Crypto is one of the hottest topics of investment in the modern financial world, especially in the Philippines right now. As some digital coins currently cost tens of thousands of dollars per coin, it is no wonder that a lot of people are looking at crypto as a real investment opportunity. However, there are several critical considerations to consider before you do.
Avoiding the hype is one of the greatest challenges to new investors. The fast development of cryptocurrencies has drawn the interest of both individual traders and big financial organisations. As the hype about digital assets is getting bigger and bigger, professionals constantly warn potential investors about the dangers involved. Crypto markets are characterised by extremely high volatility, so you may as well end up with losses as with gains.
When you are new to this world of cryptocurrency and considering entering it, you should know the basics and be prepared for the risks. The following are some of the main considerations that you should remember before making your first crypto investment.
1. Learn the Crypto Investing Basics
It is important to learn how the process of buying, trading, and selling works before you get into the world of cryptocurrency. It is not a matter of throwing money into digital assets and hoping that things will work out. The first step to making informed decisions is learning the basics of how crypto transactions work.
Begin with learning about the services that enable you to deposit and withdraw traditional money (fiat), including your local currency, into a crypto exchange. Become acquainted with simple functionality such as purchasing and selling coins, creating a digital wallet, and making transactions. The more you are familiar with the way the system operates, the more you will be confident in wisely managing your investments.
2. Research is Always the Best
One of the worst decisions you can make when purchasing a coin is that everybody does it. Hype should not be a valid reason to invest. Rather, do your study and research the technology behind the coin, its use, and its risks.
These are some of the questions you can ask yourself before investing in a cryptocurrency:
- What is the coin price and its past performance?
- Is there an official coin site or whitepaper?
- Is the team behind it transparent and reputable?
- Are there forums or community discussions about the coin?
- What is the current news or mood about the project?
Doing your research will save you hype-related losses and provide a better understanding of the long-term value of the coin.
3. Do Not Do What the Majority Does
One of the most dangerous traps of novice investors is FOMO (fear of missing out). Many individuals observe a coin going up fast and buy it immediately, only to lose their money when the coin crashes down as fast as they bought it. Such emotional decision-making may be expensive.
Do not blindly follow trends; instead, learn to evaluate. In some cases, coins that have a rapid price increase of 30 per cent or more in a single day are involved in a pump-and-dump scheme that attempts to take advantage of naive investors. Be sure that you know what you are investing in and why. Your strongest weapon against making hasty decisions is solid research.
4. Be Cautious of Anything That is Too Good to Be True
The crypto universe is exciting but full of scams and overpromises. You will encounter individuals or projects that say their coin will be better than Bitcoin or the next big thing. Do not believe those claims.
Avoid highly leveraged platforms; some exchanges permit borrowing up to 100 times the initial investment. Although this can increase profits, it can also cause devastating losses in case the market goes against you. Before you commit, always know the risks.
5. Establish a Good Investment Plan
A plan is the beginning of smart investing. In the case of cryptocurrency, you need to make decisions on how you would handle your assets before the market plays with your emotions. You may want to use strategies such as limit orders, which automatically sell your crypto once it reaches a certain price. This helps you to earn profits or avoid losses without having to monitor the market all the time.
Other exchanges provide the option of following or copying other traders as well. This can be a useful learning tool, but make sure you do not blindly copy their trades; make sure you are aware of the strategy behind it.
6. Fractional Ownership
Another misconception is that you have to purchase a whole Bitcoin or other expensive coins to start investing. This is no longer the case. With fractional ownership, you will be able to purchase a small portion of a cryptocurrency, similar to purchasing a fraction of a stock.
This implies that you can begin to invest with any amount. Fractional investing allows everyone to have access to crypto, whether it is a small piece of Bitcoin or a few Dogecoins, enabling newcomers to invest in small amounts.
7. Select the Best Wallet
As you would keep your cash or cards safe, you should have a safe place where you keep your cryptocurrency. And that is where the wallets come in. A crypto wallet does not contain your coins; it contains the keys to the coin on the blockchain.
As a novice, you may begin with the wallet offered by your cryptocurrency exchange. They are easy to use and convenient, and they might not be the most secure. When you are willing to keep significant sums of crypto or wish to have more control over your assets, you can create a separate software or hardware wallet to have additional security.
8. Tracking and Record Keeping
It is important to keep records of your crypto transactions as this will help you manage your investments and also pay taxes. Most investors end up forgetting where their coins are or when and where they traded, and this causes a headache later.
Crypto taxation may be complicated, and in some places, even minor transactions might need to be reported. Remaining organised, not keeping wallet addresses, transaction histories, and exchange activity records, will help you avoid stress and even money loss in the future.
Conclusion
Cryptocurrency investment is exciting and rewarding in the Philippines right now, although it is also risky and complicated. Learn the fundamentals, conduct proper research, make rational decisions, and store your assets safely, and you will be in a better position to feel confident in the crypto market. Start small, remain informed and never invest without a strategy.