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Are you new to investing in cryptocurrencies? Do these 3 things right now
When you’re just getting started with cryptocurrency investing, whether you’re considering buying and holding Bitcoin (CRYPTO: BTC) or an exotic memecoin, you will need to be mentally, financially and technologically prepared if you want to succeed. So do the following three things right now, and you’ll be well on your way to becoming more experienced.
1. Decide how much capital to allocate
The very first thing a new cryptocurrency investor should do is have a serious conversation with themselves about how much of their hard-earned money should be devoted to crypto rather than more conservative investments like stocks, bonds and real estate.
If your wallet is already sufficiently diversifiedas it should be before tackling anything crypto-related, the decision is closely related to your risk tolerance. Cryptocurrencies are very risky, volatile and speculative assets, and the more uncomfortable this thought makes you, the more you should start by reducing the size of your portfolio allocation. Likewise, choosing the more established coins, like Bitcoin, will help you reduce your risk exposure.
If you plan to invest for several decades, it’s okay to allocate about 5% of your portfolio to cryptocurrencies, or maybe even a little more once you know what you’re doing. On the other hand, if you’re nearing retirement, a 1% allocation is probably a better idea.
Above all, remember to never invest more than you can afford to lose without suffering the slightest material difficulty, even in the worst case scenario. If there is a painful economic recession, chances are at least some of your crypto investments will be worth next to nothing, so make peace with that before moving forward and plan accordingly.
2. Set up your accounts and organize your assets on the blockchains of your choice, if necessary
The next thing to do to start investing in crypto is to set up your different accounts and crypto wallets. You only need to worry about setting up wallets if you want to have direct control over your holdings rather than parking them on an exchange, which will handle most of the logistics for you.
If you are looking for the least restrictive solution that is widely suitable for most investors, simply register with Coinbase (NASDAQ: COIN) and connecting your bank account will be more than enough to get your feet wet. It is completely acceptable to invest in the ecosystem it offers and never look at frontier coins that are not yet listed on major exchanges.
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But know that there are plenty of lucrative opportunities beyond the walled gardens of Coinbase and other exchanges if you’re willing to deal with a little more friction in the investment process, especially on the most popular blockchains. popular at the moment, like Solana (CRYPTO: SOL).
Trading “on-chain” rather than with an exchange means that no one else has custody of your coins, and also that you can invest in projects that are in their early stages. It tends to be riskier than what exchanges offer and is only suitable for people interested in seriously investing in cryptocurrencies.
For stocks, the equivalent would be trading shares over-the-counter (OTC). The problem is that you will have to work a little harder to access opportunities compared to what the exchanges offer you to buy, and you will also have to keep your coins in a self-managed wallet using a service like Phantom.
So when you’re starting out, wherever you choose, put your money close to where you plan to deploy it, preferably in something that will hold its value.
3. Limit your enthusiasm
The third thing to do if you’re new to crypto is to calm down and curb your enthusiasm.
How many get-rich-quick schemes have you heard of that ultimately resulted in money being made for program participants? Probably zero. And approaching cryptocurrency investing with the idea that it will bring you wealth quickly and easily is, unfortunately, the path to ruin.
There’s no rush to buy anything, no matter how excited Internet commenters may be about a particular piece. There will always be another juicy opportunity to find. Money is earned by patiently holding quality pieces, not by buying the latest fashion.
If you don’t feel like you have time to research or fully plan what you’ll do with an investment before you buy it, you’ve already missed the window, and chasing it won’t cause it to reopen . But that could leave you broke.
Additionally, there is no possibility of making a successful investment until you learn what types of opportunities to pursue, how many resources to devote to each swing, and how to manage your own psychology when you have a winning investment. gain value in your hands.
So slow down and filter your investments with a sober and responsible mindset. Keep your expectations in check and follow your plan. The rest will come with time.
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Alex Carchidi has positions in Bitcoin and Solana. The Motley Fool holds positions and recommends Bitcoin, Coinbase Global, and Solana. The Motley Fool has a disclosure policy.
Are you new to investing in cryptocurrencies? Do these 3 things right now was originally published by The Motley Fool