Invest savings in Bitcoin
6 min reading
You want to increase your savings with cryptocurrency? How to do it and not to lose money? We will help you to understand it.
Can I invest all my savings in Bitcoin?
For many novice traders, investing in cryptocurrency is not easy to understand. But at the same time, some experienced investors earn money and grow their savings with the help of cryptocurrency. As the price of cryptocurrencies is very volatile, you must first decide how much you can afford to lose. When the price of an asset goes up, it can go down, and vice versa. And therefore the risk of losing savings is possible.
Decide how much you want to invest
You need to decide which assets you want to invest in, but it is better to choose several cryptocurrencies. Experienced digital currency traders know that investing in only one currency is very risky. To build your portfolio, you must analyze the price charts and the market situations. To invest effectively, multi-level analysis of the stock market must be carried out. Depending on the volume and duration of the investment, two main approaches are used: technical analysis and fundamental analysis.
What to take into account
Both methods are equally indicative of market conditions and complement each other. Technical analysis forecasts future price movements based on an analysis of past price changes. It is based on analysis of price time series, most frequently on charts of different timeframes. In addition, it uses information about trading volumes and other important statistical data. Fundamental analysis is used to examine the financial and economic condition of industries, individual companies, and their investment attractiveness. It is also used to determine the real or “fair” value of securities with a high degree of certainty.
Investment into bitcoin
Bitcoin is for sure the most popular crypto. Bitcoin is now in fact an international currency, which is used by its holders, like any other, for settlement, purchases, and investment of funds. A distinguishing feature of Bitcoin is that it is created based on blockchain technology and is not presented in the form of cash.
The Blockchain is a huge database in which all operations (transactions) are recorded, where each subsequent operation is linked to the previous one. The main advantage of this system is that the information about all transactions is distributed to thousands of computers on the network. It is believed that this ensures that Bitcoin cannot be counterfeited.
There are a number of reasons why people decide to invest in Bitcoin. To start with, BTC has a leading position and has long been globally recognized in the cryptocurrency market. This cryptocurrency is constantly growing and is sustainable itself. Bitcoin is also liquid and volatile. But it is worth remembering that in addition to BTC, there are many more cryptocurrencies, and you also need to invest some time on it to understand the underlying project and decide if it is worth selecting them in your portfolio. Do not forget that in order to start investing in cryptocurrency, you first need to study several investment strategies that will help you in lowering risks and losses. Now let’s take a look at the strategies. The strategy of familiarity with portfolio investments – an investor is just starting to interact with portfolio investments and is being cautious. The strategy of conservatism – an investor seeks to maintain balance in the investment portfolio. Diversification strategy – an investor reallocates assets and resources to different investment portfolios to make them more efficient. Liquidity strategy – an investor chooses the most attractive projects with high liquidity.
Your crypto portfolio
All strategies use two key metrics: profitability and risk. There is also a third metric, liquidity. Consider portfolios in developed capital markets with large trading volumes. As a result, a portfolio is shaped in the way these criteria are managed. So, what types of portfolios exist? Let’s start with Growth portfolio. This is based on a strategy of seeking out and including stocks of growth companies. It is made up of stocks in companies that have shown maximum growth in recent periods. A portfolio of undervalued companies – formed shares of undervalued companies that have the potential to grow in market value. The financial condition is assessed using the following ratios: liquidity, profitability, turnover, solvency. There is also such a portfolio type as fixed income and minimal risk portfolio. This investment portfolio includes assets that provide a fixed level of return most commonly: bonds, dividend stocks. “All season portfolio” will yield a return irrespective of the economic situation on the market. It may include equities, government bonds, real estate, commodity futures. And last but not least, index-based portfolio strategy. It consists of following a market index.
You must choose the method through which you can purchase crypto tokens. It is necessary to buy cryptocurrency only on serious platforms with a strong reputation that guarantees the safety of your financial transactions.
You can start buying bitcoin in small amounts. You can make money with cryptocurrency in different ways: actively trade digital coins or choose to invest with long-term goals. Another, even more, passive option is mining, but it is quite expensive in terms of hardware and energy consumption. All options have their advantages and disadvantages according to your budget.
Reading the news is not enough to start investing in cryptocurrency properly. It requires at least basic technical analysis skills. This will help you keep your savings and increase your income.