Without any doubt, cryptocurrencies have worked their way into the consciousness of the average investor. The growing interest in the opportunities of the crypto market has shown that investing in digital assets is one of the viable ways of evading today's economic realities. Due to this prevailing narrative, we have put together a comprehensive guide on how to invest in cryptocurrencies.
What Are the Things to Consider Before Investing in Cryptocurrencies?
It is important to become familiar with the extreme volatility commonly used to describe the crypto market. The speculative nature of the market has made volatile price fluctuations a common attribute of the market, so much so that even the more stable digital assets, like Bitcoin, often experience price swings alien to traditional assets. Therefore, it is advisable to consider the possibilities of such price fluctuations and how it might affect the profitability of your investment portfolio before deciding on the percentage to allocate to cryptocurrencies.
Once you have determined the amount to invest in crypto, the next step entails thorough research of the best cryptocurrencies to invest in. Here, you should consider the market cap of the cryptocurrency, the use case of the digital asset, and the likelihood of generating impressive returns. Next, you need to decide if you will rather invest in physical cryptocurrency or go for crypto futures and, thereafter, conclude on the duration of such an investment.
How to Invest in Physical Cryptocurrencies?
Cryptocurrencies require special storage systems called wallets. Those who own crypto must either rely on third-party websites or enable an autonomous storage facility for their assets. For the former, you will need to open an account with a software wallet provider and receive a public address, which you will use to accept cryptocurrencies. On the other hand, the latter entails you to have access to your public address as well as the private key used to authenticate transactions.
Depending on the volume of cryptocurrency you plan on holding, you could also opt for the services of platforms offering insured cold storages for digital assets. After you must have picked a wallet, you ought to choose from the list of top crypto exchanges allowing users to purchase crypto with fiat money. Before this, you should have identified the right time to enter the market, especially if you are opting for a short-term investment strategy.
How to Invest in Crypto Futures?
To some, the process of storing cryptocurrencies is complex. Likewise, the security issues related to engaging directly with the crypto market is a huge risk on its own. For these people, it is better to opt for an investment scheme that allows users to bet on the future of digital assets without physically holding them. This is where crypto futures come in handy.
With this investment option, you can engage with the crypto market the same way a futures contract for a stock index allows you to partake in the traditional stock market. In other words, investors could take delivery of cash upon the settlement of crypto futures contracts. Therefore, you do not need to own a wallet or enable a cold storage infrastructure with third-party services. And since there is a growing list of regulated platforms that provide the facilities to trade crypto futures, participating in this market is relatively safe.