If you are interested in general background information before investing, take a look back at previous articles found here.
So you decided to take a small amount of money that you can live without and begin investing in cryptocurrencies. Now picture yourself setting this money on fire.
You should not invest money you can’t afford to lose and with all investments you should do your own due diligence and thorough research.
The goal of buying these assets is the potential for large long term growth. While many factors are driving the demand for digital assets, currently the main reason is to hedge against the inflation of our monetary system. With the stagnation of our economy and rapid addition to monetary supply, the pressure on the US economy is enormous with potentially devastating effects for traditional investors.
This instability is encouraging institutions to dip their feet in the crypto pool. While we like institutions to notice cryptocurrency, these CEOs are looking for protection and aren’t fully sold on the underlying technological advancement. In past cycles, gold and mining stocks served well as solid ground for investors to land on amidst the mudslide.
Sign Up Somewhere
The first thing you need to do is sign up. Coinbase and FTX.us are two good options. Coinbase is the first place everyone goes. They have higher fees, but are the most user friendly. If you have some trading experience FTX.us is definitely the platform you want to use.
Always practice good cyber security and set up 2FA (2 factor authentication) on your trading accounts for security purposes to help mitigate breaches. My preference is the app Authy for backing up 2FA codes.
One of the oldest adages for cryptocurrency is “not your private keys, not your money.” Always protect your currencies with a hardware wallet. They are relatively cheap and allow you to hold your currencies off exchanges. Since cryptocurrencies inception, 11 billion dollars have been stolen from exchanges. These large pools of users assets are a massive target and with crypto being very liquid, money can easily be lost. I recommend Ledger or Trezor hard wallets. A review can be found here on the benefits and drawbacks of each.
Dollar Cost Average
One of the best methods for entry into a long term position is through dollar cost averaging. Buying small amounts over time instead of buying the total amount you want to invest in one purchase. The benefit of this is keeping emotional trading in check. When dealing with larger sums of money investors let their emotions get the best of them and can end up making rash decisions. This strategy allows for multiple purchases and can lead to better entry points during turbulent cycles. For more in depth analysis on specific assets consider joining my subscription with daily setups.
Sit Back and Enjoy the Extremely Bumpy Ride
As with any emerging asset it takes time to solidify it’s real world value. Cryptocurrencies are still in their infancy, which leads to volatility. As time goes on the market becomes more stable as its true value is realized. Analysts have noticed more stability in digital assets, but that doesn’t mean it’s without unpredictability due to market forces. On our last rise in 2017–2018 there were 9 price corrections and so far this run we have only had 1 +30% correction in September, 2020.
This shows historically that we are either gaining more stability or that we have a long ride ahead. Either way, the addition of BTC to corporations balance sheet is not a short term play. As all successful investors will tell you, time in the market beats timing the market.
That’s All Folks
It’s a great time to come into the water; just make sure you have your floaties on before you do a cannonball into deep end. Corporations and institutions are just starting to put on their bathing suits and they take up a lot of space in our small pool.
-Dr Austin Fortner