New to crypto? Do you want to invest when the bear market offers some attractive opportunities? Here are a few tips!
Despite the crypto winter, interest in crypto investments continues to grow. The market capitalization of the crypto market has even grown exponentially from 2020 to 2022.
What you should know
What basics should every investor pay attention to before and during an investment in the crypto market?
Max Krupyshev is the CEO of CoinsPaid. “First of all, it is important to understand that there are many different types of crypto investors. So you should first get a feel for the industry in order to be able to decide which type of crypto investments you want to choose. Whether you end up opting for monthly dollar-cost averaging or high-frequency daytrades, the most important thing is that you figure out your preferred strategy over time.”
Nicolas Tang is Director of Internal Communications at Phemex. “Investing involves a lot of work and research. It is not easy to find a project whose tokens or shares are steadily increasing in value. Countless examples of seemingly unstoppable projects have collapsed within days. Many of them have relied on a passing hype and trends, building only a facade of success. By analyzing the basics, it can be determined whether the people and ideas behind a project have enough value or potential to be truly successful.”
To make a successful investment possible, investors should take the following steps.
Analyze the type of cryptocurrency
The consumer should carefully analyze the type of cryptocurrency before acquiring it. A stablecoin like Tether or a value currency like Bitcoin are not the same thing.
You should know whether the cryptocurrency is backed by a real asset or whether the value is determined by supply and demand in the market. In addition, you should be able to analyze the volatility of a cryptocurrency.
Know the whitepaper of the project
Once you have determined the type of cryptocurrency, you should then study the whitepaper of the project in detail.
The whitepaper contains various fundamental points, such as:
- Description of the project behind the cryptocurrency
- The technology behind cryptocurrency
- Main features of the project
- Market risk of the token
In this example, we can find out some of the main features and description of Tether through the white paper.
You should always research the developers of a project
There are thousands of cryptocurrencies on the market. In order not to invest in a pyramid scheme or some other kind of fraud, investors should carefully research a project and the founders.
Rodrigo Torres is the director of Valora Analitik. “According to literature and experience, the best way to start an investment is to get to know the relevant market. Another recommendation is to invest only excess capital and not what you might need tomorrow for things like food, housing or basic expenses. It is better to start with small amounts.”
Know the price and analyze the market capitalization
You should analyze different variables of a cryptocurrency. For this, you can use a trusted site such as CoinMarketCap use.
Price of cryptocurrencies
By analyzing the price of the cryptocurrency, we can see whether it is currently at a low or a high, and make a purchase decision based on this.
According to Coinmarketcap’s description, we can understand that market capitalization is “the total market value of the circulating supply of a cryptocurrency. The term is therefore comparable to the free float capitalization on the stock market.”
In other words, market capitalization = Current price x circulating supply.
In the figure above, users can see the current total supply of Bitcoin, which has experienced a decline of 3.76%. The analysis of this data will help us to understand how much market dominance the cryptocurrency has.
You should be able to read the recent price fluctuations
Conduct a brief analysis of the behavior of the cryptocurrency of your choice. How does volatility behave? What is the market trend?
Here, investors can analyze Bitcoin prices in different time periods. In addition, you can analyze the market price at the time of opening, the higher and lower price, as well as the closing price on different days.
Investors can study the evolution of the price of a cryptocurrency over the course of a day at different times. Here, for example, the value of Bitcoin has fallen over the hours.
The crypto market is one of the most volatile markets in the world. Investing requires not only time, but also dedication. Therefore, inexperienced investors should familiarize themselves sufficiently with the circumstances before investing. Only use capital that you are willing to lose. We wish you every success!
All information contained on our website is researched to the best of our knowledge and belief. The journalistic articles are for general information purposes only. Any action taken by the reader on the basis of the information found on our website is done exclusively at his own risk.