7 tips for your first crypto investment

A low Bitcoin price and a tense international economic situation invite you to invest. At least if you follow the basics of countercyclical investing. After all, stock market parlance has always called:

Buy, when the cannons roar. Sell ​​when the violins play.

Old stock market wisdom

But what is even more important: if you have no idea about the subject, you should also keep your hands off it. To make sure your first bitcoin investment is a success, here are some basics every investor should know.

1. When will the bitcoin bulls come? Know the market phases

Basically, a distinction is made in the investment sector between bull and bear markets. in bull market (also “bullish”), the mood is generally positive (“bullish”), prices on the market are rising. Of one bear market (also “bear market”) spoken when prices fall. The mood is quite negative or “bearish”.

Between these two market phases there is also sideways market, not much happens here. The tracks move without major fluctuations.

But just because prices are heading north doesn’t mean it’s a bull market. Traditionally, you only talk about a bull market when there has been an increase of at least 20 percent compared to the last low. Everything below counts as “gather“.

ONE crash on the other hand, describes the phase where prices collapse in one fell swoop. If this happens during a bull market, a 20 percent crash makes it a bear market.

If, on the other hand, there is only a short-term fall in prices, one speaks of a bull market correction.

2. Let the emotions out

R&D and FOMO are not friends of good investments.

Behind FOMO (“Fear of Missing Out”) is the fear of missing out. This fear usually leads to irrational decisions. Then it can happen that you put your money into a project just because it is considered to be particularly popular. There is hardly any time left for thorough reflection on one’s own actions.

FOMO often occurs during bullish market phases. For example, if the Bitcoin price rises sharply, it creates headlines: The media, which otherwise rarely report on cryptocurrencies, suddenly write headlines about the violent increases in the crypto market. This in turn attracts inexperienced investors who now want their share of the pie. If it goes wrong, it will overheat or even bubble – if you don’t know your way and don’t know what to do, you will lose money.

3. Don’t blow your budget

How to avoid such knee-jerk reactions? Never gamble more money than you are willing to lose. So you should only invest money that you know you won’t need in the next five to ten years. Spending money you depend on can be an R&D accelerator. If you have to fear for your money, you are more likely to be tempted to quickly save what is left of it.

On the other hand, if you know you are not dependent on the money, you can sit out such market phases. The following applies here: Whoever has the stamina has a better chance of profiting.

4. Bitcoin on fire? Realize it

You only lose when you realize them. No matter how red the portfolio is and the losses seem painful: As long as you haven’t sold, you haven’t had a loss.

So if the whole market bleeds, it might be worth waiting a little longer. Maybe prices will rise again. Selling in a bear market is usually not a good idea.

What applies to losses also applies to gains. When all the signs are green and the portfolio looks set to explode, it might be time to take profits. Sure, theoretically it can always go up. But especially in the crypto market, things can go downhill very quickly.

5. Find your strategy

First of all: There is no one right strategy that fits everyone. The magic formula has not been found here yet either. But everyone can find their right strategy.

In preparation, it is important to be clear in advance when to invest, how much profit you want to make and how much loss you can absorb.

The investment checklist:

  • How much do I invest in which period (day/week/month/year)?
  • What is the maximum loss I can bear?
  • Where do I place my limit order/stop loss order?
  • What is the profit I want to make?
  • Where do I place my sell order/take profit order?

Anyone who answers these questions for themselves has something important in store for many amateur investors: security. Because as soon as you have defined a minimum and a maximum for yourself, you can act accordingly.

6. Stick to your strategy

There are a number of precautions you can take to achieve your goals. You can do this with most brokers and exchanges Stop Loss function to use. You enter a specific rate at which the respective cryptocurrency is to be sold. On the other hand there is The Take Profit function. You can also enter the course you want here. As soon as this is reached, the coins are sold at a profit.

It saves you a lot of stress and, if necessary, money. By leaving the trade to the respective platform, you are not forced to observe the market, but can devote yourself to other things.

Don’t know which exchange to use? Take a look at our review section.

7. Consider a bitcoin savings plan

The cost averaging effect, also known as the Bitcoin Savings Plan, is one of the less stressful ways to profit from the crypto market. With the cost averaging method, you invest a fixed amount at regular intervals, usually monthly.

Depending on whether the Bitcoin price goes up or down, you get more or less shares for the monthly fixed amount. In the long run, however, you steadily stack rate.

In any case, according to the idea behind the cost-averaging effect, the average price compensates for price fluctuations.

Want to know how to create a Bitcoin savings plan? Here we explain it step by step.

Bonus material

Alright. You get another tip: Find out about bitcoin depository. (For example here). Because if you invest in Bitcoin, you yourself are responsible for your coins. If you leave them at an exchange and they are lost, there is no support in the world that can recover them.

Want to buy cryptocurrencies?

Trade the most popular cryptocurrencies like Bitcoin and Ethereum as an ETP on Scalable Capital, the leading investment platform in Europe.

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