The current decade is all about investing in new forms of assets, mainly those you can’t see or touch. Here, we are talking about digital assets. One of the most common and sought-after digital assets being considered for investment in today’s time is cryptocurrency. Learn more: https://bit-indexai.co
If you have seen your friends getting monetary benefits by investing in cryptocurrency, It must have enticed you as well to put your savings into this form of investment.
However, you need to know that investing in cryptocurrency is easier said than done. To be on the safer side and not end up in losses, you need to be well aware of all the factors associated with digital investment.
Before you decide to buy a cryptocurrency and invest in it, here are some key buying factors you need to consider:
a. Buying Coin With The Highest Market Capitalization
As there are thousands of cryptocurrencies out there to choose from when it comes to buying cryptocurrency, you need to consider only those that have the highest Market capitalization. In simple words, market capitalization is the sum value of the coin as calculated in the current market.
The coin that has the highest market cap is the one that showcases the biggest trading volume. This factor makes that particular coin trustworthy as many people are using it for purchase, sale or exchange activities.
You would see the coin charts made considering market capitalization, and those that you spot at the topmost positions are the ones you should invest in. However, at the same time, there is a possibility that an Altcoin that is downward in position may also showcase great market growth in the coming time.
b. Volatility Of The Market
The biggest feature of the Crypto market is that its highly volatile. This is the main reason why some people end up becoming millionaires by investing in cryptocurrency, while others end up losing all their hard money. Sometimes, there are really wild swings in the prices which turn the fate of investors.
Considering this factor, you should invest in cryptocurrency only if you can manage this turbulence. There are times you would see double-digit drops and may even make triple the amount you had invested overnight.
As a beginner, you should invest a bit of your savings in cryptocurrency and keep a safe fund in that to be able to manage emergency situations efficiently. People have also used the Bitcoin trading software in order to make swift sales and purchases.
c. The Liquidity Factor
Another major factor that you should consider while buying cryptocurrency is the level of liquidity it offers you. Liquidity refers to the ease with which you can exchange the bought cryptocurrency tokens with cash or some other digital currency.
This level of liquidity depends on the trading volume of the currency. If this digital currency is widely accepted, you won’t have any issues while exchanging the coin with some other coins or even cash.
At the moment, Bitcoin gives the highest liquidity to investors. Hence, as a new trader, you should prefer this coin over others to be able to manage your assets.
d. Speed Of Transaction
A lot of times, new traders are not aware of the time required for transaction activities to get through. For each transaction of cryptocurrency, there is a certain speed of the transaction and network traffic. Bitcoin lets you make only 5 transactions in a single second.
However, if there are multiple Bitcoin payments, they are maybe certain blocks that you are particular transaction would have to pass before getting completed. it means that sometimes you may have to wait for as many as 10 minutes to get your purchase or transaction verified by the system.
Investing in cryptocurrency is indeed exciting. As it is a new form of making money, it entices people into entering the world of digital investment. However, at the same time, it is loaded with risks.
This is why it’s always better to be well aware of all the limitations of cryptocurrency before putting your hard-earned money into buying these coins and tokens. Choosing the right kind of Crypto trading platform also makes sure that you are on the safe side and do not lose all your investment in one turn of the market.