How Much Should Cryptocurrency Beginners Invest?
Has all the recent hype and discussion surrounding cryptocurrency made you want to invest? You’re not alone. If you want to go ahead and start investing, then this article is going to point you in the right direction.
As a beginner, you will have lots of crypto-related questions on your mind. Most likely, the biggest question of them all is this: how much should I invest?
It’s a common question that almost everybody asks when they first start. Let’s address this question first before moving on to some tips and tricks.
Cryptocurrency: How Much You Should Invest?
Before investing in cryptocurrency, you must first choose a specific one.
Right now, Bitcoin is the most popular cryptocurrency. Following close behind is Ethereum, which is a blockchain platform that uses ETH (Ether) as its digital currency. Ethereum is a little different to Bitcoin. Whilst Bitcoin is used as a ‘store of value’, Ethereum is a platform for smart contracts and secure financial transactions.
There are also plenty of other cryptocurrencies for you to consider investing in, such as Tether and XRP.
Before investing, you should always check the current price that a cryptocurrency is trading at. For example, if you’re interested in Ethereum, you should take a look at OKX’s Ethereum price charts.
Whichever cryptocurrencies you decide to invest in, it’s highly recommended that you only invest up to 5% of your portfolio. This is something that most experts agree on.
The reason for this is that cryptocurrencies are extremely volatile. One day, they can skyrocket in value; the next, they can experience big drop-offs.
If you want to – and are confident in your investment – then you can take a risk and invest up to 30% of your capital. However, this should only be done when the market forecasts for specific crypto are overwhelmingly positive.
Tip #1 Don’t Stick with Just One Cryptocurrency
As a beginner, there’s nothing wrong if you decide to stick with a single cryptocurrency (such as Bitcoin) for the first few weeks or months.
However, over time, you should look to grow and diversify your portfolio. The reason for this is that it protects you from volatile markets. Think of it like a protective blanket.
For example, if one crypto suddenly plummeted, you wouldn’t need to worry because you have healthy investments in a handful of others that are performing well. If you were to put all your investment capital into one basket – and that basket fell apart – then your investment would be ruined.
Tip #2 Consider Using a Crypto Bot
Some crypto experts like to use crypto bots. These bots are programs that execute trades at certain times during the day based on market behaviors. Essentially, it lessens the workload that you must do, as the automated program does it for you.
Tip #3 Avoid the ‘Invest When the Price Is Low’ Strategy
Sometimes, cryptocurrencies can drop to very low prices compared to usual. When this happens, many people jump at the opportunity and invest lots of money in the hope (or expectation) that cryptocurrencies will soon rise in value again. However, this often doesn’t happen – after all, there’s a reason for the value drop in the first place.
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