Cryptocurrency has become the most profitable object for investing money. At the same time, in comparison with precious metals, natural resources, or real estate, virtual coins involve more risks associated with jumps in quotes. Does it make sense to continue or start investing in cryptocurrency next year? What cryptocurrency to invest in 2020?
Compared to securities, bonds, and other classic financial assets, cryptocurrency resembles a kind of lottery, sweepstakes. The booming demand for virtual coins, high margins, and media attention leads to the fact that often the real value of a particular digital currency is overstated at times. Those investors who work with ordinary shares regularly monitor market capitalization and asset volumes. As for cryptocurrencies, their holders should constantly analyze the trends of this market.
How to start investing in cryptocurrency?
So, if you have already decided to invest in digital assets, the first question that arises before you is how to invest in cryptocurrency? Proceed as follows:
If you do not want to engage in auto trading, it remains to accumulate currencies. To do this, at least in general terms, you need to figure out how to form a cryptocurrency portfolio.
The standard portfolio to advise is:
Of course, the rest of the portfolio is of primary interest. You can also buy fewer bitcoins, more XRP, etc. Some traders recommend buying more Ethereum. It is believed that the rate of this cryptocurrency can soar up to 1 thousand US dollars. But such forecasts have no solid foundation.
In any case, it is hardly worth composing your digital portfolio from one bitcoin or, moreover, another cryptocurrency. It is necessary to diversify your investments. However, this should be done wisely. If the portfolio will include cryptocurrencies from the top 10 by capitalization, then x2 (doubling of investments) can be expected for a very long time. Bitcoin, Ethereum, and XRP can stagnate in one place for ages without any profit.
An ordinary portfolio with relatively low risk consists of 70% of the top 10 coins and another 30% of the top 30 coins. As I noted above, such a portfolio can double for many years.
That’s why it is more profitable to compose a portfolio in other proportions, adding cryptocurrencies from the top 100 to it. For example, a portfolio consisting of only a quarter of top-10 tokens, 50% of top-30 tokens, and another quarter of top-100 tokens can be considered risky. Such proportions are most often used by experienced traders to get profit in a relatively short time.
What cryptocurrency to invest in?
Studying current cryptocurrency quotes is the main task of the investor. One must also take into account the reliability of “digital gold”. At the moment, you can easily get into a difficult situation with fake currencies, which are held by companies and are more like a financial pyramid. Verified cryptocurrencies:
Investment process
Knowing the benefits of investing in cryptocurrencies, and deciding which one to invest in free finance, you need to think about the process of buying digital money
The traditional way of acquiring cryptocurrencies is an electronic wallet, fraudsters will not be able to crack it, which only the copyright holder has access to, even if the service on which it is located shares the data. It is also possible to conduct transactions with digital currencies on special exchanges, where you receive several wallets at once for unhindered operations. Wallets on exchanges are hacked regularly, so storing large amounts of money is a big risk.
There are exchanges through which you can buy bitcoins for Dollars from other users. On services of this type, usually a good course. The operation is easy to carry out, having a card of Sberbank or any other bank. The whole process is as follows:
Difficulties for novice investors
Even a professional will not be able to predict the rise or fall of quotes of new cryptocurrencies, their rate depends more on advertising and all kinds of speculation. With more trusted players, such as Ethereum or Bitcoin, the situation is more clear and predictable. But there are a number of other problems associated with the technical equipment of the problems. An increase in the number of users will result in transactions going slower than usual. Payment operations involving small amounts are unprofitable due to the fee charged for the transfer. This feature of the new currency can significantly weaken its influence on the economic situation in the world, as well as affect the price and quotes.
Advantages and disadvantages of investments
I’d like to start with the advantages of investing in critical currency since it is really profitable:
In addition to the positive investment factors, it is worth mentioning the disadvantages:
Investment risks
The risks are also due to the fact that even a group of speculators acting together can affect the position of bitcoin. It is worth recalling the time when the rate fell almost for no reason, in the early days of 2017 it amounted to $1,153, and after five days it sharply shifted to $850. Such situations are quite rare, but you should not discount such an opportunity. With large investments, you can lose a significant amount.
How to assess the risks?
Altcoins, currencies that compete with more trusted financial market players, are considered even more profitable in terms of investment. However, their situation can radically change in 2-3 years. It is difficult to predict the exact time of stagnation, so the investor must make an independent balanced decision on the reliable investment of his own funds.