Many people have made millions of dollars in the crypto space and the big question on many people's minds is - Is crypto still a good investment? Should you invest in crypto?
In my opinion, the answer is a definitive 'YES'.
However, before getting started in crypto investing, you need to be aware of these 5 important rules before getting started.
5 Rules Before making an Investment in Crypto:
Whether you are new to the crypto space or have been here for a while, there are 5 core rules to consider before investing in cryptocurrency.
1 - Know Your Investing Style & Risk Profile
Before starting any investment, it's important to be clear about your goals, objectives, and the amount of risk you are willing and able to make. Cryptocurrency differs from other investments in that it is highly volatile. This volatility can make you massive profits but can also result in massive losses too.
There are ways to reduce your exposure to risk within the crypto space (such as investing in stablecoins) however the downside is the lack of price volatility.
What type of Cryptocurrency Investor are you?
To better gauge your investing style, it's important to know what type of cryptocurrency you are. There are 5 main types of cryptocurrency investors:
- The Newbie
- The Trend Follower
- The HODLer
- The Early Adopter
- The Trader
For a full explanation of these types of cryptocurrency investors and how they can determine your success (and profit) in cryptocurrency, check out this article:
Richard Knight
2 - Know The Market Cycle
The biggest mistake most crypto investors make when getting into crypto is not knowing the prevailing market cycle. The market cycle to a large part determines when you should be buying (and accumulating crypto) and when you should be selling your crypto.
What most individuals are not aware of is the crypto market is highly cyclical - that is approximatly, every four years the crypto market goes through a complete market cycle.
As an investor, you should be buying during the accumulation phase and selling your crypto assets during the distribution phase of the cycle (for most investors, unless you are day trading).
For a full explanation of the phases of the Crypto Market Cycle and how to maximize your profits, see the article below:
Richard Knight
3 - Know What You Are Investing In
If you have been in the cryptocurrency space for any period of time, you have likely heard of the expression "DYOR", which refers to "Do Your Own Research".
The crypto space is filled with many influencers and scams, most often referred to as "Pump and Dump" schemes and to be successful in this space it is important to be able to develop the skills and ability to determine whether a cryptocurrency project is worth investing into.
If you are new to cryptocurrency, check out our article How to Evaluate a cryptocurrency, which highlights 7 simple-to-follow steps in determining the quality of a cryptocurrency project before making an investment.
Richard Knight
4 - Know when to Buy
So, you have found the project you would like to buy into. The next big question is knowing when to buy and understanding the physiological factors impacting your choice to buy (or sell), often referred to as FOMO (Fear of missing out) and FUD (Fear, Uncertainty and Doubt).
As a crypto investor, it's important to know and understand Crypto Chart Patterns - similar to stock chart patterns, they help investors to determine the most probable future price movement and can help in determining the best time to buy and sell your cryptocurrency.
Richard Knight
4 - Manage Your Risk
A very common phrase within the crypto space is "Never invest more than you can lose". This is a good philosophy to follow when investing in cryptocurrency. This space is still very new, and unregulated and there is the potential for many scammy projects. Managing your risk by only investing a small percentage of your portfolio into crypto is a good way to reduce the risk while still being in the crypto market.
5 - Know when to Sell - Taking Profit
Lastly, the most important skill in cryptocurrency investing is knowing when to sell your crypto assets. It's this step that many people get wrong and while there is a group of cryptocurrency investors called "HODLers" at some point in time, they will sell.
If you have read up to this point in the article, you will already know the best time to sell your crypto assets is during the distribution phase of the crypto market cycle.
What Are The Most Profitable Crypto Investments?
The most profitable cryptocurrency investments come from the class of cryptocurrencies known as low-market cap cryptos.
Low market cap cryptocurrencies which have 10x-100x growth potential are typically referred to as Low Cap Gems.
Richard Knight
If you would like to learn more about these types of investments, subscribe to our crypto investor newsletter.
What is the Best Crypto to Buy Now?
Every month we update our listing of the best crypto to buy now which includes up to ten cryptocurrencies that we believe have good short-term and long-term growth potential.
Richard Knight
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