In 2021, 37 new projects appeared, thus, today their number has increased to 132 cryptocurrency-based investment instruments. But due to the volatility of the crypto market, the risks of losing all investments are also growing. Nikolay Mozhenkov, the founder and president of the A&M Crypto crypto fund, shared tips on how to invest in crypto with minimal risk.
Council number 1. Consider risks
Any investment – in the stock or digital market – must be accompanied by a preliminary analysis of the current situation and the likelihood of risks. Cryptocurrency is a fairly high-risk investment due to market volatility. For this reason, even the large automaker Tesla could not avoid the loss of $ 101 million due to the instability of the bitcoin exchange rate. During the crypto winter – a period when there is a trend in the market for a decrease in the value of digital coins – both new types of cryptocurrencies and coins from the top ten lost up to 95-97% of their original value. This is comparable to the crisis of 2000 on the stock market, when the share prices of Amazon, the largest IT holding, fell by a similar percentage. Therefore, if there is no willingness to take risks, it is better not to invest.
Council number 2. Don’t invest the last
You cannot use the entire amount of income for investments. It is better to choose a long-term, but reliable strategy: regularly invest 5-10% of your monthly earnings. So you can get the average entry price to the cryptocurrency exchange, accumulate a decent annual income and not be left without funds.
Council number 3. Diversification of the investment portfolio
Many novice investors make a similar mistake: they choose one cryptocurrency for investment without considering other market offers. It is optimal to choose 5-10 types of digital coins with different denominations or 10-20 projects in Pre-ICO (pre-IDO), as investors of the A&M Crypto crypto fund do. But in order not to be mistaken, it is necessary to analyze these projects, the team that offers them, its approach and communication with potential investors.
Council number 4. Don’t just stop at cryptocurrencies
The digital market is now very diverse and offers the opportunity to earn not only on cryptocurrencies, but also on other options. For example, use new technologies, such as algorithmic trading or trading through bots that monitor different crypto exchanges and, due to market volatility, can buy coins cheaper on one of them, and sell more expensive on the other. At the same time, the owner of the cryptocurrency retains his initial investment. For example, having 10 bitcoins, an investor not only keeps his money, but also earns on it with the help of algorithmic trading, as well as the growth of the exchange rate of this coin. The only risk of algorithmic trading, compared to holding (“hold” is a strategy for storing cryptocurrencies in order to obtain further profit by increasing its price) of coins, is that
Council number 5. Mining
Mining is a promising but conservative means of generating income. It is especially effective during the crypto winter, when the cost of equipment drops. The most profitable mining will be in countries with low electricity tariffs. But this process also needs to be approached wisely: to properly cool the equipment, to operate it competently, which will require a team of specialists.
Council number 6. Try
Investments in cryptocurrency, according to Nikolai Mozhenkov, especially long-term ones using diversification, algorithmic bots, will give a higher income than investments in stock markets, banking products, deposits, or commercial real estate. The digital coin market is the future and will develop at a rapid pace in the coming years. Explore this market, discover something new for yourself – this will become not only income, but also development.