How to Start Investing in Cryptocurrency [Like a Pro]

If you have spent any time following the news, you already know that cryptocurrency is all the rage. However, cryptocurrency is not just some passing phase; it is here to stay. For those smart investors, you can make some serious profits if you follow a few steps. Here are a few pointers on how to start investing in cryptocurrency like a pro!

Do you want to learn more about cryptocurrency and how it could play in improving your future financial prospects? Reach out to the professionals at Unbanked today to find out more about these hot investments!

Why You Need To Consider Cryptocurrency

2021 has been a hot year for cryptocurrency investments, and there are no signs of slowing down. By May, the total value of cryptocurrencies surpassed $2.5 trillion. As a result, new investors have jumped at the opportunity, and it is estimated that about 14% of Americans own cryptocurrencies. 

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If you don’t know, cryptocurrencies are exchanged on several large platforms, such as:

  • Unbanked
  • Coinbase
  • Gemini
  • Robinhood
  • SoFi Invest

You might think that the cryptocurrency phenomenon is new, but the most prominent crypto, Bitcoin, was established in 2009. Along with Bitcoin, Tether, Ethereum, and even Dogecoin are some of the largest cryptocurrencies in the world. 

Some investors love to speculate, while others are looking at cryptos as a way to place their bets against inflation. Bitcoin was created as a direct response to the financial crisis of 2008. For those first-time investors, you probably have plenty of questions. Let’s look at how to invest in crypto, why you should invest in it, and what you need to know. 

Related: Best Crypto Tax Tools You Need to Know of

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What Is Crypto Investing?

You are putting your money in actual cryptocurrencies and crypto-related businesses, programs, and projects with crypto investing. Like any investment, you want to make a profit in the short or long term. In short, you are betting on the future success of the crypto. When the value of cryptocurrency rises, so do your earnings. 

Making a Profitable Investment in Cryptocurrency

There are several ways that you can start investing in cryptocurrency. HODLing is the buying and holding of selected types of cryptocurrency with the hopes that the prices will rise over time, and with that, turn over a profit for you.

Crypto start-ups include investing in crypto-based companies and businesses. Along with that, you can also fund crypto projects. With those investments, you might have a stake in ownership, percentage holdings, or dividends with your investment.
Finally, you can mine cryptocurrency coins. There are several methods to mine, and you can find a way to finance the equipment to start on that investment path.

Find a Place To Invest in Cryptocurrency

While cryptocurrencies are a trending option, they have not gone mainstream in investment circles. You will not be able to invest with traditional online brokers. However, there are a few brokers that allow you to hold cryptocurrencies with bonds and stocks. 

Here are some of the top online brokers for cryptocurrency investments:

Unbanked is the ideal option for new or experienced investors. You can buy and sell several types of cryptocurrencies. Plus, all of those crypto purchases can be settled with your self-custodial wallet, and you are guaranteed the best rate on the market. 

Coinbase is the largest U.S. crypto-exclusive exchange. You can trade over 60 types of cryptocurrencies. Many of the transactions have a spread of 0.5% for making any transaction with these digital tokens. There is a fee of $0.99 per trade. 

Robinhood is another online broker for cryptocurrency trading. All trades are 100% commission-free, and there is an easy-to-use app that can simplify investment for beginners.  

SoFi Invest is another great crypto exchange and platform. However, it is not commission-free; there is a markup of 1.25% on all crypto investments. Throughout the year, SoFi Invest does offer promotions. For example, you can trade in $10 worth of crypto and change it for $10 in Bitcoin. 

Gemini offers about 40 digital coins that can be traded, and there is a fee of 1.49% per transaction. eToro is another trading platform that supports over 20 cryptocurrencies. This platform is geared more towards non-U.S. citizens. While the costs can vary, they typically start at 0.75% for popular cryptos like Bitcoin. 

TradeStation is designed for the most advanced investor. While it is not a commission-free platform, it only charges about 0.3% per trade for accounts with less than $100,000. As your balance increases, the fee will begin to decrease. 

Some other major investment companies have entered the cryptocurrency trading field. Interactive Brokers, Charles Schwab, and TD Ameritrade all offer Bitcoin future tradings for their portfolios. 

Prepare for Volatility and Risk in the Market

You should keep in mind that not all cryptocurrencies are the same. With that, every token has characteristics that can swing in price. Before you invest, you want to know as much as you can about that specific token, including who created it and the reason behind the creation. When you understand your particular crypto, you can start to invest more smartly. 

All cryptocurrencies are known as alternative assets, like real estate. These assets can diversify your portfolio, and they often have a lower correlation to other investments, like bonds and stocks. 

Remember that cryptocurrencies can be volatile. For example, these digital tokens are traded on a 24/7 basis, so when there is news, the markets will react immediately. This year, Tesla CEO Elon Musk made a controversial tweet, and the prices of crypto went in a volatile spin and then recovered. You have to be ready for anything to happen with these investments. 

