Cryptocurrencies have revolutionized the financial world and they are still a trending investment. What makes them a hot opportunity to profit is not only the unique technology behind them – but their potential to be traded on exchanges. If you’re looking to invest in cryptocurrency for the first time, read below about 5 essential factors you need to consider before doing so.
- Cryptocurrencies require a rigorous understanding
Because they are very different and still new in comparison with any other asset class – you’ll need to spend more time reading about the virtual coins. Research how they are formed, about the blockchain technology, the security measures you need to take before investing and the technical slangs. Keep in mind that regulations and the market are prone to change very fast – so you need to stay up to date with all the happenings. Luckily, the crypto community is very active on Social Networks such as Facebook and Twitter. Don’t hesitate to join relevant groups or follow informative sources.
- Cryptos are the most volatile digital assets
As you’ve probably suspected, cryptocurrency trading comes with its share of risks, and the most troubling one is their volatility. The price value of a cryptocurrency can drastically increase or decrease over a very short amount of time, which can result in a painful capital loss. It is advisable to remain cautious and test the waters before trading all your life savings. Start with baby steps and practice with a demo account, and then proceed to invest small amounts of money.
- The market doesn’t have a universally accepted regulatory control
Cryptocurrencies have been around for a decade, meaning that they are still very new. Regulatory authorities have not yet formulated a set of universal rules on how cryptocurrencies should work, but certain countries have released official statements. For example, in the United States, the IRS issued a Notice in 2014, saying that “Virtual currency is treated as property for U.S. federal tax purposes”. In other words, cryptocurrencies aren’t treated as currencies, but as properties. However, in many other countries around the world, including Egypt, Morocco, and Saudi Arabia, cryptocurrencies remain illegal and banned. This general ambiguity and lack of regulatory control made it the perfect digital environment for cyber-attacks, hacking and user errors. Make a wise choice and trade with a safe broker! TradeLTD.com is an online investment firm that complies with all international regulations and uses the highest security technologies to protect you and your funds. Apart from that, the broker provides numerous educational resources and an intuitive platform geared with modern tools – just perfect for you to enter the cryptocurrency world in the best possible way.
- There is a bad time and a right time to trade cryptocurrencies
Although the market is active basically all the time, there are only certain moments when you can score big profits. Knowing the most convenient time to either buy or sell is the key to making profits. There aren’t rules; however, there are trends and indicators. Experts say that the best time to buy is when the price of a digital coin has reached a certain amount of stability. When the value is crashing or when the bubble is peaking, it isn’t a wise choice to buy. Pay attention to the bubbles on the cryptocurrency market, because they are very different from the ones you’ve encountered on other financial markets. A 100% surge is considered a bubble on other markets, but in the crypto world, it might be insignificant. In addition, it is equally important to know that every digital currency is different and has its own characteristics. If you do your homework properly, you’ll know when to carry out an execution for the cryptocurrency you’re trading.
- It is important to know the utility of the cryptocurrency you’re trading
You might find this fact a bit funny, but a big inconvenience a lot of cryptocurrency investors face is their perception regarding the utility of digital coins. They end up not knowing why they are trading them or how to use them as a means of payment in real life. It is essential to determine why you are willing to invest in cryptocurrencies and to document if the area you’re living in is crypto-friendly.
The cryptocurrency market is still emerging to a more complete and accepted form – but it is still among the hottest trends in the financial world these days. Many experts see it as a very promising change in the investment world, as well as the world’s economic structure. We’ll have to wait and see! Until then, the above factors will ease your debut on this exciting market and hopefully, will bring you your first profits.