Introduction
Investing in Bitcoin and other cryptocurrencies is an excellent way to diversify your investments. But investing also involves high risk. Therefore, before you start, it is important to understand certain basic concepts and principles. This is more than just buying cryptocurrency and hoping for a better one.
An investment decision requires a thorough investigation and analysis. Ideally, you should have a strategy based on your risk profile and never invest more than you can afford to lose.
Bitcoin or altcoins?
For newcomers to cryptocurrency, Bitcoin is often the first stop when it comes to investing. It is the most popular blockchain project and the largest cryptocurrency in terms of market capitalization.
However, there are thousands of different cryptocurrencies (altcoins). Some altcoins have their own blockchain, while others use an existing measure (e.g., Binance Smart Chain or Ethereum). Each project has its own proposition, potential risks and benefits.
Whether you want to invest only in BTC or in several crypto-assets is up to you. Some people think it is better to hold BTC; others think it is better to diversify their assets by using altcoins.
On the one hand, diversification of assets removes the risks of investing only in one project. If you have a number of assets, you are less likely to lose significant amounts if one of them fails. On the other hand, investing in altcoins can be risky, and unfortunately, there are many shahravy. Therefore, it is very important to conduct your own research before taking the risk.
With such a large number of coins, it is important to understand what to start with. Check out the article What Cryptocurrencies Should I Buy Other Than Bitcoin? to get additional information about different types of cryptocurrencies.
Trading or Investing?
When deciding on what to buy, you also need to consider whether you want to invest or trade. These two activities can easily be confused, but there is a difference. Simply put, investing involves choosing assets that you believe in and hold for more than a long time. This strategy requires less active time inputs and sometimes carries a much lower risk.
And on the other hand, trading is aimed at obtaining short-term or mid-term profit at the expense of regular purchases and sales. To become a good trader, you need a lot of time and practice. A trader needs to develop more sophisticated strategies, devote more time to analyzing markets and trading platforms, and take more risk. It is also necessary to take into account the money spent on trading, and commissions for transactions.
Keep in mind that cryptocurrency markets sometimes have more volatility than traditional ones. Although traders need volatility to make a profit, a high level of volatility can also carry a high risk.
For newcomers investing is, without a doubt, the easiest and most secure option. Investors often think for years, so short-term changes in prices are not so important. Decisions about ґinvestment are based more on the basic principles of money (how reliable the project and how likely it is that it will be successful in the long term).
Some users think it is better to invest and not to worry about short-term fluctuations. Others believe it is better to trade frequently, trying to maximize profits. Some even do both at the same time. All depends on your strategy, profile and tolerance for risk.
Again, the decision is up to you, but you never want to invest or trade in the money, which you can not afford to lose.
With that said, if you want to learn more about cryptocurrency trading and swing trading, you can find more information in our Complete Guide to Cryptocurrency Trading for Beginners.
Fundamental analysis vs. technical analysis
To decide what will be a good investment, you must conduct analysis. Type of analysis will depend primarily on the investment or trade, but can be useful as a fundamental and technical analysis.
As already mentioned, short- and medium-term price changes are not so important for investing (or Holds). In general, long term investments are more related to the intrinsic value of a coin or project, which belongs to the fundamental analysis (FA).
Fundamental analysis includes evaluation of the asset's potential on the basis of the entire project, including its merits, team, whitepaper, development, marketing, management, reputation, long-term goals and other factors.
And on the other hand, technical analysis (TA) looks at previous price movements and volumes in order to try to anticipate future price movements. The technique often includes candlestick graphs and TA indicators such as cov-naive average and trend lines.
Buying your first Bitcoin on Binance
You can easily buy Bitcoin and other altcoins on the cryptocurrency exchange Binance.
1. Create an account by going to the Binance home page and clicking [Sign Up] in the upper right-hand corner.
2. Next, you will need to verify your Binance account. This KYC process will allow us to verify that you are who you say you are, and that you meet our legal requirements.
3. the easiest way to buy cryptocurrency is to use a credit or debit card with "convert" function
You can also transfer fiat currency from your bank account to buy digital assets through trading mode. For more instructions on both methods, check out the Binance Beginner's Guide.
Buying your first altcoin on Binance
You can begin to diversify your portfolio by buying an altcoin such as BNB, which is a real asset token with a wide range of usage options.
1. Go to your Binance account, put your cursor on the [Buy Cryptocurrency] button and click [Credit/Debit Card].
2. Then you will be able to choose from a plethora of cryptocurrencies. Be sure that you have chosen the right fiat currency.
3. Enter your card data to complete the purchase and get the cryptocurrency credited to your account.
What can I do with my cryptocurrency?
Buying, selling and storing cryptocurrencies are some of the strategies you can use when investing or trading cryptocurrencies. When it comes to long-term storage, you can store your cryptocurrencies in your Binance account or transfer them to an external cryptocurrency wallet.
If you decide to save your cryptocurrency in your Binance account, you can explore the possibility of investigating a myriad of options offered by Binance Earn. You can think of it as a generous withdrawal, which allows you to get passive income by retaining your cryptocurrency.
Final thoughts
Learning how to invest or trade cryptocurrency takes time. Improving your knowledge is a good way to reduce your overall investment risk, which leads to making more informed decisions. It is easy to panic and sell an asset based on emotions, but the chances are much lower if you learn how to invest and trade correctly. For more details, read the article Psychology of Market Cycles.
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