The Art of Crypto Trading – Choosing The Cryptocurrency As Per Your Needs And Preferences [Part III]

The need for investment arises largely due to two reasons, either you need to plan for a future expense, or you don’t want your savings to sit idle. In both cases, there is a purpose and a need, according to which a person makes investment decisions.

Investing in crypto is quite similar. One additional case may be that a person just wants to experience the blockchain and cryptocurrency industries. Therefore, before making an investment one needs to assess his or her goals and objectives, by which he or she would be able to determine investment plans.

While we have already discussed what to expect and what not to expect before investing in cryptocurrencies and what to see in cryptocurrencies before investing, we now bring to you a few ways to decide which cryptocurrency suits your needs:

1. Decide whether you want to invest for a long term or short term

There are numerous cryptocurrencies in the market, each with a unique trend and behavior patterns. Some may be beneficial for short term goals, and others may benefit in the long run.

For instance, if you want to invest for your retirement, or your child’s education and marriage, you need to invest in cryptocurrencies with a stable nature, which also grow over a period of time. Therefore, investing in established and most trusted digital tokens like Bitcoin and Ethereum will be of great use.

However, if you have a short term objective, say you need funds for business expansion in six to twelve months, you need to invest in emerging tokens, as they would yield higher rewards. But such tokens involve risk, as they are just emerging after all.

2. Invest lesser than your total capacity

Cryptocurrencies, as compared to traditional instruments like equity or bonds, are more volatile, which can either be beneficial or disastrous. For instance, Bitcoin was priced around $1,000 apiece in January 2017, and by the end of the year, it was at its peak of $20,000. Unfortunately, the market collapsed during the following year, and Bitcoin came down to around $3,440 in January 2019.

To avoid this, never invest your entire savings into cryptocurrencies, especially not at the initial stage. Also, look for the stable tokens to invest initially.

3. Buy tokens with high acceptance, if investing for a specific purpose

Cryptocurrencies are now being accepted across the globe as valid payments. If you have a business, which engages in foreign trade, you can buy cryptocurrencies to make cross-border payments. While choosing the coin, one must consider the liquidity and acceptance of the token.

Also, if you want to pay fees for higher education from foreign countries, you can purchase cryptocurrencies listed on international crypto wallets, which would allow you to transfer money at lesser transaction costs. Also, transferring money in cryptocurrencies would allow saving on the forex conversion rates.

Likewise, you an avid gamer, who spends money regularly on in-game purchases, can buy tokens like Enjin Coin (ENJ), FunFair (FUN), Decentraland (MANA), etc., which are specifically focused on gaming.

4. Invest in smaller currencies if you just want to explore the crypto space

If you want to invest diversify tour investments, but are not sure about cryptocurrencies, you can try to get a gist of the market by buying small value tokens. TRON (TRX), Ripple (XRP), or Dogecoin (DOGE) are very good options for exploring the crypto space.