With the incredible rise in popularity of cryptocurrencies over the past year, novice and experienced investors alike are starting to take an interest. After all, just one Bitcoin was worth $10 back in 2011. Now it’s valued at $2,592!
While Bitcoin is certainly the most well-known cryptocurrency out there, there are plenty of other opportunities for investors. It can be a little intimidating if you aren’t all that tech-savvy or don’t really understand how the cryptocurrency market works, but it’s actually pretty simple. Before you start placing Swyftx orders or any other crypto purchases, here are seven things to consider before investing in cryptocurrencies:
1) Understand the Market
Before investing in any new technology, it’s important to understand what you’re buying into. After all, the world of cryptocurrencies is complicated enough without you being blindsided by some aspect that makes it even harder for you to understand. So, find answers to the following:
- What are the benefits?
- Who uses cryptocurrency?
- What kinds of problems are they trying to solve?
- How do these technologies work?
2) It’s Not Too Late to Invest in Cryptocurrencies
The price of Bitcoin has gone from $1 to over $2,500 in the past year alone. Imagine if you had invested just five years ago – it would have been worth millions by now! So don’t let the fact that cryptocurrencies are still relatively new put you off investing for the future.
3) Think About How You Want to Access Your Investments
There are three different ways to access cryptocurrencies:
Buy and Hold: Cryptocurrencies can be purchased and held, just like any other investment. You can choose to sell when you need the money or if the price rises significantly, but there’s also a chance it could gain more value in the future.
Mining: Some cryptocurrencies can be mined, which means they’re created by computers worldwide that solve incredibly complex math problems to create new coins.
Trading: For those with experience in trading stocks, currencies or other assets, you can also trade cryptocurrencies on an exchange. You can place Swyftx orders and start trading immediately once you receive your allotted cryptocurrency. It is perhaps the quickest way to turn a profit, as you’re buying low and selling high.
4) Store Your Cryptocurrencies Safely
Just like anything valuable, you need to store your cryptocurrencies somewhere safe. It means storing them in a wallet that’s not attached to the internet – either on a USB key or some other storage device. That way, if someone hacks into your computer and steals your login details, they won’t be able to access all your cryptocurrencies.
5) Know Which Order Type to Choose
When you buy an asset, the transaction is usually completed immediately. However, that’s not always the case with cryptocurrencies. You can choose between different order types available on cryptocurrency exchanges:
Market Order: This is the default option, and it allows you to buy any amount of a given cryptocurrency for its current price.
Limit Order: Rather than buying a cryptocurrency instantly, you can choose only to buy it if the price drops to a certain point. It is advantageous because you don’t have to wait for your order to be completed before selling again if the value rises.
Stop Limit Order: This type of order helps prevent losses and lock in profits by setting limits on how low or high a cryptocurrency can go before your order is placed.
Stop Order: Similar to the stop limit, and this option will automatically sell if the price goes below or above a certain point – however, it doesn’t allow you to lock in profits like stop limits.
Conditional Order: You can also use conditional orders (such as iceberg order) based on trends or flat price ranges. These are more complicated but can be useful if you have a strategy in mind.
6) Find Out How Cryptocurrencies are Taxed
Cryptocurrencies are treated very differently from country to country. While most countries treat them as assets for capital gains tax purposes, some consider cryptocurrencies a currency. In Australia, for example, cryptocurrencies are treated as foreign currency, and gains from buying and selling them are taxed.
7) Don’t Keep All Your Eggs in One Basket
While cryptocurrencies have a lot of growth potential, investing all your money into one is still incredibly risky. Spread out across multiple cryptocurrencies – and not just the most popular ones like Bitcoin and Ethereum – is often a good way to minimise risk. It also gives you more choice when it comes to currencies – instead of being forced to use Bitcoin at a bunch of different places, and you’ll have the option to use any number of cryptocurrencies.
If you’re thinking of investing in cryptocurrencies, it’s important to take your time and do some research first. Don’t place your Swyftx orders in a rush. There are a lot of factors to consider – how you access investments, whether or not to trade on an exchange, how to store your currencies safely, etc.