A Beginners Guide To Investing In Cryptocurrency

Written By: Eric Williams
Reviewed by: Mike Reyes
Last Updated November 1, 2023

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Looking for a beginners guide to investing in cryptocurrency? The world is going crazy about cryptocurrencies. The massive interest and increasing mining activities have increased the prices of digital assets way higher than anyone thought a decade ago. The financial situation around the world is forcing people to find better ways to invest their money, and cryptocurrencies seem to be the best option for many.

However, there are hundreds of markets and thousands of digital assets available right now, with new options incoming all the time. It is getting harder and harder to get things right as a beginner, so we’ve put this guide together to help you start your crypto-trading career on the right foot.

Steps To Take When Investing In Cryptos

Before we get to the details, you should be aware that you need stable finances if you’re thinking about investing in cryptos. Spending your last stash on digital currencies is never a good idea. The most important thing is to create an emergency fund and ensure that your debt is diversified across multiple investments. That way, the money you invest into cryptos will be another part of your financial portfolio, with the highest return potential. 

Follow these steps below, and you will be able to find the best option for your budget.

1. Do Your Research

No matter what you want to invest in, you should always do as much research as possible to ensure that you’re spending your money on the right thing. The same can applies to cryptocurrencies. The best approach is to look at historical prices, future price predictions, and find as many details about the currency as possible. There are thousands of options, so research is a must if you want to choose the best one. 

Most cryptos don’t have any real value. Their prices vary based on demand, so it’s easy to invest your money in crypto that’s losing its value. Therefore, the essential thing is to review the digital asset, see what the company behind it is planning to do in the future. If everything looks good, you can think about investing. 

Popular cryptos like Bitcoin, Ethereum, Solana, Cardano, and others saw massive success in the past few years. Even so, you should invest in digital assets only when the investment is backed by stable cash flow. 

2. Don’t Look Back

a man looking for a Beginners Guide To Investing In Cryptocurrency

While researching historical prices can give you a better idea of the general value of cryptos, don’t look too far back. Why? As little as 10 years ago, one Bitcoin was worth a few dollars. Today, it’s worth over $50,000 at times, so how can you possibly use historical data to make an accurate assumption of future prices? The best approach is to figure out where prices will go in the future. 

As a crypto trader, you have to know where the future prices will be, rather than where they were in the past. You also have to know where to buy Bitcoin in the UK at the best prices to increase your returns. Of course, that requires some practice, but once you understand how the system works, you can make accurate predictions.

Read more: How to Earn Passive Income With Cryptocurrency

3. Volatility Matters

Cryptos are extremely volatile assets. Their prices can drop significantly in seconds on a simple rumor. A few years ago, a single Tweet made by Elon Musk has increased Bitcoin’s price by thousands of dollars immediately. Investors that follow price changes in real-time have the most successful trading cryptocurrencies. New investors who still don’t understand how the system works face the highest risks. The volatility of the markets can easily eat through your investments, so you must invest your money very carefully.

Beginner investors get scared easily when they see prices dropping, so they start selling assets, allowing more experienced traders to buy them at lower prices. The goal is to buy low and sell high, not the other way around.

4. Manage Risks on The Go

If you plan on trading digital assets in the short-term, risk management should be one of your primary concerns. As a beginner, it will take you some time before you’re able to understand how to manage risks and mitigate your losses. Risk management varies from one person to another, so there are no universal tips we can give you. 

Generally speaking, long-term investors are not affected by price changes, since they hold their assets for long periods, waiting for their price to increase to a point where they provide high returns. On the other hand, every successful short-term trading is based on a set of rules that determine the right time to sell the assets. For example, if the investment loses 10% of its value, many traders sell their assets to minimize losses. It’s always better to lose some money than to get crushed by low prices.

The best approach is to invest only a portion of your money and leave an extra amount in reserve. That way you’ll have more money to invest if you lose your original investment. The reality is that you’ll have to lose money at some point to improve your strategy and have more success in the future.

5. Don’t Invest More Than You Can Lose

Many people think that they can make a fortune by investing their last money in cryptocurrencies. However, the reality is completely different. The general rule is to invest only as much money as you can lose without putting your finances at risk. The same approach applies to stocks, ETFs, and other assets.

As we mentioned above, trading cryptos won’t make you a fortune quickly. If you want to make extra cash, the best option is to return your loans and save the extra cash you have leftover. It’s also worth mentioning that many crypto marketplaces lack security and are not regulated by governments and essential bodies. Investing your money on such a platform can leave you empty-handed or at least put you at risk of cyberattacks. You need a trusted crypto wallet to ensure that all of your digital assets are kept safe and sound at all times.


The bottom line is that cryptocurrency trading is almost entirely based on market speculations. They can earn you a lot of money if you do things right, but many experienced investors prefer spending money on physical assets, company shares, stocks, and other traditional options. 

When it comes to crypto trading, the best approach is to start small and build your investments up over time, after you learn how to manage risks and identify the best investment options. Good luck!

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