In recent years, cryptocurrencies have become one of the biggest buzzwords in the digital world. They are highly volatile which means there are ample investment opportunities.
Before you invest your money, it’s important that you do your research. Just three years ago, the price of Bitcoin was $710.00. Today, the exchange rate of a single Bitcoin is at $6200. Obviously, you don’t need an economics degree to know that folks who invested in the digital currency are smiling all the way to the bank. Here is a quick guide to help you make a wise investment decision.
Price swings are common
Since cryptocurrencies are largely unregulated, price swings are quite common. Thankfully, some countries require cryptocurrency exchanges to adhere to counter-terrorism financing and anti-money laundering. Another cause of intraday swings is the use of past volume to predict future returns. Traders who speculate on private information are the key drivers to price changes.
How to buy cryptocurrencies
Buying cryptocurrencies can be an overwhelming process if you don’t know where to begin. It doesn’t have to be tough, though. LUNO has made the process of buying and selling cryptocurrencies much easier.
You can now buy Ethereum and Bitcoin in three easy steps. First, you have to register for a free wallet on the web. The wallet you choose will depend on the cryptocurrency you want to buy. Secondly, choose the deposit method. You can use a bank transfer, credit card, or simply deposit the money into the wallet and buy the cryptocurrency.
Safety and security
Bitcoin users can buy goods or send money to friends and family online and, of course, there’s transparency and privacy of your money. While cryptocurrencies have become a focal point for cyber-attacks, they are more secure than paper bills, and traditional banks for that matter.
There are three levels of cryptocurrencies security:
The coins are under an independent network so the security is based on the parent cryptocurrencies. On the other hand, the exchange is a centralized web service deployed in a data centre or cloud.
And with the introduction of wallets, you can decide which one suits you best. You can choose between a cold and a hot wallet. With a hot wallet, the tokens and coins are under the control of the provider. If somebody identifies your flaws, he can compromise the entire network.
Market trends/investor perceptions
Although Bitcoin suffered a big blow in 2018, some traders have kept their gains. Unlike traditional financial instruments, cryptocurrencies tend to fluctuate based on large-scale trends and public perception. There are times when you may see big price changes within 24 hours. Whenever there is speculation on big events, you’ll see high volatility in the market. Trust me, there’re lots of speculative traders who have lost their hard-earned money. A cryptocurrency investor should pay close attention to both technical and fundamental analysis. Apart from predicting trends, you should look for news swirling around a particular cryptocurrency.
Bitcoin offers an alternative way to diversify portfolios, save wealth, and make long-term investments. Once you’ve developed a strategy, the next step is to time your investment. In actuality, you have to follow particular price patterns. It’s worth mentioning that the digital cryptocurrency space has an active community – you can always learn what is going on around the world. Finally, remember that digital currencies are in a highly speculative area. If you do your homework, you’ll have the best chances of success.