Cryptocurrency Investment Strategies For 2022

Strategies For 2022 Crypto Investments

From banking to healthcare, the underlying technology behind cryptocurrencies has the potential to be a gamechanger for a variety of different industries. The potential of cryptocurrencies to disrupt the world represents high-income opportunities for people who believe in the future of digital currencies and support its transformative industry as a whole. In this article, we have listed some of the top cryptocurrency investment strategies for 2022 to help both new and seasoned investors who are looking to get a piece of this market.

What are Cryptocurrencies?

Cryptocurrencies are supported by a tamper-resistant record of transactions called the blockchain that keeps track of the asset ownership and shows the history of all the transactions made within the space. Depending on the cryptocurrency or also referred to as tokens or coins, most are intended to be stores of value, units of exchange, and carry out other complex digital financial transactions.

Some of the most common cryptocurrencies include Bitcoin, Ethereum, Litecoin, Dogecoin, and Polkadot to name a few, Today, more and more retailers like Paypal, Whole Foods, Etsy, Nordstorm, and Expedia have accepted cryptos as a currency and customers can use them to purchase goods or services.

How to Invest in Crypto in 2022?

Investing in cryptocurrencies securely involves three (3) simple steps:

(1) Create a Brokerage Account

Aspiring crypto investors can start their journey by opening a brokerage account. When choosing a crypto broker, it is wise to opt for one that has solid financial backing. Another great option for new investors is to buy cryptocurrencies through centralized exchanges. These user-friendly exchanges act as third-party facilitators for an extra layer of security and they make money through transaction fees or commissions.

(2) Top Up Your Account

For first-time buyers, you may use regular fiat currency to buy digital assets like crypto. You can make your payment by linking your bank account and authorizing a cash transfer through either debit or credit card. On the other hand, experienced investors can trade some of the existing coins in their portfolio to buy another type of cryptocurrency of their choice.

(3) Purchase Your Cryptocurrency

Once you have deposited cash into your account, you can choose among thousands of coins ranging from the popular names like Bitcoin and Ethereum to more speculative cryptos like Holo or Theta Fuel. When you purchase your first crypto, you will be needing a digital wallet and a private key to digitally sign off your purchase and show that your exchange was legit.

Before deciding to make a purchase, it can be helpful to ask yourself the following questions:

  • What are my goals and objectives for this investment?
  • Am I hoping that it will increase its value short term?
  • Am I interested in its underlying technology?
  • Are there real-life use cases for this digital coin?

Another helpful tip is to take the market cap into consideration. A high market cap can signify that there is not much growth left and early investors may look to take their invested money off the table. Beyond the technicals and fundamentals, looking after the crypto’s real-world use cases can also be helpful to spot golden opportunities when HODLing a specific digital coin this 2022.

Tips for Investing in Crypto

Before muster up the courage to buy your first ever crypto, read through these tips to ensure that you take calculated risks and well-informed investment decisions in your crypto journey,

Have Your Finances In Check

As in the case of any type of investment, having your finances in order is always the first step to making it easier for you to stay focused on your investments without worrying about your financial security. Having your finances in check means you keep a manageable level of debt, have at least three months’ worth of savings/emergency funds, and have a well-diversified investment portfolio.

This will help you mitigate the risk associated with investing in speculative investments and reduce the severity of stomach-churning ups and downs in the crypto market. Furthermore, without a well-planned financial process, all your crypto gains are bound to go down the drain.

Do Your Research

With all the get-rich-quick schemes on the internet, it can be tempting to pour all your hard-earned money into them in hopes of a high return in a short period of time. However, the hard truth is that building wealth in a risky investment like crypto requires thorough research and a mindset to stick to your cryptocurrency investment strategy even when the market looks choppy.

With thousands of digital currencies available and new ones being created on a daily basis, analyzing the companies with proven track records and reading their prospectus can help you spot crypto assets that will drive significant returns for you.

Calculate Your Risk

In the space of cryptocurrencies, it’s only natural to see their value swing way up only to come plunging back down at the end of the day. There’s no denying that investing in this type of asset class comes with some level of risk especially if you don’t really understand how the system works.

A good rule of thumb is to only invest the money you’re willing to lose so you won’t put your family’s financial future and your retirement dreams at risk when things don’t go your way. Above all else, crypto investors should know the risks associated with investing in this asset class and take the time to understand the common pitfalls that lead novice investors to lose money.

Be Careful of the Psychological Traps

For new investors, it is important to be wary and practice caution so they won’t fall into psychological traps like fear of missing out, greater fool fallacy, or herd instinct in the cryptocurrency space. Be sure to take a step back from the hype and focus on your cryptocurrency investment strategy to avoid getting crushed by these psychological traps

It can be helpful to automate your crypto purchases to remove the likelihood of your emotions influencing your crypto investment decisions and to help you take the stress out of trying to watch the market only to realize that you’ve been buying high and selling low. By automating your purchases, you will also take advantage of dollar-cost averaging and ride out market downturns to potentially increase your portfolio in the long run.