3 smart ways to invest in Cryptocurrency

2017 was the rush of the capital of cryptocurrency markets, and there is no reason that 2018 will be any different therefore the millennials are keeping the crazy flourishing.

A recent survey conducted by Blockchain capital has said, 30% of those who are in the 18 to 34 age range would invest $1,000 in Bitcoin rather than invest $1,000 in government stocks or bonds. The same study also points that 43% of millennials have known about Bitcoin, compared with 15% identifying those aged 65 and up.

Ignoring trading cryptocurrencies by the millennial is hard. However, they are not only people who are interested in this market. The competition for the coin is expected to become more robust in 2018 as new players enter the domain.

It is safe to say this year more institutional investors are going to start trading cryptocurrencies, especially Bitcoin. Despite the high price at the moment the bitcoin market already faces a significant supply and demand imbalance.

According to an ex-hedge fund trader and co-founder of CoinFi, Timothy Tam, as well as the cryptocurrency traders advanced market intelligence platform, it seems the existing equation may force prices even higher earlier. He explained that “There’s limited supply because, aside from the fact that there will only ever be 21 million Bitcoins in circulation, most of the holders of Bitcoin are long terms holders. The demand, on the other hand, keeps soaring.”

Bitcoin is not the only investment-worthy coin on the market yet. Litecoin, Ripple and Ethereum prices are keep climbing up also. If you are interested in investing in cryptocurrencies, See beneath essential tips how to do it the right way.

1. You should be Beware of the bots

As financial markets are prone to speculations, the cryptocurrency trading is no the exception. Some “savvy” players who are using bots nowadays to manipulate the markets and inflate the coin prices artificially.

Timothy Tam figures out that bots can severely hamper your investment. Neo – a Chinese alternative to Ethereum – went from $34 to $3.74 in a matter of seconds in 2017, before returning on $34 mark. Trading bots made the price dip artificially, which caused a flash crash for many investors. As a result, the organizing party mostly benefited from this.

Identifying the trading bot, however, it difficult to understand. You have to cautiously monitor and make your self-learned the signals of market trading and observe and identify those who are the unusual traders.

As per Tam, the two most significant indicators of bot market manipulations are volume and price momentum. As an investor, you should observe these two parameters and inform co-ordinated buy patterns during an early stage. Alternatively, you can use a cryptocurrency trading analytics platform which will do “the watch” for you.

2. Based on your risk tolerance allocate your assets

First and foremost, To avoid financial collapses, you should set a stop-loss level. A stop loss is the end point of loss where the trade will get closed automatically.

Next step, you should keep that number in mind, which need to build up coin portfolio. Consider it as managing the fund. The highest percentage should allocate to the least volatile coins, with the smallest percent given to the least stable, yet potentially higher returning currency.

Tam said “One should keep in mind that the price correlation between the Bitcoin and the most Altcoins to account for volatile market conditions,” “What we noticed at ConFi is that the Bitcoin and the most of the other coins have an opposite relationship in their value. Once there is a dip in the Bitcoin price, everyone rushes into buying other coins and vice versa, This volatility can cause serious losses for inexperienced investors”.

Your strategy should keep an eye on the market signals always and use those insights to tailor your trading strategy on a daily basis.

3. Resist FOMO as well as overtrading

Tam says that both experienced investors and their novice peers are often prone to these two mistakes that come together.

First of all, there is the trading FOMO – fear of missing out on buying the new misleading coin which caused losing some potential benefits. Investors sometimes feel urged to buy a particular coin and end up allocating a lot of over-hyped and even illiquid assets when the price is being pumped up. It should remember the Neo case –bots may be artificially inflating the coin price, and therefore the shining coin quickly loses its value.

Next, you should be aware of overtrading – you should immediately sell your coins if you see any small price spike like 10%-20%. In most of the cases, it could happen temporary which encourage to sell coins of smaller currency holders, before the price goes up further.

Trading is a particular asset just because it is in profit is not an executable long-term strategy as it can decrease ones future gains. If the coin price boosts ten times over a year, 400 percent gain initially made by someone that will wipe out an 80 percent loss. Furthermore, overtrading will result in a significant chunk of someone assets being exhausted by exchange fees.

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