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4 Golden Rules for Investing in Cryptocurrencies

by Brock Dakari

Cryptocurrencies as a new asset class are as exciting as fascinating. Like Homer’s sirens in the Odyssey, cryptocurrencies attract us as much as we fear them. But now, it’s stronger than you. You want to understand, and you want to learn and better “tame the beast”, so to help you, we give you here the seven golden rules to apply if you plan to embark on investing in digital assets.

1.  Buy and hold

If you are interested in cryptocurrencies, you will often hear this term, “buy & hold”. This means that if you are interested in crypto, then invest in it for the long term. Decentralized finance, blockchain and cryptos are still only at the dawn of their advent.

Everything still remains to be built, imagined, deployed, structured; this is why if you invest, tell yourself that it is at least to keep them for five years. In the meantime, you will experience great upswings and chilling correctives or downswings, but in the long term, if the revolution continues, your investment could increase in value.

Once again, if you are convinced by this asset class, then be really convinced and therefore, never forget that the time parameter is the most powerful lever in investing.

2. Don’t trust, verify.

Don’t trust the first content you read. Do not trust the predictions of X or Y. Use technical analysis in order to avoid bull trap.

It is up to you to build your own knowledge, your own point of view and your own analysis of this market. Of course, you will feed it and make it grow with the information you glean here and there, but do not trust in the words of one person. Remember to check and compare the information he or she has given.

Once you have cross-checked the same information several times, you can tell yourself that it already has more value.

3. Stay focused

Unless you’re already a seasoned trader (and even if you are, you’re still a human being anyway…) you might be surprised at your reaction to a sudden and violent drop in the price of your favourite crypto… like for example the one we saw in May 2021.

After a long and magnificent upward phase (where everyone already saw dollars reflected in their eyes) the crypto market chained sharp declines: -30, -40, -50% and sometimes more.

To avoid these disappointments, make sure you follow the cryptocurrency news in order to be in line with the events.

4. Diversify

For once, it is certainly the universal golden rule which applies to all the management of heritage and to all types of asset classes. It is the rule of diversification; the famous phrase “don’t put all your eggs in one basket”. This is, therefore, just as true for the world of cryptocurrencies.

But diversifying is not limited to cryptocurrencies alone. Of course, we recommend that you invest in several digital assets and, above all, not “put everything on bitcoin or dogecoin” for example.

Unless you invest a few euros, if you plan to invest more significant sums, the duty of prudence requires you to distribute your operations and your purchases on different platforms.

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