How to be responsible with your crypto investments?

When cryptocurrencies were first introduced to the market, they were considered mainly an overhyped phenomenon. However, numerous people recognized their great potential, viewed crypto as an investment, and put faith in it. The result? Some of them made a fortune with the help of cryptocurrencies, including Bitcoin.

Still, cryptocurrencies are very volatile, and before people consider investing in them, they should consider several factors, including the Bitcoin price, to ensure they will have good results. Although people saw that crypto can offer many returns, most still fear investing in digital assets. 

One of the main reasons people still refrain from investing in virtual coins is because there is still little knowledge around them, and individuals might not realize their true potential. However, there are some ways to invest in crypto safely, and this article will present some of them.

It will always be better to start investing only a smaller percentage when you are a beginner. Cryptocurrencies are volatile, and the current status in the market shows various price fluctuations, making it quite difficult to decide rationally. 

People also invest in cryptocurrencies because of the fear of missing out, which is not really the best option. But despite the ebbs and flows in the market, digital coins should only cover a specific part of the portfolio. A good percentage revolves around 5 to 10%. 

Crypto is quite different from other investments, including stocks. For example, crypto investments will not pay interest or dividends, as they depend on fluctuations and market value. 

Any investor with experience will tell you why investing only the amount of money you can afford to lose is important. This is not only valid for cryptocurrencies, but for all the types of investments. The current investing world has some reckless individuals who don’t make rational decisions and throw away their entire life savings. 

The crypto market has gone through unprecedented growth in the last few years. But still, crypto is in a nascent market, lacking regulatory checks and encountering many technical barriers, which can lead to fraud and hacks. 

As such, investors only need to select a small portion of their capital - again, the amount depends on how much anyone is able to lose - and buy with them the wanted cryptocurrencies. 

Research is still an important aspect of the crypto market and essential to investment. Some principles you can follow in your journey are whether the crypto in question has a unique and valuable use case, the potential it has to disrupt some industries in which it is working, the technical elements or the management team. 

Also, focus on the fundamentals and look for answers to the following questions: Does this technology have potential? Does the crypto have an honest and transparent team? Will the selected digital asset be suitable for me?

There are numerous cryptocurrencies nowadays, so investing in crypto might be intimidating for plenty of people. For those who have just started to take their first steps in crypto, it will be better to stick with the major assets that have stood the test of time. Ethereum and Bitcoin are good examples of these kinds of digital coins, as they have endured several rough bear markets.

However, even the most stable virtual coins are still volatile, so keep this in mind and navigate the market carefully. 

Outside the act of investing itself, storage is another major requirement you must remember when dabbling in the crypto market. It is quite common to hear that investors have lost access to their accounts and funds because of a security or hack incident. So, storing your digital assets securely has a paramount importance. 

A hardware wallet is one of the best ways to store your digital coins safely. These wallets have excellent security features and will ensure your funds are not stolen. It is not advisable to hold cryptocurrencies on software wallets or exchanges, as they don’t really have an increased security feature. 

When investing in cryptocurrencies, it is very important to use your common sense. It can be very easy to get swept up in the commotion and hype surrounding a new project, but it will be good to use your common sense if you don’t want to encounter heavy losses. It is easy to become interested in a meme token that has gathered the attention of plenty of individuals, but you must be very careful, as the fast popularity can be a double-edged sword, and one side might be much sharper than the other.

Additionally, you will need to diversify your portfolio exactly like it happens in the stock market. Various projects offer some unique use cases and solve several problems, but they can potentially cause disruption. And this is why it will be better to have a diversified portfolio. 

This affirmation holds true for each kind of investment. So, investors should set strict boundaries and stick with them to keep better track of what they can afford to lose, be it in terms of money, time, or other assets. 

Investing in cryptocurrencies might seem daunting, as you have many considerations to keep in mind. The crypto space is quite new, and you need to use your rational thinking, as so far, there are not many rules to follow in this environment. However, some fundamental approaches can help you in this journey and increase the chances that you will use your capital well.

You need to understand the fundamentals behind cryptocurrencies, use common sense and apply the standard tenets of investing, and you might discover that the crypto market is not as overwhelming as you initially thought.