Cryptocurrency is commanding a booming market and for all the great reasons. Despite the recent crypto crash in May-June 2022, the digital asset industry is still garnering both individual and institutional investors. Now, of course, purchasing cryptocurrency can’t be denied that the recent crash had unleashed panic among the entire crypto sector, compelling many investors and traders to think twice about their investment and trading choices. However, the majority of experts have already stressed on the fact that the market is simply passing through a correction phase and a bull run is waiting ahead. Do you too aspire to buying crypto but are clueless about where to start from?
Well, purchasing cryptocurrency good to have doubts before investing in a wildly volatile asset like cryptocurrency. Crypto is not something where you will dive blind. You certainly want crypto to make money for you and hence, you must proceed with a calculated approach. Here is a list of questions that you must clear up before you head to buy crypto.
- Have you given it a serious thought?
This is the first question that you must ask yourself before you proceed to buy crypto.
As mentioned previously, crypto is a wild ride. There is a common saying in the crypto world that “crypto ain’t for faint hearts”. Now, of course, if you don’t buy crypto that doesn’t mean you are not brave enough. It only implies that crypto, given its extreme volatility, is especially for those who are up for some extreme adventure in the money market.
So, please give it a good thought, discuss with your investor and trader friends, and then take the final decision to buy crypto. Don’t dive into purchasing cryptocurrencyjust because purchasing cryptocurrency the current fad.
- Have you conducted research?
Crypto is a high-risk zone. You just can’t sign up with an exchange, put money, and buy crypto.
There is a lot to know before you make a move in the crypto world, especially because purchasing cryptocurrency a new subject. Unlike stocks and bonds, crypto isn’t something that you have known while growing up. Even though crypto has been around for more than a decade now, the awareness about crypto and the discussions regarding the cutting-edge asset is a relatively new phenomenon. So, you will need to do a good lot of groundwork before you actually hop out to buy crypto.
Experts suggest taking at least 6 months for extensive research on crypto before you buy crypto. You have to gather a thorough understanding about the crypto technology, blockchain platform, what makes it different. Also, you should study about top cryptocurrencies, the cryptos with most potential, crypto coins that boast an ambitious roadmap, and more. Next, you should also learn about the different cryptocurrency trading strategies, investment strategies, and various ways to earn money through crypto.
- What about your risk appetite?
The crypto market can take steep plunges in the blink of an eye. The extreme volatility aspect of crypto comes with both high rewards and huge losses. So, if you want to buy crypto, you might encounter a loss at one point or the other. Now, of course, there are tried and tested strategies that can help to reduce risks of losses when you buy crypto but loss is a common occurrence in the crypto world.
Now, how much would you be prepared to risk out when you buy crypto? The fundamental thing you must know here is that when you buy crypto you must not shell out a sum that will hamper your basic life, lifestyle, and major life goals. If you have some spare money which you can afford to experiment with, then you can buy crypto.
- Have you got emergency and retirement covered?
This is another major question that you must ask before you proceed to buy crypto.
Always remember, crypto is best for your spare money. Even if you have opportunities of high ROI with your crypto investment, do not count on crypto for emergency expenses. You must create and stack your emergency fund before you buy crypto. The same goes for your retirement fund. A lot of people today buy crypto to fund their retirement savings. Well, it’s a good idea to pump up your retirement portfolio. But, you should not ever buy crypto to fund retirement.
- What are your plans with crypto?
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This is probably the most important question that you should answer as you head out to buy crypto.
Are you going to HODL after you buy crypto? Or do you have plans for short-term investing? Are you looking forward to trading with crypto?
You must get answers for all these questions first because this answer will determine the cryptos you will buy and how you would make them work for you.
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- What cryptos are you going to choose?
Let’s proceed with the fact that you have already done your research in different cryptocurrencies. Have you studied the top lists on cryptos for trading or investment, or both? Well, try out multiple lists and you will get a basic idea on the best coins to invest in or trade with. For example, your goal is simply investment, you can go for stablecoins when you buy crypto. If you are planning for day trading, opt for coins with high trading volume when you buy crypto, say Bitcoin. However, the rule of the thumb is to follow these pointers when you purchase crypto-
- Go for coins backed by strong fundamentals, highly knowledgeable team, and ambitious upgrades when you buy crypto
- Try to look for coins that aim to serve some solid purpose
- Please try to avoid coins that have mostly surged on hype and are created out of jokes, such as meme coins
Now, the lists of top cryptos might enlist some meme coins. As we have mentioned previously, meme coins are to be avoided as they are not sustainable in the long run. But, you can try out meme coins when you buy crypto if you plan short-term investment.
Finally, don’t forget to check out the taxation system in your State for crypto traders. crypto write for us
