Investing in crypto is much more than merely putting your money into promising tokens through your preferred exchange. A lot has changed over the past 12 months, leading to a monumental rise in risks associated with the industry. Events like the FTX fiasco have left millions of investors rekt. Billions of dollars in cryptocurrency funds are now zero. Thanks to the notorious crypto hacks and uncontrollable scams. While these events worsened the already boring crypto market amidst a prolonged bear run, there are several takeaways that a crypto trader can use to master their investment game in 2023.
As the risks involved in the crypto industry increase, investors need to be more cautious than ever to avoid getting rekt due to an unexpected scam. While investing in cryptocurrencies is a simple process, safeguarding and growing your portfolio takes a lot. You can invest in cryptocurrencies with just $10 but becoming a seasoned crypto trader requires much more than money.
Follow These Strategies To Become An Expert Crypto Trader
When you put your money in a volatile market like crypto, your entire portfolio is at stake. This is why you must have a solid investment strategy to safeguard your portfolio. Here are some proven strategies to make the job easy for you:
Identify The Best Suited Trading Type: Risk management is becoming increasingly complex. The price movement direction changes within seconds in the crypto market. Therefore, you must identify which is the right type of trading for you before putting your money into any token. There are different types of trading such as day trading, range trading, scalping, and DCA (dollar cost averaging). If you are trading crypto part-time when you come home from your regular job, it is practically impossible for you to do day trading as it requires continuous attention. However, you can try scalping for a short time and DCA for the long term. This will ensure that you are tracking your portfolio most of the time.
Extensive Project Research: Events like the Terra-Luna collapse are prime examples of what can go wrong with a crypto project that looks fundamentally strong at the first glance. Scammers and wannabe founders are experts at building such projects to make easy money. As an investor, you must research a project in detail before putting in your money. From the whitepaper to team building the project and use cases, you must do your due diligence to avoid getting trapped in a scam. Mastering the art of differentiating fundamentally strong projects from scam projects is the first step to becoming a seasoned crypto trader.
Avoid Holding Your Funds In A Single Exchange: Instead of getting trapped in the never-ending debate between the supporters of centralized and decentralized exchanges, focus on diversifying your crypto holdings across multiple exchanges to minimize the risk. We all are witnesses to the disastrous collapse of FTX, one of the biggest crypto exchanges globally, that left the fate of hundreds of thousands of crypto investors in jeopardy. Make sure you hold your crypto assets across multiple reputed exchanges (both centralized and decentralized) to safeguard the majority of your funds in case of a major collapse.
Befriend Technology: Taking care of everything manually is a mammoth task. From tracing price movements to doing fundamental analysis, there are a lot of things an investor needs to take care of to make money. Thankfully, there are plenty of useful tools in the market that makes the job easier for investors. Learn how to use various useful tools such as portfolio trackers, charting tools, and automated trading bots to get ahead of others in making informed investment decisions. With millions of investors chasing the same goal, you are literally racing against time to make a profit.
Trends Dictate Price Movement: Remember the play-to-earn or metaverse rally? While only a few projects survived the bear phase, that succeeded the hype phase, almost every project within the space provided investors with exponential gains at the peak of the trend. You must be smart enough to catch emerging trends and make investment decisions accordingly. Be it Bitcoin halving or the Ethereum Merge, every trend has a role to play in how the crypto market moves. Therefore, it is extremely important to stay ahead of the trends. Read the latest articles on popular crypto websites, follow renowned influencers and seasoned investors on social media platforms, and understand what VCs are investing in, to catch the trend before everyone else.
Bottomline
Investing in crypto is becoming increasingly challenging as scammers and fraudsters adopt smart ways to steal money from investors. With more and more people jumping on the bandwagon, it has become even more important to stay ahead of the trends and master your trading game. Billions of dollars in crypto assets have been liquidated over the past few years due to different events. A similar amount of funds have gone down the drain due to various hacks and breaches. As a crypto trader, you need to be mindful of all the events that happened in 2022, to make 2023 a profitable year for you.