A Beginner's Guide to Investing in Cryptocurrency

With the recent Bitcoin halving, there’s speculation as to whether the cryptocurrency market will experience another bull run in the next 1–2 years.

Because of this, there will be a lot of new investors flooding into the market, who wish to invest into Bitcoin or other cryptocurrency assets.

This could very well be you. If it is, you’re in the right place.

With that being said, here is a beginners guide to investing in the cryptocurrency market.

What is Cryptocurrency?

A cryptocurrency is a digital currency, in which transactions are verified and records maintained by a decentralised system using cryptography, rather than by a centralised authority.

When you compare a cryptocurrency to a regular fiat currency, the key difference is that its technology (Blockchain) enables it to operate without a central bank, like the Federal Reserve or Bank of England.

This is called decentralisation, or decentralised finance (DeFi).

It’s one of the reasons why cryptocurrency has become so popular since the first cryptocurrency, Bitcoin, was created in 2008.

Since 2008, thousands of cryptocurrency assets have been created.

Some provide great value and solve complex problems, whilst others do nothing but take the money of naive investors.

This is why it’s important to have a certain level of knowledge before you begin to invest into the cryptocurrency market, so you can differentiate between the fakers, and the real winners.

Risks of Cryptocurrency

The best way to look at the cryptocurrency market is like the stock market on steroids.

The best way to treat the cryptocurrency market is like walking into a casino.

Even in 2024, the market is still very new, and unregulated.

Although regulation is on the horizon, the crypto industry has a ton of scams and ponzi schemes, all with one objective:

To seperate you from your money.

So, to minimise the risks in the cryptocurrency market, familiarise yourself with these tips:

Only Invest What You’re Willing to Lose

Like I said, treat the crypto market like a casino.

Do you see people walking into a casino with money they need to pay rent?

Well, maybe actually, but we’d be lying if we said that wasn’t stupid.

So, only invest money you had planned on spending on things that don’t really matter.

This way, you enjoy investing more, and there’s no financial pressure on you to succeed. In many cases, this can be a catalyst for success.

Do Your Own Research

The cryptocurrency community is full of shady characters who, at first glance, might seem like they’re trustworthy and have authority in the space.

Not true at all.

In truth, despite their follower count, all they care about is money.

They’ll do anything to try to get naive investors like yourself to invest in the next scam or ponzi scheme, just so they can grow their bank accounts.

In other words, big accounts don’t promote projects because they like them.

They promote projects because they get paid to do so.

Don’t fall in the trap.

Any money you invest should be put into assets that you found.

Or, at the very least, you we’re told about something online and you went digging for information yourself, rather than throwing money at something because of what someone else has said.

Don’t Invest With Emotion

There’s a chance you’ll perform better when you simply go against the overwhelming narrative within the community.

In other words, buy when everyone else is selling, and sell when everyone else is buying.

A huge amount of crypto investors don’t really know what they’re doing.

You don’t need to follow the herd. Most of the time, they’re going in the wrong direction.

Understand The Bitcoin Halving

The Bitcoin halving is a cyclical event which has significant implications on the prices and overall sentiment within the cryptocurrency industry.

Every 4 years, the reward for mining Bitcoin gets halved, making it more scarce.

This is typically a huge catalyst for a Bitcoin bull run, where the market tops off around 18 months after the halving.

You can use this event to decide when it might be a good time to buy or sell.

For me, I haven’t bought crypto for nearly 2 years now. I was buying when everyone else was selling.

Is now still a good time to buy? Probably, just as long as you’re able to sell it at the right time, too.

Choosing Cryptocurrency Exchanges

There are several popular exchanges that you can invest into as a beginner.

Like stock market platforms, they’re all free to join. You can make accounts for as many, or as little as you wish.

Through my experience, the one key difference between a regular exchange (eToro etc.) and crypto exchanges is that certain crypto exchanges might not have the asset that you want to invest in.

As a result, you’ll need an account with another platform, that does.

It’s not a dealbreaker, but can be a minor inconvenience if all the different crypto assets you want, can’t be bought on the same platform.

Never sacrifice the quality of your investments for the sake of convenience though.

For me, the best place to start as a beginner is Crypto.com.

When it comes to what you need as a beginner:

• Easy to use.

• Low fees.

• Range of high quality assets.

The trait that stood out for me was how easy it was to navigate in comparison to others.

