If you have been keeping a close eye on the opportunities that can make you money, then the question of whether or not to invest in cryptocurrency is unavoidable. A lot of people have been holding off because the market is relatively new and initially hard to understand. However, if you’re starting to dip it, it might be time to learn more about how to manage the coins that you have already bought as well as those you might buy in the future. Here are a few crypto management tips to keep you on the right path.
Tracking the movements
You need to have a keen eye on what, exactly, the coins you buy are doing. As with all investments, your goal should be to grow the value of your cryptocurrency and to sell them at a profit, whether to give an income or to reinvest. As such, you should compare tools like crypto portfolio trackers or even learn how to build a cryptocurrency exchange yourself that allows you to monitor the movements of the currencies you have currently invested in, to know when to sell, when to buy more, and to build an effective long-term strategy. Decent crypto trackers can offer comparisons of different coins, monitor your trade orders, as well as giving alerts to real-time price movements in the crypto world. This way you can stay plugged into the market and make a move precisely when you need to.
Mind where you keep your coins
Where do the coins that you buy end up? There are a few options here. Online wallets are known as “hot” wallets, offline are known as “cold” wallets. There is a risk to keeping all your coins in hot wallets, as they can be stolen with ease, but they can also be sold with more ease. Conversely, cold wallets are less accessible but safer. There are also trading platforms and funds that will invest in coins for you, but you won’t actually receive the coins, they will be kept by the company that manages the investment for you. Naturally, this carries some level of risk, so you have to make sure you trust whatever device, software, or organization is keeping a hold of your crypto coins.
Learning about the currencies you’re investing in
The tools mentioned above can help you learn more about the individual movements of different cryptocurrencies to help you make decisions on when, exactly, to buy and sell. However, for a good long-term strategy, it’s important to have an idea of what the individual cryptocurrency is designed to do, its movements historically, and what it’s likely to do in the future. All major cryptocurrencies have a whitepaper that explains the currency in full, and it’s worth taking the time to read through all of it if you’re investing heavily in any given currency. The more you know what you’re investing in, the more informed your choices are likely to be.
Read the news on the changing markets
We’re at the point where cryptocurrency and the markets around them are starting to get more and more attention. As well as more investment opportunities, this also means that there’s going to be more regulation to keep track of. Look at the existing cryptocurrency regulations where you are, as well as any that are being proposed, and how they might change your abilities to invest in them. If the market starts getting more regulated, potential gains can be diminished, for instance, meaning that it might not be a good idea to buy certain coins right at this moment. This all depends on the laws specific to where you are, of course.
Don’t trust “gurus” blindly
Always be wary of any people who call themselves a guru or an authority on something as complex as cryptocurrency. They can often build reputations on one or two good trades and then excel in getting people to either pay attention or to pay money for the insights they give into the market. If anyone is promising that a certain coin or a buying strategy is 100% going to lead to profit, be aware that there is no way that they can know that. Sometimes, they might even be involved in crypto scams or might be driving buyers to a certain coin so the value will temporarily rocket, allowing them to sell it because it dips back down, leaving their followers holding the bag.
Get ready for tax season
As new as they might be, the tax agencies of the world aren’t exactly ignorant of the money that people are making on cryptocurrencies. Indeed, you’re going to pay taxes on the crypto you buy and sell. You have to track all of the transactions and record them individually and provide that information. Given how much work it can take, it’s good to know there are accounting tools that make it easier. This site offers help on how to compare crypto tax calculators. Choose whichever one suits your needs best and make sure you’re keeping your books updated on a regular basis so you don’t have a huge amount to catch up on when tax season arrives.