What is crypto investment? Why are more people participating in investment? In this article will explain to you and guide newcomers how to invest effectively smartly.
1 – What is crypto investment?
First you need to understand what Crypto is? Crypto is a cryptocurrency using decentralized blockchain technology, which is the algorithm that runs on computers. Coins such as bitcoin, ethereum, binance coin, … are called crypto.
Understand fundamentally, the investment also crypto almost like you invest in securities. You buy cryptocurrencies at a low price and when the value of the cryptocurrencies increases, you sell them to make a profit x2 x3 even x10 of the original capital.
But for the crypto market, there are advantages over the real estate and gold markets that you only need to have an amount of 100 – 200 $ to start investing.
How to invest, invite you to continue reading the sections below. After reading all of the information in this article, you will have a basic amount of knowledge to be able to invest wisely.
2 – What is a crypto investment mindset to prepare?
Investment thinking is very important, so is it in any market. There are many people who still do not understand investment thinking leading to losses, default, depression, … and then they say this is a scam market or even blame others.
Some of the following investment thinking criteria you need to understand:
Use your free money: in any market, you should only use your idle money, unused money, to invest. Absolutely do not borrow money or mortgage assets to invest.
Take risks: not only crypto, gold or real estate, and securities are at risk of losing money in the market. If you buy at a time when the price is too high or during a period of market bubble, you will inevitably run the risk of loss. Your job is to invest in a position in the opportunity there will be risks, so that if you lose your investment money, you will not be too hopeless. However, if you have the knowledge then you can manage the risk.
Do not put eggs in a basket: this is the investment mindset of the world’s famous billionaires to help you limit and manage your risks. Instead of spending all the money invested to buy 1 cryptocurrency, divide that amount to invest in 5 coins or 10 different cryptocurrencies. That way, your risk will be broken down into several parts.
3 – How to make money from crypto investment
3.1 – Step 1: Select potential cryptocurrencies
In the crypto market there are many well-priced cryptocurrencies with potential for growth. You can see a list of cryptocurrencies on coinmarketcap.com.
Thus, your job is to look at and select a list of cheap cryptocurrencies with the potential to increase in price.
First you need to access Coinmarketcap and then select “cryptocurrencies” -> “ranking”.
You choose any 1 crypto currency to view price chart information. Example: XRP
Here you view the columns of the chart by day (7D), month (1M), year (1Y) and column All. You compare the current price with the price in the past of crypto, if the current price is less than the price in the past then this is the potential crypto and the time you can buy.
3.2 – Step 2: Buy and hold cryptocurrencies
Once you have selected good cryptocurrencies, you use the Binance exchange to buy and store them. Waiting times can be calculated in months or by years is quite long.
How to buy, there will be a link to the article below.
3.3 – Step 3: Sell the cryptocurrencies when the price is high
At one point, the price of cryptocurrencies is soaring, now is the time to sell them to make a profit.
How to sell, there will be a link to the article below.
4 – What skills are required when investing in crypto?
To be able to participate in investing, you need the following skills:
Skill in viewing month or year price charts of cryptocurrencies. See prices on tradingview.com and coinmarketcap.com. Very simple, as explained above, you just need to compare the current price against the historical price to see if the cryptocurrency is at a good price or not.
Skill to distinguish junk cryptocurrencies on coinmarketcap.com, this is a website that statistics information of all cryptocurrencies in the market.
When you search for a certain cryptocurrency on coinmarketcap.com without data or information, you should not invest in those cryptocurrencies.
You check to see if the capitalization of that crypto is large or not and is present on the Binance exchange. These are the two basic factors that will help you determine if this is junk crypto or not.
How to identify good and junk crypto currency, please continue to see below.
5 – How to choose a cryptocurrency to invest in
5.1 – Step 1: Identify a good cryptocurrency
Good liquidity: It means that a cryptocurrency you want to buy as much as you want and you want to sell it at any time. Acceptable liquidity is in the range of 500,000,000 USD and above. You can see it at coinmarketcap.com.
Large communities: There must be communities of information.
There is great potential: considering behind those cryptocurrencies is who sponsors, whether or not that unit’s potential is strong or not.
Present on the Binance exchange: Binance is the largest exchange in the world, if that cryptocurrency is present on this exchange, it means good liquidity.
Step 2: Determine the price of the cryptocurrency
When you choose a good cryptocurrency, the factors in step 1 above are not enough. Because there are good cryptocurrencies but their prices are very high, but there will also be good cryptocurrencies with cheap prices, this is your chance to buy in and invest. Below are the price factors:
What time is the price of the cryptocurrency in the daily, weekly and monthly charts? Based on this chart you will determine whether to invest in the short or long term.
As instructed above you access to Coinmarketcap then select “cryptocurrencies” -> “ranking”.
You choose any 1 crypto currency to view price chart information. Example: XRP
You see the columns date (7D), month (1M), year (1Y), All. You compare the current price with the price in the past. If the current price is less than the price in the past then this is a crypto that is priced well.
6 – Crypto investment strategy from time to time
Inside the crypto market is a market with a 2-3 year cycle that will bounce back. Here are the 2 most basic crypto investment strategies you need to know and choose for yourself a suitable strategy.
6.1 – Long-term investment strategy
Choose 5 good cryptocurrencies, good prices to buy to store. For the long term strategy look at weekly and monthly chart to track.
