Cryptocurrency is making big headlines these days, and it’s not difficult to see why: Bitcoin recently passed the $50,000 mark, and many analysts believe that it has nowhere to go from here but up. For the average person, though, it’s hard to see where exactly they could get in on this action. Bitcoin? Dogecoin? Ethereum? What does this all mean?
With the rise in cryptocurrency’s popularity has also come a rise in accessibility. There are now more ways than ever to trade crypto, and most allow you to get started without hefty initial investments.
Ways to Ease Into Cryptocurrency
For the first time, it’s now possible to ease into crypto instead of diving in head first. If you’re hoping to do so yourself, here are a few key principles to keep in mind:
1. Use retail trading apps.
Most cryptocurrencies are bought and sold on exchanges, the vast majority of which are far from user friendly. For more casual investors who want a piece of crypto action by easing into cryptocurrency, retail trading apps are the way to go. The same platforms that allow you to buy and sell stocks with ease are now facilitating the same trades with cryptocurrencies — meaning that dipping your toes in has never been easier.
Cash App offers a helpful guide to what Bitcoin is and how to properly buy some, and Robinhood allows its users to trade a whole bevy of different cryptocurrencies. Transferring money from your bank account into these apps is an instantaneous, painless process that allows you to get the ball rolling on your crypto portfolio in minutes. This method is not for the faint of heart, though: crypto is a high-risk asset, so don’t go all-in on your first trades.
2. Save with cryptocurrency.
Tesla recently made waves by investing over $1.5 billion in Bitcoin, but it’s far from the first enterprise to make such a big shift: both MassMutual and Square have made Bitcoin buys recently to the tune of tens of millions of dollars. If some of the world’s most successful companies are willing to store their money in the form of cryptocurrency, why shouldn’t you?
Even if cryptocurrencies are currently experiencing high volatility, the clear trend is an upward one, so there’s nothing wrong with using them as a way to store your cash. That’s the idea that Quontic Bank had when it developed its new Bitcoin Rewards Checking account. The account takes the 1.5% fee generally applied to debit purchases and instead passes the contents of that fee onto its customers in the form of Bitcoin. Not only do you earn while you spend; you store those earnings in one of the most valuable assets on the market today. That’s a safe way to ease into cryptocurrency.
3. Keep things diverse.
Bitcoin is the most visible of modern cryptocurrencies, but it’s far from the only one out there: CoinMarketCap currently lists well over 7,000 different cryptocurrencies available for trading. Going all-in on just one of these currencies leaves your portfolio stranded with far too much risk exposure, but trying to divide your money equally between many different cryptos will likely land you with more duds than winners.
The answer here is simple: take it easy. Do your research, keep things diverse, don’t chase trends, and be ready to suffer a few losses. Cryptocurrencies are the way of the future, but that doesn’t mean that every single one is going to come out on top. The more informed your decisions are, the more likely it is that you’ll come out in the black as you ease into cryptocurrency.
4. Leave FOMO at the door.
It’s a fact that’s hard to swallow in today’s economy: if you had invested $100 in Bitcoin just over a decade ago, today those coins would be worth over $48 million. Returns like these are what drive people to crypto today, but fear of missing out — FOMO — can lead to some hasty and ill-advised decisions when left unchecked.
Beating crypto FOMO isn’t easy, but it’s necessary for making wise investment decisions. Not every upward trend will continue forever, and a downward trend isn’t a sure sign that it’s time to buy, either. The days of “get rich quick” crypto are probably over, but some well-considered investments in the right assets may still prove to give solid returns. Be patient, adopt a long-term mindset, and don’t let FOMO get the better of your good sense.
Crypto is booming, and the demand to get in has never been higher. As you ease into cryptocurrency investing, keep these tips in mind — they could make all the difference when it comes to determining the strength of your portfolio.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.