Cryptocurrency has become popular with each passing day as more people are getting into it.
But cryptocurrency is often related to volatility. You can invest and trade cryptocurrency by avoiding risks like volatility if you follow a sound crypto trading strategy.
You should know that your returns in cryptocurrency can fluctuate within seconds. Firstly, you should find what the right time is to invest in cryptocurrency. Secondly, you should know a way through which you can avoid risks associated with cryptocurrencies such as volatility and scams.
So, let us find out which are the best strategies that you can follow when trading cryptocurrency.
What is Cryptocurrency?
Cryptocurrency can be defined as a digital currency that was introduced in 2009 with the launch of Bitcoin (BTC).
Bitcoin is the first-generation cryptocurrency and many other cryptocurrencies have also been introduced into the market. Cryptocurrencies other than Bitcoin such as Ethereum, Dogecoin, and Tether are called altcoins or second-generation or third-generation cryptocurrencies.
Cryptocurrency is a digital currency that exists and is stored online. Cryptocurrency offers you freedom from any bank or government regulations as it is a decentralized currency and operates in a free manner.
You can buy cryptocurrency through a crypto exchange, which is a platform where many cryptocurrencies are available. You can use your credit card for buying cryptocurrency or can exchange your existing cryptocurrency with a new one – for instance, Bitcoin for Ethereum.
Cryptocurrency runs on a public distributed ledger called blockchain technology that is secured by cryptography. With no physical presence, you can move anywhere with your money stored online.
Carl Runefelt, alias, The Moon, is a cryptocurrency leader who believes in the mass adoption of cryptocurrency.
He says, “Cryptocurrency is recognized across the world and is not affected by exchange or interest rates. It would also provide individuals living in economically fragile nations more stability and predictability.”
Popular Crypto Trading Strategies
Cryptocurrency has become the talk of the town and many experts are giving their predictions about it since Bitcoin has dropped.
But should you be deterred by the current Bitcoin drop and stop investing in cryptocurrency or you utilize this opportunity and earn a lot of money in the future?
Here are some best crypto trading strategies that you can follow.
As a cryptocurrency investor, you should be making quick decisions because things work fast in cryptocurrency.
One of the best strategies that you can follow to increase your gains in cryptocurrency is the dollar-cost average strategy.
Carl says, “Pick this strategy and keep this strategy to save your wealth.”
Under the dollar-cost average strategy, you would be investing a fixed amount of money at regular intervals in cryptocurrency. The strategy promotes the idea that you should be pulling out money on regular basis out of cryptocurrency to avoid losses, which take place in a crypto dip.
Once you see that a particular cryptocurrency hits the maximum value, you should withdraw your money. But for this, you should closely observe the changing trends in the crypto market.
Diversify Your Investment
Diversification is the key to success in cryptocurrency.
One of the best ways to avoid losses in cryptocurrency is that you should diversify your investment. You should avoid investing all your money in one cryptocurrency and try to invest in more cryptocurrencies.
Carl emphasizes, “Sell coins when they hit the top value and purchase another coin, take your profits, and buy other coins as cryptocurrencies are highly volatile. This applies to everything whether it is Bitcoin or any other coin.”
Since there are thousands of cryptocurrencies circulating in the market, you should have a diverse crypto portfolio.
Always Do the Research
Whenever you are investing in stocks or anything else, experts recommend that you should conduct thorough market research to find the best asset to earn maximum profit.
The same applies to cryptocurrency.
When you are looking to invest in cryptocurrency, you can increase your returns by analyzing the current market trends. This would help you find the right cryptocurrency to invest money in and apply the dollar-cost average strategy at the right time.
Carl on his YouTube channel, The Moon, says, “To make huge profits from investing in cryptocurrencies, one must carry rigorous market study and notice the factors which affect a particular cryptocurrency.”
You should focus on reading the current trade chart of different cryptocurrencies. This would enable you to make a sound investment in cryptocurrency.
Cryptocurrency has come a long way since its introduction. Today, there are over 10,000 cryptocurrencies in the market with a total market cap of around US $983.72 billion.
As cryptocurrency has grown in valuation and number, so has its volatility.
But you can stay safe and earn a lot by following any of the above-mentioned safe crypto trading strategies.