Ever since Bitcoin’s record rise in 2017, investors have been debating the merits of cryptocurrency incessantly. Several people think cryptocurrency is the new gold rush; others think it’s an unstable investment that’s doomed to fail.
The truth falls somewhere in between the two extremes. Crypto investing can have worthwhile payoffs. However, it is an unstable market, making it imperative you know how to invest in crypto safely.
Fortunately, we can help you do just that! In this article, we’ll explore five considerations to evaluate so you can wisely invest in crypto. Let’s get right to it!
1. There’s More To Crypto Than Bitcoin
Bitcoin is by far the most popular cryptocurrency on the market, and with good reason. It leads every other cryptocurrency in value, boasting a market cap of over $1 trillion. However, several other crypto options exist.
The second most valuable cryptocurrency is Ethereum, with a market cap of approximately $299 billion. Other leaders in this sphere include Ripple, Chainlink, USD Coin, and more.
2. Be Realistic When You Invest In Crypto
People love to oversell the benefits of crypto investing. While it’s true that crypto investments have led to rags-to-riches tales, don’t expect it to happen for you. Instead, treat it like the stock market or any other investment.
You will most likely receive gradual payoffs, not extraordinary gains in wealth. Also, remember that the market will fluctuate, so keep your head about you. Don’t panic if the market experiences a downturn; it often pops back up within a few weeks.
3. Be Responsible About Which Crypto To Invest In
Currently, approximately 4,000 cryptocurrencies exist on the market. Most crypto platforms, such as Uphold or Coinbase, only let you choose from 40 or so. There’s a reason for this.
Occasionally, some freak event will cause a random cryptocurrency startup to explode in value. Generally, however, it’s best to invest in blue-chip stocks like Bitcoin, Ethereum, LTC, and others.
These investments guarantee you a measure of quality and reliability. It’s also best to diversify your crypto investments. Don’t put all your eggs in one basket; instead, invest in a few reputable currencies to form a safety hedge.
4. Stay Vigilant
Hacks and security breaches are a vulnerability for any online activity. As such, make sure you stay on top of your information. Only use reputable exchanges and digital wallets, such as Coinbase, Binance, and Uphold.
Likewise, keep all of your private information private. Don’t give anything unnecessary away.
5. Taxes With Cryptocurrency
Lastly, remember to keep track of your profits and losses in cryptocurrency. The IRS requires you to pay capital gains taxes on your investment profits. Your tax rate depends on your AGI (adjusted gross income) and the length of time you held your cryptocurrencies.
Start Your Portfolio
By following these tips, you can expect a much safer and reliable outcome for your crypto investments. Remember, crypto is like any other investment. As long as you invest wisely and pay attention to trends, you can expect a worthwhile payoff.
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