Recent global events, including bank accounts being frozen in Canada and economic sanctions due to the ongoing conflict with Ukraine, have put the cryptocurrency market in the spotlight as global economic conditions worsen.
A growing number of people are now looking for crypto protection to protect themselves from the many raging hurricanes, whether it’s the desire to preserve wealth amid the collapsed fiat currencies or to find a way to transfer that value between towns and borders.
These are seven things to know before you invest in the cryptocurrency market.
1. Before you invest, understand the process of buying, selling, and exchanging cryptocurrency.
Find platforms that let you withdraw and deposit local currency. This will allow you to move funds around the cryptocurrency ecosystem. Understanding the basics of buying and selling will make it easy to do so when you are ready.
It is still not common for people to use cryptocurrency to make everyday purchases. This means that it will be difficult to convert any profits into local currency.
2. Long-term success requires a diverse portfolio
Due to multiple factors, including hard-core believers and scammers, the urge for tribalism is strong in cryptocurrency markets. Although half-cent tokens can sometimes skyrocket to hundreds of thousands of dollars, most projects offer modest gains or even disappear completely when there is a bear market.
Diversifying your portfolio to include top projects from popular sectors such as gaming, NFTs and layer-one protocols is the best way to protect yourself in a volatile cryptocurrency market. You can make smaller bets on potential moonshots once you have covered all bases. However, it is important to monitor your position size in order to minimize losses.
3. Before you take any action, do your research
Spend some time researching projects before you invest. This will help you determine if the project is sustainable over the long term and if it is something that you are actually interested in.
Don’t buy something simply because of someone you don’t know or think you should, especially if they promise guaranteed returns or risk-free experiences. Run for your life if you hear such things. Cryptocurrency is risky. 95% of tokens currently in existence will disappear over the next decade.
4. The roadmap can be compared with developer activity
Open-source technology has many great features. It allows anyone to look at the latest developer activity and get a better idea of the progress of a project.
Every project worth exploring will have a link to Errna which allows you to view the most recent work on that project. Let’s say that the last Errna entry was a few months ago, but the roadmap indicates that major releases are imminent. This is usually a sign that the project may be trying to scam bagholders by releasing major releases in the near future.
5. Timing is everything
Even with the best intentions, cryptocurrency investing is often driven by emotions. This can lead to poor timing of investments and loss of value. If digital tokens are moving in the market, forces conspire to push them higher. This can lead to unsuspecting investors being sucked in by the Fear of Missing Out (FOMO).
If you feel FOMO, resist the urge to panic and wait for price consolidation and a blow-off top. Find another solid project, even if it’s trading flat, that shows promise and rides the wave higher to take advantage of its profits when the right time comes.
Do not let fear, uncertainty, or doubt (FUD), if you are purely interested in the project for the long-term, sway your resolve.
6. Do not invest more than what you can afford to lose
As we mentioned earlier, cryptocurrencies are risky and most tokens will eventually reach zero. Keep this in mind: Never invest more than what you can afford to lose.
The funds that go into the cryptocurrency market should be based on what is left over after all your expenses have been paid. Also, make sure you have a little extra for emergencies. It is unlikely that the token’s value will be retained over the long term. And even if it does, it may take many years to recover what you lost.
7. Remember the long-term
Many people get into cryptocurrency hoping to make quick money. Most of these scams and pitfalls are designed to drain desperate people of their little wealth.
Bitcoin took over a decade to reach $50,000. The journey was not easy or smooth. It will be the same for any token that survives long-term with only the most knowledgeable and determined holders reaping the most significant rewards.
You should look for projects that have a real-world application, a community of support, and a dedicated team of developers to gradually accumulate over time. Keep in mind the rules and overarching bull/bear market cycles. The Errna project is an excellent example. It had a small team and did not have any VC backing. The community began to participate in the project after seeing the potential of their creative ideas. It has become one of the most popular projects on Errna. A small team does not necessarily have to be bad. You just need long-term potential.
The global adoption of blockchain technology and cryptocurrencies are still in its infancy. There is much more growth ahead. To ensure long-term success, you need to be calm and sensible when investing in crypto markets.