How to Invest in Cryptocurrency in Smarter Way

Nearly a Third of Millennials Say They’d Rather Own Bitcoin Than Stocks

survey by venture capital firm Blockchain Capital found that about 30% of those in the 18-to-34 age range would rather own $1,000 worth of Bitcoin than $1,000 of government bonds or stocks.

We have most likely heard of Bitcoin or cryptocurrencies by now. However, are you truly familiar with cryptocurrencies? Are you able to make a smart investment with these highly volatile cryptocurrencies?

So, how can you make a smarter investment in cryptocurrencies? Below are some hacks you can follow:

Know Your Appetite!

Don’t “overeating” if you can’t afford!
  1. Set A Stop-Loss

First and foremost, you should set a stop-loss level to avoid financial collapses. A stop-loss is the level of loss where the trade will get closed.

2. Build The Portfolio

Next, keeping that number in mind, you will need to build up your coin portfolio. The higher percentage should be allocated to the least volatile coins, with a smaller percentage given to the least stable, yet potentially higher returning currency.

3. Monitor Your Portfolio

Next, always keep an eye on the market signals. You can follow cryptocurrency news sites and market intelligence platform to keep up with the news and updates. You should keep in mind that the price correlation between Bitcoin and most Altcoins accounts for volatile market conditions. Bitcoin and the majority of other coins have an inverse relationship in their value. Once there’s a dip in the bitcoin price, everyone rushes into buying other coins and vice versa. This volatility can cause serious losses for inexperienced investors.

By keeping up with the market signals, you could use those insights to adjust your trading strategy on a daily basis.

Always allocate your assets based on your risk tolerance level

Resist Overtrading and FOMO

1. Fear Of Missing Out

Trading FOMO — fear of missing out on buying the new hyped coin and “losing” some potential profits.

Investors often feel urged to buy a certain coin when the price is being pumped up and end up allocating a lot of fund to over-hyped and often, illiquid assets. We need to beware that the price may be artificially inflated by bots and the shining coin may quickly lose its value.

2. Overtrading

What is overtrading? Overtrading is selling immediately your coins when you see a small price spike like 10–20%. In most cases, this could be a temporary occurrence. The smaller currency holders will be tempted to sell their coins off, before the price goes up further.

Selling an asset off just because it’s in profit is not a viable long-term strategy as it can diminish your future gains. After all, if the coin rises 10 times in price over a year, an 80% loss will wipe out that 400% gain you have initially made. Additionally, overtrading will result in a significant chunk of your assets being eaten up by huge exchange trading fees.

Check out one of the most competitive exchange trading fees in Asia!

Beware of the Trading Bots

Financial markets are prone to speculations and cryptocurrency trading is no exception. Some “savvy” players are now using bots to artificially inflate the coin prices and manipulate the markets.

One of the most dramatic market crashes caused by trading bot is the famous 1987 Black Friday Wall Street crash, where equities dropped over 30% in one day. It was caused by program trading — the first generation of bots, which sold stocks automatically when they fell below a certain price.

Today, bots have become ubiquitous and are certainly not limited to the equities market. In the equities world some bots (commonly known as high frequency traders) are in fact welcomed because they provide liquidity to normal buyers and sellers of equities. But in the cryptocurrency world, not all bots are created equal, and many are not there to help you.

Neo Case:

With Ethereum’s 5,800 percent rise in 2017, investors piled into Neo, which is touted as the Chinese equivalent of Ethereum. And Neo quickly became prime territory for a trading bot to operate and take advantage of overly optimistic and inexperienced investors. On 29 November 2017, advanced crypto trading platforms began detecting abnormal signals that indicated multiple bots trading on Neo. The extreme volatility of the market coupled with dozens of bots trading simultaneously caused the price to crash within minutes of the first detected signals. Neo went from $34 to $3.74 in a matter of seconds, before returning to $34. Investors who bet big lost almost everything within a few bats of an eye. This kind of flash-crash has happened more than once and will likely happen again.

Spotting the trading bot, however, is a tough call. You will need to carefully watch the market trading signals and learn to notice the abnormal trading patterns.

The two biggest indicators of bot market manipulations are price momentum and volume. As an investor, you should carefully watch these two parameters and try to notice coordinated buy patterns early on. The alternative is to use a cryptocurrency trading analytics platform that will do “the watch” for you.

Herd Mentality

The real reason people are now interested in bitcoin might be much simpler: because everyone else is.

As humans, we’re easily tempted to conform to what everyone around us seems to be doing. Wide media coverage can heighten the sense that we’re missing out on something that everyone else is doing, and the more we hear about something like bitcoin, the less risky it seems to us.

The only reason you buy bitcoin is because you think that other people value it too. In other words, people buying bitcoin are assuming that someone else will come along soon enough who’s willing to pay more for the same amount of the cryptocurrency. Or maybe you invest in the cryptocurrencies because you heard people make money from it. One of the gold investing rules is to invest something you are familiar with, not to follow blindly the trend.

Rule of Thumb: Don’t invest in something you are not familiar with!

Choose A Good Platform

Nowadays, there is a lot of exchanges get hacked and millions of dollars are being swiped away. So it is important to choose a good platform with sound security.

Tokenize Xchange is a digital asset currency based in Singapore and has a sound profounding security features such as AES 128 security encryption, IP whitelisting, 2FA authentication, hybrid wallet mechanism and multi signatures confirmation.

Besides the exchange’s security, it is important to look at trading commission fees too. Some exchanges charge fees when you deposit or withdraw your funds or crypto out. Check out Tokenize’s tiered trading fees here and learn how you can get 50% off in trading fees when you pay with TKX Emblem (an ERC 20 token issued by Tokenize Xchange).

Do Your Research and Due Diligence!

Last but not least, always do your research and due diligence when you are investing a new token or Initial Coin Offering (“ICO”). Some ICO projects sound promising, but it could turn out to be a scam. You can research the project by reading their whitepaper, attending their meetup and participating in the forum i.e. GitHub, BitcoinTalk etc to spot any abnormalities. Do not jump quickly to a conclusion when it comes to a new project due to FOMO or herd mentality.

If you are looking for an alternative to invest new token in a smarter, you may check out Initial Exchange Offering (“IEO”) platform. On the IEO platform, the sale of a new token takes place directly on an exchange where the investors will send money to the exchange’s wallet and the exchange will then send tokens to the investors. There are many advantages to participate on IEO platform. Check out more details here.

In short, always be clear of your investment objective and know what you are investing in.


PS: Want an easy way to trade or invest in cryptocurrency? Join us now @ https://tokenize.exchange/

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