Cryptocurrency is a hot topic in the ongoing digital age. This is because its popularity has significantly increased in recent years. Cryptocurrencies like Bitcoin and Ethereum have grown exceptionally giving investors good returns. Noticeably, the price of Bitcoin has risen from $10,082 to $67,519 in the past 5 years.
Many experienced investors are already making profits for years, but how can crypto investing for beginners be made easy? How can you get started in the volatile crypto market?
This crypto investing for beginners guide will help you understand the factors to consider before investing. Also, we’ll explain how to invest in and secure your cryptocurrency. Here, you will also learn how to invest in and secure your cryptocurrency.
What To Consider Before Investing In Cryptocurrency
A volatile cryptocurrency market can reduce or increase the crypto holdings value in a short time, which can be risky. So here are a few crucial factors to consider for crypto investing for beginners.
1. Understand What You’re Investing In
Cryptocurrency is a broad term that includes various digital assets with unique characteristics and use cases. Bitcoin, Ethereum, and other altcoins serve different purposes, from digital gold to smart contract platforms. And from Defi tokens to NFTs, all these digital assets are unique. Understand exactly what you’re investing in, as cryptocurrencies are not backed by anything like stocks.
While getting started with crypto investing as a beginner, you can begin by exploring the most popular coins, such as Bitcoin, Ethereum, Polygon, and Solana.
2. Research About Projects And Industry
It is best practice to not follow the hype and invest in FOMO (fear of missing out). You must do your research on the crypto projects, read their whitepapers, understand their use cases, and evaluate their development teams. One must also try to stay updated about industry trends like regulatory changes, bans, and tax implications.
To explore more, you can follow the projects on social media to learn about cryptocurrency project updates and partnerships. You can also explore platforms like CoinMarketCap, CoinGecko, and crypto news for valuable insights into emerging projects and industry trends.
3. Past Performance Does Not Give A Future Guarantee
Anyone can easily be impressed by the past performance of certain cryptocurrencies. However, a coin that has given impressive returns in the past might plummet tomorrow. Yes, Bitcoin and Ethereum have performed well, but not all cryptocurrencies can repeat the same.
If you are analysing any cryptocurrency price, don’t check just a day, month, or year’s performance. The cryptocurrency market follows a four-year bull and bear cycle. Therefore, it is best to check how a particular coin performed in the whole cycle.
4. Crypto Market Is Highly Volatile
Cryptocurrency prices can fluctuate dramatically within short periods. These fluctuations can be due to market sentiment, regulatory news, technological updates, and macroeconomic factors.
This volatility can be an opportunity for expert traders and investors who buy at lower prices. However, this can be a substantial loss for beginners.
5. Don’t Invest That You Cannot Afford To Lose
Last but not the least, avoid putting all your money into speculative assets like crypto as a beginner. Follow the golden rule of crypto investing: only invest what you can afford to lose.
The market’s unpredictability means there’s always a risk of losing all your investment. An exchange hack or theft can vanish all your holdings in a blink. So, never compromise your financial stability, or borrow money to invest in crypto.
How To Invest In Cryptocurrency In 2024
Till now, in this crypto investing for beginners guide, you have an idea of what to have in mind before investing in the crypto market. If you decide to start investing in crypto, you can follow the step-by-step guide to getting started with investing:
1. Pick A Crypto Exchange
The first step to investing in cryptocurrency is choosing a reliable crypto exchange. Popular exchanges like Binance, CoinDCX, and Kucoin are well-established options for beginners. After you choose an exchange platform, you can go on to complete the signup process with your name, email and other important details.
It is best to opt for exchanges that offer:
- Security features
- A wide range of supported cryptocurrencies
- Competitive fees
- User-friendly interfaces
- Robust customer support
2. Choose The Crypto Asset
When there are thousands of cryptocurrencies available, selecting the right set of cryptocurrencies can be confusing for a beginner crypto investor. Large-cap coins like Bitcoin, Ethereum, Binance Coin, and Solana are great for crypto investing for beginners.
Also, you can check out our in-depth guide for the 10 best cryptocurrencies to invest in 2024.
