5 Things You Need To Know Before Investing In The Cryptocurrency Market!

Factor investing, also known as evidence-based or rule-based investing, is an investing strategy that requires investors to be aware of certain information to lower their chances of losing their capital whilst trading. Let us go over a few things you need to know/pay attention to if you intend to join the crypto space as an investor.

1. Timing is Key

If you are a short-term investor hoping to make a quick profit, then timing is everything. The crypto market goes through phases where it will see extreme rallies and pullbacks, adding and wiping significant amounts of money from the market. Therefore, it helps to enter the market when it dips, just before the rally, and then take your profits after it peaks and wait for the next dip. However, this is easier said than done. The truth is that no one can accurately predict what the market will do at any time. To be able to make these predictions, you need to conduct technical and fundamental analysis. That can be learned but will take you time.

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On the other hand, you do not have to worry about price volatility in the midterm if you plan to invest in the project for the long term. As long as the project is solid, the value of your investment will grow with the market. You can also use short-term dips to add to your portfolio.

2. Build an Investment Strategy

Successful investors develop a plan on how they intend to invest in the crypto market. This can involve determining how much you intend to put in the market and when you will do it. Also, it can involve setting a limit order, which means their assets are automatically sold when the price hits a certain level. Ensure that you educate yourself on how to invest and trade if you want to take advantage of the daily volatility of the crypto market. If you are not experienced in trading, you can invest some time to master the craft by utilizing plenty of free resources provided by trading platforms. You can also make use of Google and YouTube and opt to use trading platforms that allow you to copy the strategies of experts, and get to share their success as you learn the craft.

3. Watch out for Scammers

Crypto has been compared to the wild west, and for a reason. These statements are meant to warn you of the bad actors found within the space. The market is yet to be regulated like other financial markets, making it a scammer's paradise. Investors have lost billions of dollars over the years from investing in bogus projects, or leaving their coins on exchanges that got hacked. Regulators have tried to step up their efforts to protect investors over the past few years, bringing some validity to the space. Still, the responsibility of doing due diligence lies with you. It is up to you to check if the project you intend to put your money into is legit. Once you purchase your tokens, ensure that you move them to a safe and private wallet.

4. Invest Time in Research Before Investing

According to Coinmarketcap, there are over 19,000 cryptocurrencies within the market today. Unfortunately, 90% of these projects can be categorized as 'garbage'. You need to be extremely careful where you put your money, especially when it comes to new projects since the chances for success are quite low.

Most investors who feel like they have been late to the party when it comes to the likes of BTC and ETH will go searching for gems that can 10x or even 1000x their investment. If you are to take the word of the project's marketing team, you are likely to fall for any project and see your money gone, leaving you with worthless tokens. Therefore, you need to put in the research to see if the project is worth it.

What utility does the project have? What other solutions exist in the market? Who is the team behind the project? What do experts think of the project? Who is backing the project so far? etc. Those are just a few questions you can ask to scrutinize the project.

5. Remember to Keep Your Private Keys Safe

Once you buy your coins/tokens, proceed to move them to your private wallet. It should preferably be a hardware wallet. The wallet will help store your private keys offline, while allowing you to access your coins on the blockchain. These private keys should be kept private, along with the seed phrase that helps you recover your wallet in case you lose it. If they fall into the wrong hands, then your investments may very well be gone.