Bitcoin is on the cusp of a psychologically important $100,000 mark, with all eyes on whether it will break it soon. Other coins like Ethereum are showing relative stability, while Shiba Inu remains in the volatile territory due to its small value.
What makes cryptocurrency profits vulnerable to losses?
1. Volatile nature of the market:
Cryptocurrency prices are largely dependent on supply and demand. This means that any large movement in buying or selling can lead to sharp price fluctuations.
2. Lack of strategy:
Holding the currency without a clear plan can turn a profit into a loss. For example, if the price of Bitcoin rises from $50,000 to $90,000 and you do not sell it, any sudden price drop (say to $70,000) will reduce your profit.
3. The impact of speculation:
Small coins like the Shiba Inu may rise quickly due to speculation, but they can lose value just as quickly.
How to protect profits and minimize losses?
1. Setting Take Profit Goals:
Determine in advance the price at which you want to sell the currency to make a profit.
• Example: If you bought Ethereum at $3,500 and expected it to reach $4,000, you could set up a take profit tool to automatically sell the coin when that price is reached.
2. Setting Stop Loss Tools:
Set a minimum selling limit to avoid big losses if prices fall.
• Example: If you bought Bitcoin at $98,000 and want to protect yourself from big losses, you can set a stop loss at $95,000.
3. Diversification and risk management:
Don't put all your investments in one currency. Diversifying between different currencies reduces risk and ensures the stability of your investment portfolio.
Top tips for beginners:
1. Focus on Bitcoin:
As the leading cryptocurrency, Bitcoin’s movements have a significant impact on the entire market. Its approach to $100,000 could lead to further gains if this barrier is breached.
2. Understanding Altcoins:
Coins like Ethereum offer a good opportunity for investors, especially with their relative stability compared to smaller coins.
3. Beware of small value coins:
Like the Shiba Inu, it can make huge profits in a short time but carries great risks due to its volatility.
Conclusion:
Investing in cryptocurrencies can be very profitable, but it requires careful planning and knowledge of available tools such as take profit and stop loss. Never invest more than you can afford to lose, and be sure to constantly monitor the market to ensure you make informed decisions.