Tips to Maximize Returns from Cryptocurrency Investments
If you are a new Bitcoin investor seeking ways to maximize returns from cryptocurrency investments, then you’re on the right path.
In your attempt to get familiar with this investment route, you probably asked yourself the following questions: Was there a Bitcoin bubble? Have I joined too late? Will I make blunders and most importantly, what are the best tips to succeed in this emerging investment niche?
Well, you’re not alone. Many other investors are keen on venturing into this largely unchartered financial territory. You might also have noticed the prolonged bear market cryptocurrencies faced in 2018.
A bear market is a situation where prices of securities may drop by at least 20 percent from a recent high. The drop may be as a result of widespread negative investor sentiment or pessimism on the part of the trader. The last time a bear market affected Bitcoin was in 2011.
Most investors are familiar with stocks, bonds, and securities. However, cryptocurrency trading is different from stock market trading. Crypto trading is very different from the traditional form of trading.
Some of the major cryptos can be quite expensive with 1 Bitcoin pushing more than USD 10,000. If you’re pondering on how to invest with little money, stocks still might be a more forgiving avenue for a novice investor. Unlike the stock market, cryptocurrency trading happens 24/7. A novice investor should always compare and contrast investing options to make informed decisions.
What is Cryptocurrency Trading?
Cryptocurrency trading is the exchange of cryptocurrencies. Examples of cryptocurrencies are Bitcoin and Altcoin. You can buy or sell one cryptocurrency for another. You can exchange a Bitcoin for a U.S. dollar or a Euro.
Types of cryptocurrencies
Basically, there are three major types of cryptocurrencies:
Bitcoin first appeared in 2009 and is the most widely circulated cryptocurrency. It uses what is called peer-to-peer technology for decentralized control, making it possible to trade without the centralized control of a central bank or government authority. The store of value for Bitcoin is the blockchain. This is a public ledger for all its transactions.
Litecoin was created in 2011 and resembled Bitcoin in appearance. But it possesses a faster processing speed than Bitcoin due to its Segregated Witness technology.
Ethereum came last but has surpassed Litecoin in popularity and is currently the most popular cryptocurrency after Bitcoin. It boasts of fast processing speeds, thanks to its smart contracts: and its digital “if-when” agreements.
Investing a Small Portion of Your Portfolio
According to Mike Alfred of Digital Assets in Denver,
Bitcoin is the most important but misunderstood digital asset of our lifetime.
He says that every investor needs to own at least 5 percent of this digital asset.
He is joined by David Tawil, the president of Maglan Capital, who says investors need to allocate between 2 and 3 percent in crypto assets.
Both insist that technology has disrupted most businesses and that cryptocurrency hasn’t been spared. A growing class of investors, including regular folks, regulators, and advisors, strongly believe that Bitcoin is the currency of the future. Just recently, Max Keiser, the CEO and co-founder of Heisenberg, said that Bitcoin could have averted the 9/11 attacks had it come into existence 10 years before.
Mainstream banks and several leading investors have shown disdain on the onslaught of cryptocurrencies. However, some investors believe in the digital currency’s extraordinary rise and potential to replace investment trading as we know it.
And for those crypto investors looking to maximize returns from cryptocurrency investments, here are a few tips:
Build an investment strategy
Experts recommend investing a quarter of your funds in the most popular coins in the order of Bitcoin, Ethereum, XRP, and Litecoin. These are the coins whose prices change very frequently. So, limit your investment in these coins to not more than 30 percent.
Trading during the day
If you want high returns in the short term, then try to trade during the day. The trick is to invest in crypto and then sell as soon as the price goes up. Some cryptocurrencies can be highly volatile and suited to this kind of trading. If you plan to trade during the day, ensure not to invest more than 15 percent of your portfolio since the risk is very high in this market.
Invest in Altcoins
Altcoins are created as an alternative to Bitcoin, and some popular ones include NEO and Titan. Experts say that Altcoins can easily outperform Bitcoin and Etherium because they have a strong foundation coupled with excellent growth potential.
Last but not least, don’t forget to:
- Take your profits whenever possible
- Focus on the big wins
- Keep updating your portfolio at least every month