Cryptocurrency is no longer a niche market; it’s a global phenomenon that has attracted everyone from tech enthusiasts to mainstream investors. While cryptocurrency investing offers exciting opportunities, it’s a market riffed with risks, volatility, and constant evolution.
Before venturing into crypto, understanding some guiding principles can make a world of difference in navigating this unique asset class. Here are the modern commandments of investing in crypto.
1. Do Your Own Research (DYOR)
With thousands of cryptocurrencies in circulation, not all projects are created equal. Some are legitimate, while others are scams. Always research the fundamentals of a project – This goes beyond reading whitepapers; it includes examining the project team’s credibility, the problem the crypto intends to solve, and its real-world use cases.
2. Diversify Your Portfolio
Diversification remains essential in any investment strategy, and it’s especially crucial in crypto. While major cryptocurrencies like Bitcoin and Ethereum have shown long-term resilience, the market is full of lesser-known altcoins that are highly speculative.
According to a report from CoinGecko, altcoins accounted for over 40% of the market cap in early 2024, yet many face extreme volatility and lack of transparency. Investing in a mix of established cryptocurrencies, newer altcoins, and perhaps even stablecoins can help mitigate risk.
3. Secure Thy Assets
Security is paramount in crypto. Hacks and scams remain prevalent, with Chainalysis reporting over $3 billion lost in hacks across multiple crypto exchanges and DeFi platforms in 2023 alone.
To protect assets, prioritize using reputable, insured exchanges and consider hardware wallets like for long-term holdings. Additionally, enabling two-factor authentication (2FA) and using decentralized wallets can further secure your investments from unauthorized access.
4. Invest Only What You Can Afford to Lose
Crypto’s appeal lies in its potential for explosive returns, but high rewards come with high risk. Cryptocurrencies are extremely volatile, with prices capable of fluctuating by double digits in a matter of hours.
The collapse of FTX in 2022 serves as a reminder that even major players are vulnerable. To avoid significant financial strain, investors should only allocate money they can afford to lose and should consider crypto as a small portion of a larger, diversified portfolio.
5. Stay Updated on Market Trends and Regulations
Crypto regulations are evolving, with governments worldwide developing frameworks for digital assets.
For example, the EU’s Markets in Crypto-Assets (MiCA) law, expected to be fully enacted by 2024, imposes stricter requirements on crypto companies operating within the region.
Regulatory shifts can impact the entire market, so staying updated through reliable news sources and government updates is essential.
6. Beware of FOMO and Hype
Fear of missing out (FOMO) can lead investors to make irrational decisions, often at market tops. Learn to differentiate between hype and genuine value by focusing on fundamentals rather than impulsive trends. Avoid making investment decisions based on social media hype alone.
7. Have a Long-Term Mindset
Crypto is not a quick-rich scheme. While there are instances of high returns, these are often punctuated by periods of extreme volatility and bear markets. In 2024, Bitcoin’s price remains influenced by macroeconomic factors, including inflation rates and regulatory news, making the market unpredictable.
8. Stay Updated with Kenson Investments
In the rapidly evolving world of digital assets, staying informed is essential to making sound investment decisions. At Kenson Investments, we understand the critical importance of real-time insights and reliable data.
As regulatory landscapes shift and new technologies emerge, we keep our clients ahead of the curve, offering strategic updates on market trends, regulatory changes, and emerging opportunities.
Speak to our digital assets consultants or access our exclusive knowledge centre to gain access to cutting-edge research, timely analysis, and actionable insights designed to empower your digital asset ventures in an ever-changing market.
