Without making a profit, cryptocurrency investing is pointless. Like any other form of investment, the aim is to earn from invested capital and not make overwhelming losses.
To ensure that your investments stay healthy, you need a crypto profit calculator. These tools, one of which is available on CoinStats, is excellent for helping you keep track of earnings and losses.
Without this, you’ll be trading blindly, celebrating hollow wins and profits when, in reality, you’re taking in far more in losses.
Although it is possible to earn big in a single go, it’s not a very common scenario with cryptocurrency investing.
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What is more commonly found is slow, steady yields over a long period. And this is a result of brilliant, strategic market planning where the investor does not overplay or underplay their hand and investments.
Regardless, there are many sad tales of investors who’ve lost fortunes in crypto trading. If the scenarios were to be analyzed on a case-by-case basis, a number of common themes would be found.
The major reason why investments fail to pay off for traders is a lack of sufficient know-how regarding how the market, and indeed, blockchain technology works.
So, before we delve further into this piece, let’s take a brief but important detour into the origins of crypto trading: blockchain technology.
What is Blockchain Technology?
You’d be surprised at just how little many crypto investors know about blockchain technology.
As it’s the foundation, the bedrock of crypto trading, understanding it is key to making intelligent, profit-driven crypto investments.
The blockchain is a publicly distributed ledger of continuous, self-validating transactions. Pioneered by the anonymous Satoshi Nakamoto in 2008, its rise has been meteoric, at the very least.
Cryptocurrencies are the native tokens of the blockchain, which in turn power them, and, to a large extent, determine their values.
The first blockchain, Bitcoin, was primarily created to be a means of scalable, seamless, decentralized financial payments. Although it took a while for the project to get going, it gained acceptance in many industries and quarters, becoming the crypto giant that it is today.
Since then, other tokens, like Ethereum and Tether have sprung up, improving on Bitcoin’s technologies and creating unique innovations, such as Ethereum-based Apps. Today, Bitcoin is the most valuable cryptocurrency, worth more than four times the value of the next-largest token by market cap (Ethereum).
Its success is mainly down to the fact that it is the first cryptocurrency. However, this could change in the future.
Many blockchain developers are hard at work today, seeking more efficient ways to make the blockchain work. And, given that blockchain technology itself is very much in its early years, many big projects are still on the way.
So, as a cryptocurrency investor, you want to be in the know regarding the latest technologies and innovations in the industry, so you can know where to put your money in the hope of making a solid profit.
In no particular order, here are the top cryptocurrency investing tips to help you secure a profit:
Diversify your portfolio
Some investors have holdings in Bitcoin alone. While this isn’t a bad idea, given the token’s standing in the market, it’s always ideal to diversify your portfolio.
If anything, 2022, has taught investors that even Bitcoin can dip drastically, just like altcoins. Stablecoins aren’t safe, either. Somehow, the illusion of stability in volatility that they give off has been challenged. If the mighty Tether could drop drastically, despite it being pegged to the dollar, other stablecoins aren’t safe too.
To avoid the worst of the dips, it’s good to diversify your portfolio. By Bitcoin, if you can, but also buy several altcoins too.
Do a mix of the established, the budding, the potential, and the obscure. Established tokens like Solana, Ethereum, and Bitcoin are solid investments. Then, you can look out for potential bloomers with reasonable speculation and solid beginnings. Finally, you can throw in a bit of obscurity, as a wildcard.
This way, you will have spread out your assets evenly, but thinly across various projects of varying values. Even if you take on losses, they won’t be so heavy that a good bull run can’t put them to right.
Invest in PoS
PoS stands for Proof of Stake, and is the next evolution of blockchain consensus mechanisms.
Bitcoin, the original cryptocurrency, uses a proof of work mechanism that encourages mining.
The latter is the process by which volunteers lend computing power to the network to validate and timestamp transaction blocks on the digital chain.
This process is energy-consuming, as it requires a lot of electrical energy to power the computing programs underlying blockchain technology.
As a result, it has been criticized by environmentalists, who seek a switch to less intense methods.
Enter Proof of Stake.
In the latter, the consensus mechanism involves validating transactions with “staked” tokens.
Such networks have governance structures based on the number of tokens “staked” in. And, the stakes form the consensus basis.
Overall, it’s more efficient, even if it is less democratic, as some have argued.
However, PoW is gradually changing to PoS. Ethereum is leading the way with a new process and network update estimated to be rolled out in late 2022.
Presently, it’s not as pronounced. But, as the trends shift, the networks will have to conform to world realities. And, so will Proof of Stake, and the unique trading opportunities that it brings, come to the fore in the future.
And, the future is already here.
Make smart decisions
This is where strategy and tactics meet in crypto trading: decision-making.
To buy or to sell? To hold, or trade-in? To withdraw, or to deposit? The “when’s” to this question poses an enigma to investors.
And, that is to say, many crypto traders find it hard to form good trading strategies.
In crypto investing, you must be ready to make both good and bad decisions. Of course, you can’t make too much of the latter- that would be ruin. But, you can try to make more of the former.
Don’t wait too long before selling off coins with falling values. Although the market’s volatility is renowned, it’s rare for tokens to shoot far above their values. At best, their prices can hover above the expected range/average for a while, before plummeting down again.
Watch the charts
Also, you have to spend a good deal of time watching the charts.
The charts are some of the best simple strategies for being a successful investor. Watch out for price movements with hourly updates for different crypto assets.
Get familiar with crypto
The final advice to investors looking to make a profit in crypto is to never stop learning about it.
Blockchain technology is constantly evolving, and there is plenty of ground yet to be broken. As we go on, we will likely see more efficient ways of doing things, better innovations, and more brilliant developers.
Exciting times lie ahead, and there is plenty of potential for a patient, shrewd investor. So, to stay on the bright side of things, you should learn as much as you can about cryptocurrency and blockchain technology.
Like stock trading, crypto trading has graphic element tools to help analyze market ongoings and arrive at sound strategies. Charts, tables, lists, and other databases are available on platforms like CoinStats- a platform recommended to all newbie and veteran investors.