If you are beginning to invest in crypto, this article is a must-read. We go into the depths of the crypto world, neatly differentiate between trading and investing, while also giving you a practical guide into investing which you can follow right away.
Newbies in the crypto world may find it quite difficult to keep up with market volatility. Crypto Market goes up and down as per its nature and the value of crypto assets depends on the balance of supply and demand. If investors and traders decide to buy cryptocurrency at its high demand, the price usually goes up and when there is less interest and more supply on the market, the price goes down.
Most Investors tend to analyse the market before the trade. Applying fundamental analysis helps determine the price, whether it is overvalued or undervalued. Technical analysis helps evaluate the trading volume and the market cap, using the current price and circulating supply. For example, if each unit of a cryptocurrency is being traded at $5.00, and the circulating supply equals 10,000,000 coins, the market capitalisation for this cryptocurrency would be $50,000,000. In addition, the investors can use market sentiment, the feeling of the market, to better understand the market movement.
But before getting into the technical analysis part, let’s first get into the basics of investing and learn about crypto investing, its benefits, and how it differs from trading?
What Is Crypto Investing?
Investing is a committed capital to earn a financial return and expect the future benefits or advantages with the expectation of generating a profit. Cryptocurrency can invest in a startup business, ICO, STO, lending, Yield Farming, Staking NFT, or buying virtual land in the metaverse.
In Crypto investing, the main goal is reselling the assets later when the price goes up or getting the yield while holding them for a more extended period. Return on investing and building wealth is the core concept for investing. The approach is to invest in assets that will increase in value, often, it will take over a long period, and long-term investors do not worry about short-term price fluctuations and losses. Typically investors focus on passive income and long-term returns.
In the financial market, investing aims to generate and increase the asset value and sell them later at a higher price for profit. The booming of cryptocurrency resulted from the hyper-growth value and significant returns of cryptocurrencies like Bitcoin and Ethereum. In November 2021, the total market cap of the cryptocurrency hit its peak at about $3 trillion.
Crypto Investing and holding helps to create a better path toward financial independence and beat inflation. Investors who adopted cryptocurrency and blockchain technology at the beginning of the cycle have already received significant returns.
Long-term crypto investing gives investors direct control over their assets and diversifies their portfolios. Furthermore, digital assets are easy to sell anytime and anywhere, giving investors an edge to release their assets at their convenience 24/7 without any restricted hours.
Crypto Investing Vs Trading
Both traders and investors aim to profit from the financial markets. However, their methods are pretty different. Generally, investors would generate a return/ profit over a more extended period, which can be years or decades after the investment was made. Investors have a specifically targeted return for each asset, and the initial investment fund can be more extensive compared to short-term trading.
On the contrary, the shortened trader will take advantage of the market volatility and seek smaller returns which they will trade much more often than the long-term investors. Suppose you are uncomfortable with constantly checking the price and looking at the trading monitor every hour. In that case, it is best to seek longer-term investment opportunities that fit your financial goals and target.
Crypto Investing Strategies for Beginners
Fundamental analysis (FA) would be a great start, and it is the common method that both investors and trading used to assess the market, the value of an asset and determine if the current market offers a price per unit of the asset too high or too low.
Using Fundamental analysis (FA) the crypto investors can justify the performance of each token and determine how external factors such as new developments and the number of coins in the market can affect the performance of a coin. These considerations focus on both quantitative and qualitative aspects of the coin. For example, Bitcoin has a limited supply of 21 million, and international stores are now accepting it as payment. It would mean that in the future, Bitcoin’s value will increase due to its limited supply and increasing demands.
Technical Analysis (TA) will help the investors to understand the forecast of the future market and the market behaviour based on the price action and volume data. Savvy crypto investors use this technique by assessing historical price action and predicting the potential future price. Crypto currency’s price fluctuation and volume data users to identify the market trend and possible new market opportunities to buy or exit.
A combination of Fundamental analysis (FA) and Technical Analysis (TA) is considered by many investors a logical choice. Long-term crypto investing strategies can be crafted by reviewing the facts to understand the future projects of the coin, then using historical data of the market price and volume to determine the coin’s value and the market trend.
Crypto Investing During Bull and Bear Markets
A bull market is where the crypto prices are going up, and the charts are driving on the uptrend, in contrast to a bear market where the prices and the charts continue to go down. Determining the market’s trend before investing and learning about the market sentiment (news) would be a good indication. Assessing the Market Sentiment helps the investors indicate whether the market is bullish or bearish.
A market swing happens when a significant fluctuation in the value of digital currencies. The considerable change occurs in a short period, which could be for a few days or weeks. The attempts to profit from the price swing or market volatility can be seen when investors buy the undervalued assets and later sell them at a higher value.
How to Invest in Cryptocurrencies
At CoinField, a regulated cryptocurrency exchange, beginner investors can open a completely free account and invest in the popular digital currencies like Bitcoin (BTC), Ethereum (ETH), Tether (USDT) and XPR.
Opening your account at CoinField is relatively easy. Sign up at coinfield.com, fill in your email. You will receive an email to verify yourself and a step-by-step guide to begin your crypto investment.
Once you log in, you will be invited to verify your account. From the dashboard, go to settings and click pro account, take a picture of yourself, upload a passport picture, and provide proof of address. If you’d learn more about how to step up the account, check this: How to Verify Your Account.
After your account is fully verified, you will have to fund your account and then invest in cryptocurrencies of your choice. You can buy, sell or hold the cryptocurrencies directly on the trading terminal or download the CoinField app.
For a medium-term investment and fixed reward, you can choose CoinField Coin Staking Programs. You will need to purchase CoinField Coin (CFC) and stake them over a fixed period and get a reward up to 15 per cent.
CoinField Coin (CFC) holders will also get a trading fee discount of up to 50 per cent, depending on the amount of the CFC holdings and the 30-day trading volume. The programs can be selected directly from the CoinField trading terminal, and you can choose the programs that fit your investing goal.
Apply for the staking programs with CoinField go to the dashboard, click the Staking programs and select the program you prefer. Simple and Easy!
Cryptocurrencies are digital assets that can be used for investment and trade for short and long-term purposes. Each asset’s performance will depend on its supply, demand and market conditions. Studying and researching about each coin, analysing the crypto price, and reading the technical chart is a great way to start.
The combination method of fundamental, technical and sentiment analysis can determine your investment strategy. Finding the market entry or exit points is crucial for both pro and beginner investors. Therefore, it is worthwhile for investors to research the coin performance, track the chart, and watch the crypto price and trading volume before you make any kind of investment.
The combination method of fundamental, technical and sentiment analysis can be used to determine your investment strategy and do not forget to stay updated with the news.
We do not intend this article to be investment advice, and we encourage users to conduct individual research on cryptocurrency. This article is for informational purposes only.