Top 6 Things to Check Before Investing in Bitcoin (BTC)
30 August 2021
Bitcoin investment is expected to be one of the most rewarding investment methods in 2021. We've often heard major players say, "Be it any direction, equity makes someone a rich man and another a poor man." This could be due to the stock market's high volatility. And with more algorithmic trading on the market, the skill of generating money has gotten a little more exact than previously. However, this has resulted in the emergence of new market bitcoins. You have probably heard about it and how people have profited from it over the last decade, months, or weeks.
Investing in bitcoins is both enjoyable and profitable. In the stock market, it would take more than ten years to make the same amount of money as you would in the crypto market. However, high benefits come with high risks.
Here are the top market-proven keys to safely invest in Bitcoins.
1. Know the market capitalization of all coins
To invest safely in bitcoins, the first step is to learn about the coin's market capitalization often called its market cap. The entire net worth of all the coins in circulation is known as the market cap. It is calculated by multiplying the outstanding coins in circulation by the current price of the coin. The reason for this is that some coins are less expensive, and newcomers tend to acquire in large quantities in the hopes that the price would rise to that of bitcoin. However, given their infinite currency circulation, their market capitalization must exceed bitcoins for those coins to reach the price of bitcoin. Knowing how each coin’s market will function in the future will offer you a rough notion of how it will perform.
2. Know the scenario why you are investing in Bitcoin
The year 2021 has been designated as the year of cryptocurrency, and the excitement is palpable. Every day, everyone is talking about cryptocurrency. Every month, a new cryptocurrency emerges. Most of them are designed solely for conjecture and hype and have no practical application. This is why it is necessary to research the use cases of the currencies one is considering investing in. For instance, bitcoin's best use case is that it is overtaking gold as the best store of value and inflation hedge owing to its scarcity, while ether seeks to be the next web 3.0 with the internet's future structured around its ecosystem, among other things.
Currently, the ethereum blockchain is used in 90% of all DeFi initiatives. With its quick transaction rate and low cost of constructing additional blocks, cryptocurrencies like Cardano aspire to bridge the economic gap by banking the unbanked. By analyzing each currency and its use cases, one may determine where to invest to achieve the best future results.
3. Dollar-cost averaging
Given the significant volatility of the crypto market, it is always preferable to enter the market regularly to avoid the market’s volatility. Dollar-cost averaging is an investment method in which the total amount to be invested is divided over a while. A systematic buying plan is a unique financial idea that has been adapted for use in the crypto market. This is a beneficial choice for investors because it combines a systematic payment of a small sum over a long period with the convenience of automatic bank transfers. An SBP allows you to enter bitcoin or ether at regular times to average out the expenses and beat the volatility.
4. Portfolio diversification
It is always a good idea to spread your money across numerous coins so that if one loses value, you can make up the difference with the others. Many cryptocurrency investors use a 6:3:1 investment plan, which implies they put 60% of their money into bitcoin, 30% in Ether, and 10% in other coins.
5. Use the stop limit tool to reduce your loss
Our investment selections are frequently proven to be incorrect, especially in the early years of trading. Due to a lack of attentiveness and research, 95% of traders lose more than they gain. Occasionally, the market will take an unforeseen turn. Use the stop limit function to limit your losses during this time. It allows you to instantly exit the market whenever it reaches the price you set and can afford to lose. This tool is also available on Unocoin’s platform to help us.
6. Never put more money into something than you can provide to lose
“Don't put your next month's rent into investments, you might end up homeless”. One thing to remember while investing in any market is that the market is unconcerned about your emotions. You may wish to maximize your profits through investing all your funds, but no one can predict whether the market will crash in the next hour or tomorrow. So before you invest, make sure you understand the risks, perform the appropriate calculations and conduct extensive research.
Where to invest Bitcoin in India?
Are you looking for the best platform to buy bitcoin with INR? Then, you have chosen the right place. Koinbazar, India’s leading cryptocurrency exchange where you can buy, sell, and trade Bitcoin (BTC) easily.