Caution the FOMO effect: the best way to enter crypto investing

Author: Rosemary Barnes
16.09.2021

Despite the ups and downs, the crypto market grows steadily, reaching new all-time highs, and traders/investors understand this industry as a perfect way to capitalize on the fast-growing interest. Meanwhile, the statistics show that 95% of Bitcoin day traders are in the red. Crypto investing is a tricky sector; this is why newcomers need to dive into some basics, strategies, hiding their emotions.

Loans to invest in crypto: do not run to extremes

According to the GamblersPick survey, more than 25% of US crypto investors used loans to purchase digital assets. 38% of respondents stated they needed to sacrifice something (emergency savings, bill payments, etc.). Furthermore, the survey discloses 10-21% of Americans are going to borrow money to board the crypto investing train.

The crypto market has truly great potential for growth, as its capitalization has skyrocketed from $767 M to $2.09 billion in 2021. The price of some assets reached new all-time highs, while the experts predict more ascending trends. On the other hand, newcomers should keep in mind the golden rule of investors - never give the last dollar.

While investing in crypto, you need a plan to follow. Understand which amount is appropriate for you to invest monthly. Have enough funds for living and always pay your bills.

Caution the FOMO effect!

Beginner investors frequently enter the market driven by the FOMO effect. What does it mean? FOMO is an abbreviation from 'Fear of Missing Out.' Newcomers understand that the market undergoes skyrocketing growth and want to catch the lightning-fast train.

For instance, Bitcoin started to grow rapidly, setting new records and becoming the headliner of crypto news. Investors understand they are losing a perfect moment to capitalize on the BTC growth and put the last dollar into the first cryptocurrency. The sudden growth is usually followed by the market correction when an asset's price rolls back. As such, investors driven by the FOMO effect lose money.

No matter how rapidly a cryptocurrency's price skyrockets, keep a certain strategy in your mind and follow your plans. Successful investors put their money in cryptocurrencies during the market downs - such a strategy keeps you always in the black.

Investing strategies: which path to pave?

When you are ready for investing in crypto currency, choose a clear strategy to follow. Crypto investors are roughly divided into the three following types:

  • Daily traders.

  • Holders.

  • Seekers of to-the-moon projects.

The herein-mentioned groups are looking for the same outcomes - to gain profits from crypto investing; meanwhile, methods are rather different.

Daily traders are short-term investors who are looking for signals and news that indicate the possibility of rapid growth. Such traders prefer to invest in a certain asset, wait for its growth by 20-30%, and then take their money back.

Holders prefer long-term investment. They stake on some promising crypto projects (Ethereum, Cardano) and wait for years till the chosen cryptocurrencies will have reached new peaks. The crypto community calls those investors hodlers (HODL is an abbreviation from 'Hold On for Dear Life'). Some hodlers even plan to never sell some of their crypto funds.

Seekers of to-the-moon projects invest money in promising assets that appeared in the market recently. Some revolutionary projects may jumpstart from the very beginning; meanwhile, many newly created assets aim to capitalize on investors' interest, having no true value. For instance, Solana and Polygon are among the most recent breakthrough crypto projects with a ROI of more than 10000%.

Those are the key crypto investing strategies, as a newcomer may follow the individual way or mix popular strategies up.

The importance of an asset liquidity

The overall number of issued digital currencies is more than 11000, but the experts point out more than 95% of all crypto assets as scamming projects. Investors should take an asset's liquidity into account. Choose digital currencies that are exceptionally in-demand among the crypto community.

What is the key danger of cryptocurrencies with low liquidity? Investors may face obstacles while wishing to sell a cryptocurrency by the market price. Furthermore, crypto exchanges sometimes delist coins and tokens that are not demanded by traders.

How to calculate the liquidity of digital currencies? Divide the 24h trading volume by an asset's price. For instance, Cardano (#3) has higher liquidity than Bitcoin (#1). When the liquidity is lower than 1000, it's better to avoid putting your money in.

How to select a marketplace for buying and selling cryptocurrencies?

Crypto currency investing is possible when you have a wallet to store digital assets. The survey shows traders and investors prefer crypto exchanges as a perfect place to hold cryptocurrencies. Users may receive, send, and exchange digital assets easily.

The number of cryptocurrencies steadily grows, and newcomer investors should take security issues into account. Reliable trading platforms keep the vast majority of funds on cold wallets and provide users with a set of protective measures (2FA-authentication, white list of crypto addresses).

For instance, the B2BX exchange is a regulated platform that protects the rights of investors and corresponds with the EU legislative norms. Furthermore, this crypto platform lists only liquid digital currencies.

Why does B2Broker care about newcomer investors?

The herein given list of recommendations and crypto investing basics protect beginners from traps and projects that are going to rob traders. Why is it important for B2Broker?

B2Broker is a company that aims to revolutionize financial markets by deploying innovative high-end solutions. The team of experienced and qualified specialists is ready to push clients to new all-time highs. B2Broker never capitalizes on the lack of knowledge and never earns profit through robbing inexperienced investors.

As for the crypto market, B2Broker strives for making this sector easy-to-use and fully regulated, leaving no place for scammers and White-collar criminals.

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