Diversify across multiple cryptocurrencies
The adage “don’t put all your eggs in one basket” is very relevant in cryptocurrency investing. One of rookie mistakes the most common is to “bet” all your money in just one or two cryptocurrencies. You would be exposing your entire investment to crypto risk.
For example, many investors who believed that the Dogecoin was going to reach $1 invested heavily in this memecoin when its price was at its highest. If you had invested all your savings in the DOGE, you would regret it bitterly.
However, if you spread your capital across many digital currencies, even if Dogecoin drops 70%, the effects on your portfolio will be mixed.
Apply the “Dollar Cost Averaging” (DCA) method in crypto
Much like diversification, this crypto tip aims to reduce volatility in your portfolio. It consists of making recurring purchases of cryptocurrencies for the same amount. This has the advantage of smoothing out your entry points, rather than looking for “the best” entry point.
For example, you can buy 100 euros of Bitcoin each month over 2 years; instead of investing 2400 euros all at once in Bitcoin.
Most cryptocurrency exchanges allow you to set up recurring purchases to apply the DCA method.
Learn to read cryptocurrency charts!
There are times when fundamentals move the market. For example, when Coinbase announced its IPO and when PayPal announced its adoption of cryptocurrencies, the markets were driven up by these announcements.
However, there are periods of calm or the markets are rather calm. During these moments, it will be necessary to refer to alternative methods of analysis, in particular technical analysis.
The psychology of the markets means that cryptos, especially the most liquid ones, obey sometimes exploitable technical configurations. It is therefore important to learn technical analysis and reading a cryptocurrency price chart.
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