Here are some factors that you can consider for crypto assets:
- Large-cap market capitalisation
- Use cases and technology
- Strong community support and development
- A well-established coin
- High trading volume
3. Decide How Much To Invest
Just like any traditional investment, such as stocks, the amount you choose to invest in crypto will depend on multiple factors. These factors can include your risk tolerance, investment goals, and strategy. As per the experts, for crypto investing for beginners, it should not be more than 5% of your total portfolio in crypto.
You can follow these investing styles:
- Buy and hold
- SIP (Systematic Investment Plan)
- DCA (Dollar-Cost Averaging)
4. Store In A Safe And Secure Wallet
After purchasing cryptocurrencies, you should have a digital wallet to keep your crypto safe. While exchanges offer built-in wallets, they’re not always the safest option for long-term holding.
Wallets that are most suitable for crypto investing for beginners are:
- Hardware wallets: These are physical devices to store your crypto offline, such as Ledger and Cypherock.
- Software wallets: These are applications on your computer or mobile for security and convenience, such as Metamask and Okto Wallet.
5. Track And Pay Your Crypto Taxes
Finally, after you bought your desired cryptocurrencies, it is time to manage your crypto portfolio performance. Focus on regular investing, diversification, and investing for the long term.
Additionally, crypto profits are subject to taxation. Track all your crypto transactions and understand the tax implications. Tools like KoinX will help you calculate your crypto profit and report your taxes accurately.
How To Keep Your Cryptocurrency Secure
Security is paramount in cryptocurrency, as they are not fully regulated by authorities. When it comes to investing in crypto for beginners, scams and exploits can syphon your holdings.
Here are some tips to keep your funds safe:
- Use only reputable and well-known crypto exchanges, such as Binance, Kucoin, CoinDCX, etc.
- Use hardware crypto wallets like Ledger, Cypherock, Trezor, etc. They offer the highest level of security for your crypto holdings.
- Enable two-factor authentication as well as use strong and unique passwords for all accounts.
- Always double-check URLs and email addresses to avoid phishing attacks. Do not click on suspicious links or download unknown attachments.
- Back up your private keys in a safe place, and do not share them with anyone.
Conclusion
Today, there are several asset classes available to invest in. Cryptocurrency is a highly speculative asset class. Crypto investing for beginners can be profitable if you know what you are investing in and how much risk is involved. For investing in crypto for beginners, the best advice is to start small and only use money that you can afford to lose.
Additionally, profits from cryptocurrency trading and investing attract taxes. You have to track transactions and file your taxes when the time comes. If this sounds difficult, do not worry about it. Here comes the KoinX. You can use KoinX to calculate your crypto profit and report your taxes with ease. It has advanced features like automatic transaction import, an error-free view of your capital gains, and auto-classification of transactions.
So what are you waiting for? Sign up on KoinX today and get your reliable crypto tax report now.
Frequently Asked Questions
Is Crypto A Good Investment For Beginners?
Crypto investing for beginners can be profitable by looking at the price growth of Bitcoin and other altcoins. It also offers potential high returns and portfolio diversification along with your traditional investments like stocks and bonds. However, it comes with risks. You can start small and increase your investment after having experience.
Can You Make $100 A Day with Crypto?
While it’s possible, making $100 daily through crypto investing for beginners is not guaranteed. It will depend on your investment amount and trading strategies. For example, through crypto investing for beginners, with $10,000, it can be easy. With $1000, it could be difficult to make $100 a day. Focus on gaining knowledge and experience to get consistent profits through long-term strategies rather than daily gains.
Which Are The Best Wallets For Investing In Crypto For Beginners?
How Do I Invest In Crypto For The First Time?
To start investing in crypto for beginners, follow these steps: Firstly, create an account on a reputable exchange. Secondly, add funds to buy cryptocurrencies. Thirdly, select your desired cryptocurrency. Finally, make a transaction by selecting the amount and quantity of cryptocurrency.
Which Crypto Is Best For Beginners?
For beginners, investing in cryptocurrencies like Bitcoin and Ethereum is recommended. This is due to their market dominance and stability compared to new coins. Other altcoins that you can look at are Solona, Polygon, Polkadot, Dogecoin, and Arbitrum.
