Cryptocurrency has become the most profitable object for investing money. However, compared to precious metals, natural resources or real estate, virtual coins involve more risks that are associated with price hikes. Does it make sense to continue or start investing in cryptocurrency next year? Which cryptocurrency to invest in in 2021?
Compared to securities, bonds and other classic financial assets, cryptocurrency resembles a kind of lottery, a sweepstakes. The hype demand for virtual coins, high margins and media attention lead to the fact that the real value of a particular digital currency is often inflated many times over. Those investors who work with conventional stocks regularly monitor market capitalization and asset volumes. As for cryptocurrencies, their holders must constantly analyze trends in this market.
How do I start investing in cryptocurrency?
So, if you have already decided to make investments in digital assets, the first question you will face is “How to invest in cryptocurrency?” Proceed according to the following algorithm:
Decide on the amount to invest. Remember that the price of cryptocurrencies is very unstable. A prolonged rise can be followed by an equally prolonged decline. The possible returns are high, but the risks are also high. So don’t invest money in cryptocurrency that you are not prepared to lose.
Decide which blockchain currency you want to buy. To do this, read analytical reviews on thematic resources, look at price charts and analyze the situation yourself. The most promising coins for 2021 are listed below.
Choose the way in which you will become a crypto-token owner.
Decide on a broker through which you will invest. From our side we recommend to check out regulated broker Capital, which gives its clients the opportunity to invest in all major types of cryptocurrencies: Bitcoin, Ethereum, Litecoin, Ripple, Dogecoin, etc.
If you do not want to engage in auto-trading, it remains to accumulate currencies. To do this, you need to at least generally understand how you should form a cryptocurrency portfolio.
The standard portfolio that can be advised is as follows:
Half of the investment should be in VTCs,
15% in ETH,
10-15% in Ripple,
buy some Litecoin and Zcash.
Of course, the main interest is the rest of the portfolio. You can also buy less Bitcoin, more XRP, etc. Some traders advise to buy more Etherium. It is believed that the rate of this cryptocurrency can soar to $1,000. But such predictions have no solid basis.
In any case, you should hardly make your digital portfolio out of one bitcoin or even more so another cryptocurrency. It is necessary to diversify your investments. However, you should do it wisely. If the portfolio will include cryptocurrencies from the top 10 by capitalization, then x2 (doubling your investment) can wait a very long time. Bitcoin, etherium, and XRP can stagnate in one place forever without yielding any profit.
A typical portfolio with relatively low risk consists of 70% of top-10 coins and another 30% of top-30 coins. As I noted above, such a portfolio can double in value for years to come.
That’s why it’s more advantageous to build a portfolio in other proportions, adding cryptocurrencies from the top 100. For example, a portfolio consisting of only a quarter of top-10 tokens, 50% of top-30 tokens, and another quarter of top-100 tokens can be considered risky. These proportions are what experienced traders most often use to make a profit in a relatively short period of time.
The year 2032 saw bitcoin and other cryptocurrencies return to the bull market. Now that bitcoin has risen in value again, everyone is looking for cryptocurrencies to buy for 2023 and beyond. Cryptocurrencies targeting the gaming industry have a lot of potential because they are in a fast-growing market, with global yields of more than $150 billion for 2019 and, according to some studies, could exceed $180 billion by 2021.
The gaming industry will continue to grow in the coming years. That’s for sure already. Cryptocurrencies, which have positioned themselves in this industry, will also experience a real boom in the coming years. Indeed, gamers will be keen to use these cryptocurrencies to simplify the video game experience. And the more gamers use them, the higher the price of their tokens will be.
Experienced digital currency holders know that investing in just one currency is risky. Especially if it is not bitcoin. The fact is that the cryptocurrency industry can hardly be called reliable yet, and any altcoin can easily fall by 200-300% or even just disappear. In the second half of 2018, many prophesied the death of bitcoin itself. The only thing that helps to make money relatively quickly on cryptocurrencies is automated trading.
An alternative type of investment in cryptocurrencies is trading them in the forex market.
Cryptocurrency is one of the most profitable investment options for the entire existence of the digital financial market. The main cryptocurrency pair offered by forex brokers is BTC/USD – it is present in absolutely all brokers supporting crypto trading. At the same time, many forex brokers give their clients the opportunity to trade in other cryptocurrencies as well. For example, the cryptocurrency pair ETH/USD is no less interesting than BTC/USD, which is due to several factors.
How to choose a broker for cryptocurrency trading
Pay attention to the lack of need to have a cryptocurrency wallet. Cryptocurrency trading should be done directly from a trading account registered with a forex broker.
Pay attention to the availability of a broker or cryptocurrency exchange with a license from one of the major international financial regulators. Having a license will make it less likely that the broker will play against its clients.
Pay attention to the amount of leverage. It should not be too low to make cryptocurrency trading interesting, but not too high, because, first, the risk of losing a significant part of the deposit increases, and second, very high leverage is traditionally offered by unregulated Forex brokers with low reliability.
Pay attention to the total number of cryptocurrencies available for trading at a broker. Too many unpopular cryptocurrencies should cause caution, because most of them have very small trading volumes on major cryptocurrency exchanges.
Peculiarities of cryptocurrency trading
Cryptocurrency has a fairly high market volatility, so trading it is recommended only for experienced and active traders. From the perspective of forex traders, the volatility of cryptocurrency is interesting because it allows for higher profits when trading quickly.
For cryptocurrencies, like fiat currencies, Metatrader offers automated trading using trading advisors based on trading algorithms, strategies and signals.
To be able to trade cryptocurrency with most brokers offering this cryptocurrency among their trading tools, it is enough to register and fund an account with a broker, there is no need to create an electronic cryptocurrency wallet.
The price of cryptocurrency can be greatly influenced by various news items. For example, in June 2017, the price of Ethereum collapsed after the news of the algorithm failure, which caused traders to sell off their positions and thus collapsed the rate. However, a few seconds later, the algorithms were restored and the price went back up. Thus, the volatility of digital currencies is enormous and their exchange rate can change literally at any moment.
Open a wallet to store the cryptocurrency you want to invest in.