Over the past few years, the popularity of cryptocurrencies has become so great that the words "bitcoin," "ether," or "mining" can be heard from people far removed from the world of cloud technology.
Investors are also actively entering the digital money market, preferring it to traditional stocks, securities and deposits.
Let's find out how to invest in cryptocurrencies and which projects to choose in this article.This article will allow you to choose the right cryptocurrency and decide if it is worth it.
Many people are interested in the topic of cryptocurrencies mainly in terms of investment and the opportunity to earn "easy money".
If you're just starting to look at cryptocurrencies as an investment asset, you should know the main things about this market:
The price of most cryptocurrencies depends mostly on the demand for bitcoins because of Bitcoin's dominance (62% of the market) among other blockchain projects.
For example, Ethereum is only 16% of the total market and XRP is 1.5%.
Bitcoin has had even greater dominance in the past, which has only twice fallen below 50% - in mid-2017 and early 2018.
Investing in cryptocurrencies comes with high risk that an investor must consider. It is also worth considering the fact that long-term investments from a year bring great benefit to the investor and almost never go bust, while short-term investments will be quite unprofitable in case of a temporary drop in quotes. AMR INVEST
So, in the long term, if you have a fairly large amount of money investing in cryptocurrency is definitely a profitable venture, but even having a very modest amount of free money of 10 - 25 thousand rubles, you can competently invest and earn additional funds.
Exchange rates fluctuate from hundredths to hundreds of percent over several months.
For example, between October 2020 and February 2021, the price of Bitcoin rose over 340%.
You need an investment plan to invest in crypto.
You need to be clear about how quickly you want to make a profit, how much you are willing to invest, and what asset to use.
The most important rule for a beginning investor is to invest exactly as much as you are willing to lose if the investment project fails, and research the cryptocurrency market yourself.
Fundamentals of investing in cryptocurrencies. To start investing in a completely unfamiliar market is to waste money.
In order to study the virtual money market, fundamental and technical analysis is applied, just like in traditional trading.
Fundamental Analysis The fundamental method of analysis is most often used to assess the state of a particular cryptocurrency project by checking its:
reliability; financial capacity; prospects of development; clients/users.
If you are going to invest in new cryptocurrencies or tokens, about which not too much is known, but they have growth potential, you first need to check the following components of the crypto-project.
The White Paper or the project's operating plan.
Here you should pay attention to who is behind this or that project, analyze the experience of the team and the resources that the project has.
There are cases when the entire project is a sham and the "team" are nonexistent people.
It is important that the project has a development plan and that it describes what and in what period the developers plan to implement, what actions to perform to increase the value of their own or cryptocurrency tokens.
Be careful of false information spread on the network by bots or advertisers.
When looking for investment opportunities, you will most likely have to choose between two types of assets:
Cryptocurrency. Crypto-currency is a ready-made working project, applicable in the digital space.
Lend the coins or put them into a liquidity pool.
Here you should pay attention to what it offers: advanced smart contracts, anonymity in transactions or other features that promise the development of the project.
ICO (initial coin offering) - a fundraiser similar to crowdfunding in which developers place a certain number of tokens for sale to initial investors.
IEO (Initial Exchange Offering) - a fundraiser similar to an ICO, but the tokens are issued on an exchange that vets the project according to its guidelines, which is less risky than an ICO because there is an intermediary. Investing in cryptocurrency is a must now, as bitcoin and other digital money are currently exempt from government pressure. There are no additional fees for holding coins, as with deposits or bank accounts. Pros of most cryptocurrencies: anonymity, decentralized. In addition to the positive factors of investing, it is worth mentioning the disadvantages.
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