Cryptocurrency investment has hit its topmost form in recent times after Bitcoin raised millionaires and billionaires in its sudden run in late 2017.
In normal terms, there is the need to consult investment experts for advice before entering the sector, however, due to how difficult it is to get the most important rules before purchasing the tokens, people decide to go straight into the investment after being satisfied with just the price, and the speculations surrounding the cryptocurrency.
Don’t put all your Eggs in One Basket
Despite the fact that asset is purchased for its potential to record a positive growth in the future, no one can give a 100% guarantee of a success. Cryptocurrency investment is likened to the planting of maize.
In as much as the planter is expectant of a growth, he cannot be 100% percent sure whether the seed will die in the ground or survive as expected, explaining why more than one seed is buried in the ground in maize planting.
In the 1990s, a lot of stock investors purchased Yahoo, neglecting Facebook, Google, and Amazon completely. In the long run, the neglected assets surged in price beyond imagination. It is always important to diversify the cryptocurrency portfolio to reduce risk and still have something to be happy about when the others disappoint.
Cryptocurrency Investment is All about Patience
The clear line that separate investment from trading has been misunderstood. Before engaging in any of these, people should understand that investment is a long term phenomenon whiles trading is a short term engagement.
Anyone who invests in cryptocurrency should understand that he is putting his fund away for more than a year. In as much as there is high volatility in the market, cryptocurrency does not create millionaires in just a day.
When Kristoffer Koch purchased 5000 bitcoins worth $27 around 2009, it took him around four years to get $886,000 which came as a surprise. It is highly recommended that you invest an amount you can afford to lose to avoid temptations of withdrawing them in the early stage.
Consider the Circulating Supply
Any cryptocurrency that is trading at a higher price has a small circulating supply. In crypto investment, the circulating supply is even important than the price. People consider the tokens with smaller prices before buying.
Cryptocurrencies with low prices but large circulating supply take years to record double digit price. This happens because the price is calculated by dividing the circulating supply by market cap. In this case, the market cap needs to outrun the circulating supply to record more than a dollar.
Bitcoin is doing well because it has just 17 million circulating supply. Ripple has over 130,000 billion circulating supply with a large market cap, but trading at less than a dollar. Had ripple had a circulating supply of 17 million just as Bitcoin, its current market cap would have drove the price very high.
Mostly, cryptocurrencies with at most 150,000 million circulating supply are good investible assets, since, with the right team, they can rise to the moon.