5 BEST INVESTMENT STRATEGIES FOR INVESTORS TO EARN PROFITS IN THE VOLATILE WORLD OF CRYPTO
In unpredictable markets like the crypto market, it’s tough for crypto investors. SO here are strategies.
There have been cases of retail investors in the Crypto space making 100% (or even more) profits on their digital assets while others get hard hit due to price fluctuations in real-time. Most investors know that the market goes through the battle of bull runs and downswings given the market volatility. Yet, some individuals make large cash deals by investing in cryptocurrency in uncertain markets. As the sector is expanding and paving the way for mass adoption, there is an increasing need for users to be aware of the various facets of crypto-asset investment.
Concerns Surrounding Cryptocurrency
Cryptocurrencies, such as Bitcoin and alternative cryptocurrencies, were among the high-performing asset classes in 2021 as more investors flocked to the crypto market with the hopes of profiting from digital investments that have the potential to grow in value over time.
However, cryptocurrencies are risky assets subject to substantial price movements. This is only among the many risk concerns that crypto investors must consider to earn money investing in this new asset class, which already has a market capitalization of more than $2 trillion.
Although policy concerns surrounding cryptocurrency in India are steadily moving closer to the end, experts say that few of them are worth considering for inclusion in one’s financial portfolio. However, in the current environment, the maximum amount invested in cryptocurrency should not exceed 5-10% of one’s whole investment portfolio. That is also the amount an investor should not be concerned about forfeiture.
In the volatile realm of crypto, one needs to explore the market and do their own research. An investor must have nerves of steel, a strategic game plan, and an intuitive trading platform to succeed. Investors may be able to safeguard their investments from potential losses and profit from growing volatility utilizing non-directional or probability-based trading methods.
What Does Market Volatility Mean?
The price divergence of any asset from its mean price is measured by volatility. It is also tied to the asset’s security. This indicates that if an asset is highly volatile, its prices will fluctuate significantly, making it unstable in terms of security. The market is volatile when prices in financial markets fluctuate from current values by more than 1% in either direction. This suggests that the asset’s security will see significant changes in a short period.
What Causes Market Volatility in Cryptocurrencies?
There are numerous reasons why cryptocurrencies are so volatile, necessitating that investors maintain a careful eye on price swings to profit. But why is the cryptocurrency market so unpredictable to begin with? Here are a few of them.
- The crypto markets are volatile since cryptocurrencies are still new, and individuals are not putting all of their faith in them. It is because market stability and public approval are inextricably linked.
- There is no organization in charge of the crypto market’s framework. What draws investors in is the notion that the market is decentralized.
- Some cryptocurrencies have a restricted supply against which a broader audience holds them. The market becomes more volatile because of these digital assets’ increased buying and selling.
5 Cryptocurrency Investment Strategies for a Volatile Market
In unpredictable markets like the crypto market, it’s tough for investors to persevere with their high-valued assets because winnings can turn into losses in a matter of minutes. So, how can a crypto investor ensure that their investment yields only profits? Here are five crypto investment methods for volatile markets.
In-Depth Analysis of the Crypto Market
There are diverse projects listed in the cryptocurrency market. But how can an investor pick the most exemplary project in the crypto market to invest in, especially when the markets are volatile? It’s critical to conduct extensive market research into the historical cost of tokens, the benefit of their project, and the issues they’re attempting to address. As a result, investors should choose initiatives that have performed successfully and invest in them. In fluctuating markets, such initiatives are the least likely to suffer.
Portfolio Diversification
In this volatile market, diversifying an investment portfolio among multiple digital assets is one of the finest investment techniques for crypto investors. When the markets are down, this helps to balance the portfolio. Because traditional investment markets are less volatile than crypto markets, investors are urged to spread their money over various assets.
Another strategy to protect an investor’s investment portfolio from the effects of turbulent crypto markets is to use derivative products to hedge the portfolio. Derivative instruments are financial instruments whose value is determined by the assets (stocks, commodities, bonds, and so on) that back them up.
Cryptocurrency Trading on Social Media Platforms
As social media platforms are the most effective way of spreading the word about new products, many financial markets are seeing a shift in how traders communicate with one another. It’s the simplest way to share ideas and obtain relevant information, which helps investors and investments bridge the knowledge gap.
There are diverse social trading platforms in the crypto realm. Professional crypto traders may share their investing techniques with traders hoping to learn tried and true ways to succeed in crypto trading. In exchange, they receive a percentage of the earnings made by beginner traders by implementing their investing ideas in crypto trading. This is a modern crypto investment technique for beginners since it shields their portfolios from the effects of fluctuating markets. Yet, as an investor in the space, it is imperative to make the final decisions without any influence
Conducting thorough research on projects
When markets are tumultuous, there’s a significant chance that new ventures may emerge on the crypto market. In this circumstance, investors must conduct thorough research on new projects. To do so, investors can go to the project’s website to learn about the project’s vision, team members, contact information, and so on.
By analyzing the project’s social media accounts and the Founders’ and team members’ LinkedIn profiles, investors might be more confident in the project’s legitimacy. Examine the project’s followers to check if they are genuine and engaged with the project’s announcements.
Considering a Shorter Route
Short-term trading is another potent investing technique for crypto in unpredictable markets since it allows investors to lock in profits whenever and wherever they can. However, earnings are more likely to go out of hand in unpredictable markets and turn into losses before investors consider leaving the transaction.
So, how can one make sure they’re profiting and quitting trades at decent times? An investor can achieve this by determining the percentage of profit they want to generate from crypto trading. Another technique to make sure one is always in the black when it comes to trading is to sell the assets in chunks. If the asset’s value is rapidly increasing, an investor can sell a portion of it and pocket the gains while the rest of the assets continue to appreciate.
While the above crypto investment tactics are tried and true methods of profiting in uncertain markets, it is recommended that investors conduct their studies to determine what works best for them. It’s because one method doesn’t have to work out the same way it did for the investor who came up with the idea in the first place. Also, if one is a rookie, beginners’ most significant crypto investing strategy is to put only 5-10% of their money into crypto that they aren’t afraid to lose.