Look at Bitcoin. On average, the annualized returns have exceeded 200%, but there have been big price slumps as well. Don’t fight volatility; just make sure that you embrace it. 

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Invest for the Long Term

Along with that, don’t invest your money in a get-rich scheme. When you add cryptocurrency to your portfolio, this is long-term, especially if you don’t have the experience or technical knowledge to play the market. You might want to take the advice of an experienced investor and billionaire, Warren Buffet. He often suggests that you only buy tokens and coins that you will want to hold for ten years. 

Yes, you might have heard of individuals who have made fortunes in a short amount of time. Those stories are often based on luck and have not relied on solid investment strategies

With long-term investments, you can strike a balance between time and volatility. All of those long-term investments have lower volatility than those held for a short period. The longer you have a specific investment, the more likely you can weather those low market periods. All assets with a higher short-term volatility risk often have a higher return over time. Some experienced investors will buy cryptos and hold on to them for a minimum of a year. When you stay invested in the long-term market, it often pays off better than those short-term grabs.

Consider the Dynamics of Risk and Reward

Remember that cryptocurrency investments are not for everyone. If you take one piece of advice, consider this: with the extreme volatility in the market, moderate investments are critical. You wouldn’t invest all of your money into a single asset like a stock, so you shouldn’t do that with cryptocurrency. 

All of those cryptocurrencies have a limited impact on the risk-reward dynamics of your portfolio. For example, if you have about 2% of your portfolio dedicated to any class of asset, that isn’t going to make a significant impact on your overall investment goals. However, the exact allocation for these cryptocurrencies will be unique to every investor. You need to think about your situation and determine whether cryptocurrencies can help you reach your financial goals.

If you want to invest like a pro and dive into the world of crypto, think about doing it through dollar-cost averaging. What does that mean? You will invest in a fixed amount at regular intervals. For those who want to invest in this manner, make sure to consult an accountant. There are specific tax implications with these trading methods. 

With any type of investment, keep in mind how they will affect you. It is never a good idea to invest in something that will keep you up at night. On the other hand, don’t constantly watch the markets. Let the investment work for you. Otherwise, you could be stressing about these investments, and that is no way to have a successful portfolio. 

Related: How to Buy Penny Cryptocurrencies

Always Stay Educated

Like any type of investment, you don’t want to spend any money if you don’t know what you’re doing. Unfortunately, many people get wrapped up in the hype of trading cryptocurrency. They may buy on impulse or someone else’s advice. When you do that, you are only setting yourself up for unnecessary troubles and disappointment. As previously mentioned, research is key to a healthy and happy investment portfolio.

How do you research a specific cryptocurrency? There are so many sources of information; it can be hard to wade through the right type of advice. If you want to be a pro on a particular kind of digital token, take time to listen, read, and watch for any of the latest and unbiased news. This can be helpful for those who want to invest in a program, project, or coin.

This information is freely available for anyone, and you can simply learn about your chosen crypto by heading online. You don’t have to pay for an article either. With free resources, you can analyze and consume information before committing your money to any cryptocurrency project
Finally, it is your personal responsibility to learn all about crypto investments. Take some time to educate yourself before you make a significant commitment with your money. If you jump into an investment based on hype, you are only setting yourself up for disappointment down the road.

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Big Tip: Start Small

While you may be tempted to put all of your money into cryptocurrency, start out with small investments. A smart investor has a diversified portfolio. Yes, some people place all of their money and property in Bitcoin, but that is a considerable risk that could cripple the average investor. You never want to be careless with your investments.

Depending on your financial strength, you can make a cryptocurrency investment with as little as $10. As long as you know the technology behind the digital tokens and have a little investment knowledge, you can start investing right away. With any investment, you never want to invest what you cannot afford to lose. As you continue to learn about cryptocurrency, think about increasing your investment. In the long term, you can grow and expand your crypto portfolio over time.

Related: The 6 Best Assets to Protect Against Inflation

Reasons To Invest in Cryptocurrency

Now that you know some of the pro tips for investing in cryptocurrencies, here is the final push to sway you into these investments. Like any type of investment, there are good and bad reasons to invest. Greed can often fuel some people’s decisions to invest in crypto. You probably won’t become a billionaire with Bitcoin investment alone. Don’t fall for the get-rich-quick mindset. 

Instead, look at the good reasons to invest in cryptocurrency. Fiat (dollar) will eventually fall and might lose its supremacy. With that, you want to protect your financial health and wealth. Cryptocurrency also provides autonomy, independence, and economic empowerment for your investment portfolio. Along with that, you should appreciate and understand the value of cryptocurrencies’ technology. Finally, many investment pros see cryptocurrencies as the future of money.

With these tips, you can finally enter the world of cryptocurrency investments. Like any investment, you want to be informed and don’t hedge your bets on just one type of digital token. 

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Are you invested in starting your cryptocurrency investment adventure? Unbanked offers plenty of resources and guides to help you get started on the right path!

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