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Top 5 Tips For New Bitcoin Investors

Top 5 Tips For New Bitcoin Investors


Investing in bitcoins can be quite intimidating especially if you are a newbie in the industry. Just like you may need a dissertation team to help you with your research, you also need financial consultants to guide you through the process of investing in Bitcoins. Going alone may lead you into big mistakes that may have adverse effects on your life. The challenge is that it may be impossible to reverse some of the mistakes that you make.

This article analyzes some of the top tips for new Bitcoin investors. Starting on Bitcoin investment is equally tough, and you are like a student who is looking for custom term paper writing. You need to do a lot of research online and from other sources before you try to venture into this course. Learning is a continuous process, and you can go by yourself into a Bitcoin investment once you have honed your skills. Let’s take some time to look at some of the secrets that you need to know as a new investor in the Bitcoin industry.

Do A Lot Of Research

The first thing that you need to do if you are an investor in Bitcoin is doing a lot of research. Pawel Kuskowski, the CEO and Co-founder of Confirm, which is a regulatory and blockchain technology argues that you will be better off once you have a deeper understanding of any matter. According to him, bitcoin offers rare and unique opportunities and you have to give it the required treatment. Due to this, several experts encourage newbies to dive into the underlying technology of bitcoin.

According to Jacob Eloosoff, the fund manager for crypto, anyone who has a technical bend whatsoever should take ten minutes to read through the original Satoshi White paper of 2008. The document only has eight pages which are an inspiring and legible work of the genius. The truth of the matter is that investing in tokens or crypto coins remains to be highly speculative and the crypto market is largely unregulated. You need to hope for the best but prepare for the worst. Several people have lost their entire investment by investing in Bitcoins. Likewise, we have people who have lost their entire investment after investing in this industry.

The CEO and founder of Wireline, Lucas Geiger, provided the same guidance. According to him, all investors must ensure that they have a strong grasp of the blockchain technology. You need to have a clear understanding of the underlying distribution ledger system for all digital currencies. It may seem to be an obvious fact, but you need to know that it takes time before you can fully understand the operation of the blockchain technology. The challenge is that most new investors overlook this point when making their decisions.

If you don’t have an understanding of how the blockchain system stores its data securely, then you are making uninformed investment decisions. You must know how these coins operate before you make a decision. Find a trusted resource or person that can respond to any of your questions. The most important thing is to practice a lot of caution while investing in these currencies. 

Go Ahead With A Lot of Caution

The risk is an inherent factor in any investment and Bitcoin is not an exemption. The technology is still in the development face in comparison to other similar markets as the stocks and bonds. Investment in Bitcoins is risky, and you should only put there the amount that you are willing to lose. Some experts in this industry can provide specific guidance in the industry. It's wise to start small by investing a small fraction of your investment. Decide on your entry point and stick to it instead of chasing Bitcoin prices. You need to practice a lot of patience and allow the Bitcoin price to get to you. You should also avoid buying all your Bitcoin at the same time. Give yourself sometime before you can invest more in the Bitcoins.

Diversify Effectively

Bitcoins have been producing some impressive gains in the past years. Some of the success stories that you read online can motivate you to put all your eggs in one basket. However, this is a wrong approach to investment as it can lead you to the starting point. Put some of your investments in more traditional assets like bonds and stocks. Diversification allows you to create a portfolio where a reduction in a single component will lead to again in the other one. The implication is that you still stand a chance to benefit even when the prices of Bitcoins are falling. 

t’s the best way to hedge against the volatility that is characteristic of major markets. Diversification is one of the best risk management techniques that are available for any investor. The market also has several cryptocurrencies that you can invest in apart from the Bitcoins. Undertake detailed research on the business model for any token or coin that you wish to purchase. Some of the elements to consider include the product maturity, product plans, marketing plans, original technology, leadership team pedigree, and the current funding. The most important thing is to identify safe places for storing your wealth.


Keep Your Valuable Coins in Wallets


Exchanges are an excellent place for the purchase of digital currencies, but they are not the best storage points. It is very dangerous to store your coins on an exchange because most of them have been susceptible to hacking. Once your but your coins on an exchange, you need to move them to a safe digital wallet for storage. You can also create a paper wallet or move them to any of the available mobile wallets. 

As an investor, you can use both cold wallets (offline) and hot wallets (online) to further mitigate against risks. It’s similar to the way you store some cash in your bank account, some in the form of cash, and in other safe valuables. You have to make sure that your currencies are stored safely. Crypto markets tend to be so volatile and you should not take any chances.

Get Prepared For Volatility


One of the top characteristics of the digital currency is that they are notoriously volatile. The good thing is that investors have several strategies that they can implement to manage the unpredictable nature of digital currencies. One of these strategies is diversification as discussed in the earlier section of this article. The other strategy that financial gurus advocate for is buying and holding. 

In case you buy your bitcoins, and you realize that they are underperforming, all you need to do is keep them until the performance of the market improves. This explains why you need to hold part of your assets in other markets. Passive investment is not only inexpensive but also simple. It significantly reduces the trading feed hence reducing the costs of operation.

Conclusion


Investment in Bitcoins is a highly profitable venture that can turn out to be very risky. The above five tips will help you to make an educated decision. The most important thing is to mitigate against risk as you aspire to get high returns. Make sure you seek professional advice especially if you are new in this industry.
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