BASICS-
Conveying in a layman’s language, A cryptocurrency is a digital currency based on blockchain technology which is generally created and run by private organisations. They are run by a vast number of networks which makes it impossible for any authority to control or manipulate them.
Initially Created as a means of exchange in day to day life, its underlying value and technology gave it an alternate shape of a valuable asset for the future.
The most popular cryptocurrency BITCOIN which was also the first cryptocurrency created by Satoshi Nakamoto was created with the vision of an electronic payment system based on cryptographic proof instead of trust, With time other cryptocurrencies also emerged on similar underlying technologies like ETHEREUM, LITECOIN, RIPPLE etc.
With such hype in the market regarding the cryptocurrency market, every one is curious about what should be there approach when it comes to digital currencies. Should they invest for a longer horizon or trade to make short term money?
Here are top 5 things to consider while making your decision before entering the cryptocurrency market-
FUNDS AVAILABLE-
The first thing to consider is how much money you are willing to spend in the cryptocurrency market, let that be one shot or in instalments. This will help you in creating a more balanced portfolio and also assist you in making calls as regard to fund allocation or trading.
RISK APPETITE-
It refers to the level of risk you are prepared to accept as regards to crypto-market. if the object is to play safe, trading is not recommended due to high volatility in crypto-market. Rather, invest your funds in small portion and try to build a strong portfolio for future.
TIME HORIZON-
Even though crypto-currency is a highly liquid asset, it is important to be clear about the time you are willing to keep your money invested in such assets. This will help you in not making any foolish decisions due to day to day fluctuations in highly volatile market.
PORTFOLIO-
Never invest all your funds in a single currency, try to allocate your funds in different currencies so as to keep your portfolio balanced when it comes to risk and return. Do not be blinded by sudden jump or fall in a particular currency, a balanced portfolio will keep your risk minimum and return high.
STAY UPDATED- As the market is purely run by demand-supply, with no direct influence by any authority. It is important to stay updated regarding your investment. Proper knowledge will help you tackle high volatility and also give you an edge to make better decisions as to where, when and how much to invest.
