology to spread investments over multiple weeks/months to ensure you get a better entry price (on average), Vikram Subburaj, co-founder and CEO of Giottus Cryptocurrency Exchange told Financial Express Online.

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Your Portfolio – There are hundreds of coins to invest in within the crypto ecosystem. However, not many survive a four-year cycle. It’s always wise to start with the high caps (top 20 large-cap coins like Bitcoin, Ethereum, etc.), Subburaj added. In fact, newcomers should only start investing in Bitcoin and Ethereum before understanding the market cycle and diversifying investments into other coins/tokens, he said. The two largest currently have more than 60 percent share of the cryptocurrency market.

Don’t be a trader – Trading carries a high level of risk as only 10 percent of professional traders benefit from frequent trades. Minimize your trades as much as possible, Subburaj said. It also implies that you are not buying on FOMO (fear of missing out) or selling on FUD (fear, uncertainty and doubt).

HODL with plan – HODL (Hold your investment) is a popular piece of advice for all crypto newbies. While it’s always good to have a longer-term view of your investments, investors should take some profits (and initial capital) along the way. This will foster a robust growth and earnings cycle for the investor.

The suggestions/recommendations around cryptocurrencies in this story come from the respective commenter. Financial Express Online accepts no responsibility for the advice they provide. Please consult your financial advisor before trading/investing in cryptocurrencies.

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