Cryptocurrencies for Beginners: How Does It Work?

Why Invest in Crypto? What Potential Lies Behind It?

You may be wondering if investing in cryptocurrencies is worthwhile. Well, cryptocurrencies have undergone immense development in recent years. Many experts believe that cryptocurrencies will play an increasingly important role in our financial system in the future. Considering the growing digitization of the world and the increasing interest in alternative payment methods, there is a good chance that cryptocurrencies will become even more valuable in the future. In this article, we will look at some important rules that can help you get started in this exciting market

The ‘Right’ Cryptocurrency

When Does a Cryptocurrency Have Substance? What Should I Consider? Before you invest in a cryptocurrency, you should ensure that it has a certain level of substance. Make sure that the cryptocurrency has a solid technological foundation and is managed by a reputable development team.

It is equally important that you pay attention to a use case in our REAL economy. A cryptocurrency only makes sense through REAL applications. Everything else has nothing to do with investing but is simply ‘gambling.’

The trading volume of a cryptocurrency is another important point to consider, as higher liquidity generally leads to greater stability and a better price. Low volume often implies low liquidity, which can, in some cases, result in total losses.

Beginners Beware: These Are the Most Common Mistakes

Many beginners often make the mistake of getting caught up in the excitement and hype surrounding cryptocurrencies and investing without careful consideration. They invest in projects they don’t understand or trust unreliable sources. Remember: Never invest in projects you don’t have a basic understanding of!

So, how can you avoid this mistake? INFORMATION! Thoroughly educate yourself before investing. Verify the credibility of the sources you get your information from and never act based on rumors or speculation.

Timing is also crucial. The crypto market is known for its high price volatility and is more unpredictable than many other markets. Familiarize yourself with crypto market cycles (bull and bear markets, halving events, etc.), as you can use them to your advantage. Keyword: BUY LOW, SELL HIGH!

Another classic mistake for beginners is FOMO (Fear of Missing Out). Buying into the hype just because prices have skyrocketed is a big no-no. As quickly as it goes up, it can come crashing down just as fast. Also, never put all your eggs in one basket (one coin); instead, aim for a diversified portfolio.

The Crypto Rollercoaster

How does the cryptocurrency market cycle work? The market is always in motion, sometimes even faster than a roller coaster. However, we can identify patterns that repeat themselves, consisting of four phases: the accumulation phase, consolidation phase, growth phase, and maturity phase. Inform yourself about where we currently stand to make wise investment decisions.

Safety first!

When investing in cryptocurrencies, there is nothing worse than losing them! Make sure you securely store your cryptocurrencies by keeping them in a wallet with a high-security standard, such as a Ledger or Trezor.

The ‘Right’ Time to Exit

Here’s a fact: You’ll never find the ‘best’ time for your buy or sell. Always remember: It’s also important to realize profits to minimize the risk of a sudden market correction. There’s nothing more frustrating than selling cryptocurrencies due to a panic reaction during a sudden market crash.

You can hedge against this by regularly realizing profits and diversifying your investments. However, be cautious not to exit too early and miss out on the potential for further gains. It’s often a fine line between profitability and risk.

Create exit strategies to always trade without emotions. A convenient way to do this is by using stop-loss orders, which automatically activate when the price of an asset reaches a certain threshold.

My Conclusion:

Personally, I believe that cryptocurrencies are a great way to invest in future markets. However, there are many cryptocurrencies on the market, and not all of them have the substance suitable for investment. It’s important that you do your own research and only invest in cryptocurrencies that you believe are a solid long-term investment.

About the Author:

Eric Tristan Veszely is an expert in the field of digitalization and future markets. Since 2017, he has been deeply involved in this topic and has founded numerous companies, where he also serves as an advisor for some.

His extensive experience in the business world has helped him build a wide network of contacts and opportunities.

Eric currently resides in Dubai, where he expands his horizons and establishes new business connections. His goal is to convey relevant information about future markets and enable people to create passive income or an online business in this sector.