How to invest in crypto assets? A beginner's guide for cryptocurrencies
As we all know, risk and return are proportional, and investments with high returns will naturally have greater risks. In the world of crypto assets, the risk of investing in mainstream coins is much lower than that of altcoins. Therefore, it is not difficult to understand that the investment returns of some altcoins will be higher than those of mainstream coins. Investing in different sectors of currencies has its own advantages and disadvantages. So which crypto assets are suitable for novices to buy? How to manage positions and adjust your mentality?
I. Understanding and choosing types of crypto assets
1. Mainstream coins
Mainstream coins usually refer to cryptocurrencies with large market capitalization, frequent trading volume and wide acceptance. These currencies occupy an important position in the cryptocurrency market and are generally considered to be relatively safe and stable investment options. Cryptocurrencies ranked in the top few by market capitalization, such as Bitcoin and Ethereum, are often classified as mainstream coins.
Characteristics of mainstream coins include a large user and investor base, a relatively mature trading market, and relatively stable price fluctuations. In addition, these currencies usually have clear uses and solid technical support, such as Ethereum's smart contract function.
Mainstream coins are also a common component of cryptocurrency investment portfolios because they tend to have good liquidity and market acceptance. However, despite their relative stability, investing in cryptocurrencies is still accompanied by price fluctuations and risks, and investors should act with caution and conduct adequate market research and risk assessment.
2. Altcoins
Altcoins are virtual currencies that imitate or derive from other cryptocurrencies (usually mainstream cryptocurrencies). These altcoins usually copy the code of the original cryptocurrency, make some minor modifications or add their own features to launch new virtual currencies.
The characteristics of altcoins include small market capitalization, relatively low popularity and acceptance, and high speculation. Due to the lack of originality and unique technical advantages of altcoins, the prices of many altcoins fluctuate violently and the investment risk is also high.
So, do altcoins have investment value? This question is somewhat subjective. Judging from the historical price trend of altcoins, their rise and fall fluctuates greatly, so it still needs to be tested by time and the market.
For new users, before investing in a certain altcoin, you should first understand its essence? Is there an application scenario? What is the purpose of investing in altcoins? Invest cautiously within your own ability and risk tolerance.
3. Stablecoins, platform coins
Stablecoins are a special type of cryptocurrency whose value is anchored or pegged to one or more real-world assets, such as the US dollar, gold or other cryptocurrencies, to reduce price fluctuations.
The emergence of US dollar stablecoins is mainly to solve two problems: 1) The problem of excessive price fluctuations of digital currencies. 2) Serving as a medium of exchange between legal currency and cryptocurrency. The oldest stablecoin at present is USDT, which is issued by Tether (Tether), a company established by Bitfinex, the world's largest digital currency trading platform. It is anchored to the US dollar, and the price of 1USDT is approximately equal to 1 US dollar. Users reserve US dollars in Tether's bank account, and Tether issues US dollar certificates with a price equal to one US dollar. Simply put, how many USDT are issued means how many US dollars Tether has in reserve. In addition to USDT, there are also stablecoins such as USDC, TUSD, GUSD, USDK, DAI, and PAX.
Platform coins refer to the tokens/universal points of digital asset trading platforms. Because most of their application scenarios are within the platform, they are also called platform coins by investors. But it is precisely because they rely on the trading platform that they are naturally endowed with their own trading value and circulation value. For example, OKB of Ouyi.
2. Allocate different crypto assets in different warehouses
For novice users who are new to the currency circle, it is recommended to invest part of the idle funds in different cryptocurrencies.
First of all, you must clarify your investment goals and risk tolerance, and determine the allocation ratio of different cryptocurrencies based on these factors. You can take out most of the idle funds to consider allocating some mainstream cryptocurrencies with high market value and high market recognition, such as Bitcoin (BTC), Ethereum (ETH), etc. These currencies are relatively stable and can serve as the basis of the entire investment portfolio. In addition to mainstream cryptocurrencies, you can also consider allocating some cryptocurrencies with smaller market value but potential. These crypto assets may be more risky, but they may also bring higher returns.
In the allocation of warehouses, ensure that the investment is diversified, and do not concentrate all funds on a few cryptocurrencies.It is recommended to hold at least 3-5 different cryptocurrencies to diversify risks, and then regularly review and adjust the investment portfolio, and reallocate the proportion of cryptocurrencies according to market changes and investment goals.
Finally, no matter how diversified the investment portfolio is, there are risks. Be cautious and avoid investing more than you can bear.
3. Position management and mentality management
In cryptocurrency trading, position management and mentality management are very important. Here are some suggestions for position management:
1. Do not operate with a full position, and do not invest all your funds in one transaction.
2. Adjust positions according to market trends. Regularly monitor the market and adjust your positions according to market conditions. When the market is weak, you should clear the position and trade. When it is strong, you can increase your position moderately.
3. Manage your emotions and strictly implement the trading plan. It should be noted that once a trading plan and position management are formulated, they should be implemented firmly and not be affected by market fluctuations.
Conclusion: As a novice user who is about to enter or has already entered the market, you should not only comprehensively examine mainstream currencies such as Bitcoin, but also have a deep understanding of the purpose and value of other blockchain projects. When you recognize the value of the blockchain project you are studying, such as the more popular DeF, NFT, Polkadot and other sectors, then your investment confidence will be more sufficient, and your awareness of risks and the points of stop-profit and stop-loss will be clearer. Of course, like investing in other varieties, crypto asset investment is not only profitable, but also has risks. Therefore, investors need to pay attention to position management and mentality management, and reasonably control risks. The bull market in the currency circle has entered the golden stage. I will arrange 100-fold coins in advance in a small circle. Friends who want to enter the circle, click on the avatar to read the entry method. Welcome to like, collect, forward, comment, and leave a message.
