Before you invest in cryptocurrency, it’s crucial to understand how this type of digital currency works. It’s important to understand the intricacies of this technology so that you can avoid making poor decisions. Don’t simply rely on other people’s opinions as this will only lead to risky decisions.
While it’s easy to get excited about a new crypto currency, it’s important to stay calm. Avoid FOMO, or the fear of missing out. It’s a psychological phenomenon that causes immature investors to buy an asset simply because it’s hot. This phenomenon is exacerbated by cryptocurrency experts who use this fear to influence their audience to buy cryptocurrency. This type of psychology makes it difficult for investors to make a rational decision.
The demographics of cryptocurrency investors vary significantly. The youngest investors (ages 25-29) are far more likely to invest in cryptocurrency than the oldest (over 50). However, this doesn’t mean that the older crowd isn’t investing in crypto, as one in every five white Americans, blacks, and Hispanics are involved.
The disproportionate vulnerability of Black investors in cryptocurrency is an issue that needs to be addressed, if it is to be successful in this field. Black Americans have historically been denied equal access to wealth due to systemic racism. As a result, homeownership rates are lower among Black people. This is why it’s important to educate yourself about how to invest responsibly. By understanding how the industry works, you’ll be more likely to make good decisions.
The most important thing to remember when investing in cryptocurrency is that it can be highly volatile. Even after a bull market, a cryptocurrency can go through bear markets for several years. You should avoid investing in a coin that has experienced a flurry of hype. Even if it is highly regarded by experts in the field, if you think the market will remain that way, it’s time to sell.
The cryptocurrency market is characterized by extreme volatility, and there have been multiple deep pullbacks of more than eighty percent. Bitcoin’s most recent pullback was in 2018. Unlike other forms of investments, cryptocurrencies are based on supply and demand dynamics. If there is a limited supply, prices will likely continue to rise. This makes them speculative investments and may not be suitable for all investors.
For Roy, investing in cryptocurrency proved to be a worthwhile decision, despite the risks. In 2018, he had already invested EUR2,500 in cryptocurrencies and saw it climb to EUR8,000, EUR100,000, and eventually EUR525,000. He entered the market at the height of an adrenalised bull run, a period in which prices rose rapidly. This was helped by the stimulus packages, which stimulated demand and fueled the enthusiasm among furloughed workers.
If you’re not comfortable with trading with a virtual currency, you can start with a simple brokerage site such as Webull. They offer no minimum deposit, which means you can get started with as little as $1. They also recommend using ACH for deposits since there are no transaction fees.