Cryptocurrencies have taken the world by storm over the past few years and are showing no signs of slowing down. As long as there’s a market for them, Cryptocurrencies will continue to thrive. However, this isn’t always a good thing. For those who aren’t aware, when a new cryptocurrency bubble is formed, it often spells disaster for investors who bought into the hype without doing their research.
Cryptocurrencies tend to experience these boom-and-bust cycles almost annually. This is because most people won’t spend their savings on something that could lose its value overnight. However, some people are willing to go against the grain and invest in companies that don’t tend to give back what they’ve put in over time. And when that happens, you get a crypto-boom like we’re seeing right now. In this article, we’ll take you through 5 practical strategies that can help you survive any future crypto-bubble and emerge unscathed at the other end.
Cryptocurrencies are commodities. In other words, they’re assets that can be traded and bought and sold for profit on online exchanges like Yuan Pay. As the most common assets to trade, the market for Cryptocurrencies is largely made up of speculators, not institutional investors. This means that Cryptocurrencies have high volatility, making them extremely risky and not suitable for long-term investment.
However, there are some benefits associated with trading commodities. First, commodities trade on open markets, so there’s no centralized authority that can influence the price. This means that there’s less risk of market manipulation than with many investment products.
Diversification through security trade-offs
When you’re investing in Cryptocurrencies, the overall risk is that they could lose all their value. If you’re trying to reduce this risk and increase your potential return, you can diversify your investment portfolio. One way to do this is to invest in different Cryptocurrencies. If one of them crashes and burns, you’ve still lost a small amount in a few different portfolios.
Another way to diversify is to invest in a variety of asset classes. Some experts recommend low-risk investments such as government bonds, cash, and money market funds. Others recommend a more risk-tolerant asset class such as stocks, real estate, and commodities.
HODLing: Hold on for the long term
HODLing is an acronym for “hold on for dear life.” It’s essentially a message of optimism and hope. In other words, it’s the best thing you can do when the market for a particular cryptocurrency is pumping. No matter how good or bad your investment is doing, or how much you want to sell it off, you should resist the urge to take your profits.
In most cases, this cryptocurrency boom is a sign that the cryptocurrency you bought at the beginning is about to crash. So, if you hold on for dear life, you’ll not only have an opportunity to buy it cheap, but you’ll also have the chance to make a healthy profit when it does crash.
ICO – Initial coin offering
ICOs are the latest craze because they offer investors the chance to buy into the next big thing based on the promise of profit in the future. Just like with Cryptocurrencies, ICOs are not traditional investments. Instead, they’re unregulated organizations that sell tokens — usually with the promise of profit — in exchange for Cryptocurrencies or fiat money.
ICOs come with high risk. The vast majority of them are scams, and most investors lose their money. This is because there are no guarantees that the profit you’ll make in the future is enough to justify the risk taken in buying tokens to fund an ICO.
Find a reliable source of information
The best way to survive a cryptocurrency boom is to keep calm and buy more. However, this isn’t always realistic for those who are investing for the first time. In these situations, it’s important to find a reliable source of information. For example, you can use Google to search for cryptocurrency-related information. However, do this with a critical mind.
The mainstream media has been spreading fear about Cryptocurrencies for a long time now, and it’s done a good job of twisting facts to suit its agenda. So, don’t take what you read at face value. Instead, try to verify the information you’re getting by reading multiple sources. Another reliable source of information is a cryptocurrency investing club like the ones found on MeetUp.com.
Cryptocurrencies are extremely exciting and lucrative investments, but they’re also extremely risky. To make the most of the opportunity, you need to have a solid grasp of both the ins and outs of the industry, as well as the technology behind it. Invest wisely, stay away from scams and you should be able to ride out any future crypto-bubble without too much harm. It’s important to remember that Cryptocurrencies are a long-term investment, so you need to have a long-term plan in place, as well as a solid strategy for investing your money.