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How to start investing in cryptocurrencies

12/04/2018
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  • Crypto_trading
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Buy on the rumours, sell on the facts. Such a statement by a great investor is more relevant than ever right now. The price of cryptocurrency is at minimum values, however, no one doubts their ability to compete with traditional assets. Against this background, the question of how to start investing in cryptocurrency is becoming increasingly relevant.

What to buy during periods of high volatility

Now you can find a huge number of recommendations of what kind of coin is worth buying. Moreover, analysts give very convincing arguments based on a variety of calculations. But if you take a closer look at these tips, you can notice one common feature - excessive subjectivity.

Now it is extremely risky to make a long-term forecast, and the matter is not only in digital assets. As practice has shown, the beginning of work with cryptocurrency is most effective after studying the global situation in the global financial markets. Since now this asset is not much different from other trading instruments, it is affected by:

  • policies of Central Banks and the Federal Reserve;
  • laws of various countries and regulations;
  • liquidity flows and demand for the most popular products;
  • activity and mood of investors.

That is all that has an impact on currency pairs, stocks and indices. In this case, there are some nuances that increase the complexity of forecasting.

On the complexity of making forecasts

Not to be unfounded, it is better to talk about the reasons for the fall in cryptocurrency rates with a specific example. Now ethereum takes the second place in terms of industry capitalization. However, at the end of 2018 - the beginning of 2019, the project of Pavel Durov will be launched. During the initial placement of tokens, he was able to collect a record amount, more than $ 1.7 billion. Moreover, the businessman said that his cryptocurrency would be the “etherium killer”. Before, how to start own cryptocurrency, any company is studying the market. And looking for a niche that it seems to be undeveloped.

Does this mean that the price of ETH will drop significantly? Far from a fact. Buterin's team also does not stand still and has planned another hardfork with record changes. However, not everything is transparent here. The previous update of the coin failed and led to a drop in the price of ETH / BTC. How will the new fork, no one knows? You can guess, you can invent and listen to analysts. However, even the best experts can hardly look into the future.

Perhaps tomorrow, a successful hacker attack will lead to a collapse in the quotes of a single coin. Or its team will make a technological breakthrough. And then each schoolchild will ask how to start trading cryptocurrency. Nobody really knows that. But experienced investors own capital allocation technologies even in such a situation.

How an investor can start trading cryptocurrency

Since digital coins have become ordinary financial instruments, they should be traded on the same rules. This primarily means diversification of risks in the formation of a portfolio of assets.

One should not believe the words that “you are getting started in cryptocurrency, which we released. It is the best and most profitable.” Each team does not have the proper degree of objectivity. Diversification will help solve the problem. In practice, it looks like this.

If the investor has $ 1000, then he divides them in proportion to the capitalization of the coins and invests in each specific share. For example, in the current situation about 40% of the amount will be on Bitcoin, on ethereum and ripple 20 more, and so on. However, there is a linear way to the division of capital, when the initial deposit is divided into equal shares. A good option would be to add to the portfolio and traditional assets. Such as currency pairs, precious metals or raw materials.

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