You should only use your idle money to invest, not to borrow money to invest.
6.2 – Investment strategy of accumulation
For an investment strategy in the form of accumulation, you will also choose 5 good cryptocurrencies with good prices.
With each purchase, you will spend 5% of your weekly balance each month to buy crypto.
The strategy is like going to a company that pays monthly salaries and bucks part of your paycheck to save money.
7 – Risk and investment models crypto What is phishing?
In the crypto market there are always risks if you do not have the basic knowledge. Here are the risk models you need to know.
Deposit 1 get 2: this is a form of scammers creating a website using images of famous people to urge others to deposit crypto for them, they will get double in return.
Cheap Crypto Trading: As a novice, you should only buy and sell cryptocurrencies on the Binance exchange, should not trade on the black market, although the transaction price on the black market is cheap but there is a potential risk of being deceived by others.
ICO project, STO raising capital: Currently there are a lot of cryptocurrencies in the market, making the market gradually saturated. Therefore, projects that raise funds for new cryptocurrencies that have not been listed on an exchange are at high risk.
As a newbie, you should only invest in crypto that is already on an exchange for added peace of mind.
Betting games: there are many crypto betting games, you should not participate in these forms.
Margin Trading: Margin trading is not a scam, it allows you to leverage x2 x3 of your initial capital to make a profit greater than your capital. But this form is not recommended for newcomers, the possibility of losing all assets is very high.
BO exchange: this is a very high risk binary form of trading. So, if you are new, you should not participate in BO trading.
8 – Understanding the market
8.1 – What is the potential and risk in crypto investing?
If you choose the right time of good price, it is considered potential. Conversely, if you buy at a time when the price is too high, you run the risk of holding money for a long time.
A – Potential
Potential means that some cryptocurrency in the past was at a very low price but then the price went up 5 times. Thus, if you invest to buy 1000 $ then x5 you get 5000 $.
You will see the price chart of bitcoin below. If you bought bitcoin at the right time with a good price, your money is now 10x.
B – Risk
Contrary to the potential, if you buy crypto at a time when the price is too high, the risk of you will swing at this price for a long time. It takes 3 years for you to be able to refund your capital.
8.2 – Understanding the terminology of the market
You need to know what is altcoin, stablecoin, token, …? And other fundamental terms in the cryptocurrency market.
8.3 – Differentiate types of Coin
StableCoin: are coins whose value does not change, stablecoins appear in the crypto market to help investors take profits in times when the market rises too strongly or falls too sharply, they will change to other coins. stablecoin.
Typical stablecoins such as: USDT, USDC, BUSD are priced according to the value of US dollar, 1 USDT = 1 USD.
Bitcoin: currently in the crypto market bitcoin accounts for more than 60% of the total market value. Bitcoin is a currency invested by people with a large amount of capital because of its very high liquidity.
Coin Top with large liquidity: In addition to bitcoin, there are other altcoins in the top liquidity such as: Ethereum (ETH), Binance Coin (BNB), … For this coin when you buy in, it will be very easy to sell. easy because there are buyers.
Low liquidity coins: coins with a market capitalization of 100,000,000 – 200,000,000 USD are not high liquidity coins. Characteristics of this coin if someone buys with a large amount of money, the price will grow x2 very quickly but also decrease very quickly, usually only for a few hours.
Newly listed coins: These coins have extremely low capitalization and very little information, these coins are difficult to invest in high risk. You should not choose this coin because there are many other better options.
Coins on large exchanges and small exchanges: You should prioritize the coins that are on large exchanges like Binance, you should not buy coins that are only available on small exchanges because the liquidity of these coins is difficult to sell.
8.4 – Investment planning
Once you have understood all the above information, now is the time to start making an investment plan in the following sections:
Investment money: you should only use the idle money you save, not borrowed money. And before deciding to invest, you must think about investing with the mindset “if this invested capital is lost, it will not affect your life.” Never spend all the money you have, to buy crypto and then pray every day x2 x3 the amount, that is a “greedy” mindset and lack of knowledge in investing.
Coin selection: based on the above knowledge, you can see the price chart of the coins (crypto) on coinmarketcap.com and tradingview.com to select a list of coins with good prices for an investment plan.
Investment decision: once the plan is in place, you should now start refilling the Binance exchange to buy the cryptocurrencies you have filtered out of the list.
Set profit goals: it is very important to set profit goals, you have to limit yourself 1 stop in investment. Because if you don’t limit your stops, your greed will affect profit taking.
For example, you set a profit target of a certain cryptocurrency x2 based on the previous history of this cryptocurrency that used to be x2 x3. You should only aim for a smaller profit than the historical price increase of that cryptocurrency to be safe.
Take profit, sell crypto: when the price of the cryptocurrencies you buy has increased to the level of your profit target, it is time to sell to take profit. The process of waiting to take profits will be months or 2-3 years depending on the plan, depending on the strategy, and depending on the cryptocurrency you buy.
9 – Conclusion
So, do you understand what crypto investment is? This is a market that you can easily invest with a small amount of capital from 100-200 $, compared to markets such as real estate, gold, … then you need a very large amount of capital to be able to invest.
Hopefully, through this article, a novice like you can know how to invest in smart crypto to return x2 your initial capital. Wish you success!