Sure, I don’t use it often anymore, but for someone who hasn’t bought cryptocurrency before, I’d start here.

As well as crypto.com, there are two other platforms I’d recommend you to create accounts with, which will help you “level up” as an investor:

• Binance

• KuCoin

Binance, despite getting in some legal trouble recently, is still the largest cryptocurrency platform in the world.

Why is it the biggest?

Well, because it’s the best, but it can be a handful for a new investor.

It might take a while to learn the fundamentals of the Binance app, but it will be worth it in the long run.

The second is KuCoin, which is like Binance but with a slightly less friendly user interface.

KuCoin is the best place to find what’s called “low-cap gems” in the crypto market.

It’s full of crypto projects that are too small to be listed yet on the big platforms like Binance & Crypto.com.

KuCoin, despite being a higher risk, is the best place to find those 100x or 1,000x potential projects before everyone else.

I personally have accounts for around 6 or 7 investment platforms, most of which I don’t even use anymore.

But, the most important factor here is making accounts for platforms that offer the cryptocurrencies that you want to invest in.

How can you get this information?

Coinmarketcap.com

This website will be your best friend when cryptocurrency investing.

It’ll tell you which crypto assets are available on which platforms.

Say you wanted to invest in Ripple ($XRP).

Sure, I can tell you that because $XRP is one of the most popular crypto assets, it’ll be available on every platform, but you don’t know that.

So, simply search the crypto on coinmarketcap.com, and it’ll give you a list of exchanges you can invest in $XRP on.

List of exchanges I can invest in $XRP on.

Creating Your Account(s)

Now, it’s time to create your accounts.

There’s not much to be said here, but its a necessary part of the process. Think of it like opening up a new bank account, only more fun.

You’ll need general information…

• Name

• Age

• Address

And usually some more information potentially including:

• Occupation

• Salary

• Investing experience.

And of course…

Bank details.

Picking The Right Projects

This is clearly the most important section.

But unfortunately, it’s also the section where we can help you the least.

Despite this, I want to take you through the process that I use to make new investments.

Firstly, I start with Twitter (X) which helps me hear about new cryptocurrency assets.

That’s all I use it for.

Not to invest, but it gives me exposure to new projects that I might eventually invest in.

I still need to do my own due diligence.

From here, I head to our new favourite website, coinmarketcap.com, and check for these things.

Tokenomics

Tokenomics is short for token economics, and it’s important to know the details surrounding the supply of a certain cryptocurrency.

The two things to consider:

• Market capitalisation — the overall value of the business, so you can determine overall risk and ROI.

• Token supply — hugely important to ensure supply isn’t unlimited.

If a project has an unlimited supply, it means that the founders can inflate the supply as much as they want, which in effect, can make your investment worthless.

An example of this was the collapse of LUNA, so make sure that the supply is fixed, and the current circulating supply is close to the total maximum supply of the cryptocurrency.

Team

Is the team public?

Can you reach out to them?

Do that have social media profiles? Twitter/LinkedIn etc?

What is their prior experience?

Website

Does their website and its contents reflect their market cap?

Is it clear to see what products/services they provide?

Do they have a clear plan for the future?

Roadmap

A roadmap is a public list of a business’s objectives and strategies over a certain period of time.

Here, you can see the work a crypto project aims to complete in the year, so if you like what you see, you can make a decision whether the project is worth investing into.

When To Sell Your Cryptocurrency

There are two things to emphasise when it comes to selling your crypto assets.

The Bitcoin Halving.

Like I mentioned earlier, the crypto market works in cycles, and this will always be the case because of new investors flooding in during the bull market.

The aim? To get out before prices tank and the “crypto winter” begins for 2–3 years.

Fear And Greed.

Every cycle, there’s a new wave of investors who try to convince more experienced investors that “this time it’s different” and refuse to sell their crypto.

Guess which group of investors is right?

There comes a time in crypto where investors reach what’s called “peak euphoria” which is a term used to describe investors who believe that nothing can go wrong.

They lose all sense of reality, and lose money because they refused to sell.

I was there a few years ago. Don’t make the same mistake.

Sure, it’s hard to part ways with your investments if they’re performing well.

But remember… what’s the objective of investing?

To buy low and sell high.

The hard part isn’t making an unrealised profit… it’s knowing when to sell, and only you can make that decision.

Thanks for reading! Be sure to subscribe (it’s free!) for more financial wisdom every week.