Imagine a world where digital currencies are not just for techy investors but rather a part of the global financial system. It probably would encourage more new and weary investors to give crypto a shot, right?

Well, this possibility isn’t so far away; it is actually happening right now. Bitcoin in 2024 has skyrocketed and also pushed some other competitive coins to grow in value. Countries worldwide, including the US, are integrating cryptocurrencies more and more into their economy and normalizing the buying, selling and trading of crypto.

This University of Missouri study suggests that cryptocurrencies may not be as disruptive as originally thought and, in fact, could strengthen the U.S. dollar’s position as the world’s reserve currency, especially through dollar-linked stablecoins.

For beginner investors, we understand your skepticism and why you would be a bit worried about putting your hard-earned cash into something that might not be 100% reliable. But the truth is, our economic landscape is changing, quickly. And if you don’t get on board now, you might be left out of a great investing opportunity.

In this post, we’re going to explain 6 useful tips for new investors, from holding to diversifying your portfolio. There’s no better time than the present to begin your crypto-investing journey, so, let’s get started!

6 Crypto Investing Strategies for Beginners

With the right strategies and a bit of guidance, understanding the world of crypto can be fun and rewarding. Of course, we are never going to claim that you will become a multimillionaire, but if we have seen anything over the past few years, it is that the world is embracing digital currencies and Bitcoin, along with others is on the rise.

Here are our top tips for new digital investors, just getting into the game:

1. Holding

To begin, let’s define what is holding. Basically, it is exactly what it sounds like, it is to hold onto your digital investment for the long haul. This term means that investors keep their cryptocurrencies through the market’s ups and downs, without selling even if there is a downward dip.

It’s a strategy backed by historical data and trends used by traditional stock market investors and big names like Warren Buffet, who preaches patience to outperform the market.

Bitcoin and Ethereum

Bitcoin, the “og” of cryptocurrency, has shown immense growth since its creation in 2009. No matter how volatile the market is, long-term investors have seen big returns. For example, if you had invested in Bitcoin from the start (end of 2009), its value was $0.01, but today the single coin is worth over $70,000! This isn’t to say that its value hasn’t gone up and down like a roller coaster, but one thing that proves to be true is it continues to climb over time.

Ethereum, on the other hand, is a different type of crypto altogether. It was launched in 2015 and gives developers the ability to create and build decentralized apps, known as dApps on its blockchain. For those of you new to crypto, this all might sound like a foreign language, but luckily for you, you don’t have to worry about building apps. What’s important for you in terms of investing is understanding that Ethereum is another big player in the world of cryptocurrencies to pay attention to.

But why does holding work as a strategy? It simply lies in the idea that crypto is a powerful asset that is only going to continue to grow, as we have seen it do since its creation. More and more people around the world, including governments are taking notice, which only adds to its value.

2. Diversifying Your Crypto Portfolio

We are all familiar with the saying “Don’t put your eggs in one basket” (or fish), well, this is exactly what diversification is all about. Since crypto can be at times volatile and unpredictable, diversifying your digital investment portfolio is a great and recommended tool for getting you through the “rough times”.

It works by spreading out the risks, reducing the blow that a poorly performing cryptocurrency can have so that your whole portfolio isn’t affected. Diversifying your crypto portfolio doesn’t mean that you are limited to coins, you can invest in different crypto “sectors”, such as DeFi, NFTs and other tokens.

For a more in-depth look into particular strategies for diversification, check out our guide on How to Build a Crypto Portfolio.

3. Using Technical Analysis to Buy Low

Technical analysis is a useful tool to know when is the best to enter and exit the crypto market. You need to analyze price charts and learn to use indicators to predict future movements.

This can be kind of complicated for someone starting in crypto investing, so for beginners, we recommend focusing on basic concepts like support and resistance levels. These levels are used to know when to buy or sell crypto.

Support Levels are when prices stop falling and bounce back, giving you a good chance to buy.
Resistance Levels are when prices peak and may start to fall, suggesting a good time to sell.

You can learn more about using technical analysis in crypto trading in our guide, especially regarding when to enter and exit your trades.

4. Swing Trading with Cryptocurrency CFDs

Before we move forward, let’s first define what is swing trading and CFD.

Swing trading is a strategy that tries to take advantage of price ‘swings’ in the market, and is a very popular method with cryptocurrency investors. The goal of this technique is to make gains in the short term.

A contract for differences (CFD) is a contract between a buyer and a seller that indicates that the buyer must pay the seller the difference between the current value and the value it had during the time that the contract was created.

We know…it can be a bit complex. But, let’s break it all down for you.

The goal here is to use CFDs to your advantage when swing trading crypto to estimate the possible change in the price of a cryptocurrency without actually owning the asset.

This gives you the chance to profit from the rise or the fall of the market.

5. Managing Risk

Like with any investment, you need to make sure that you can afford to lose whatever you are putting in.

Ideally, with risk management, you want to protect whatever capital you have made; which is why understanding and setting a limit for yourself is so necessary, and hopefully helps you to make less emotional decisions. Strategies to help you manage the risks are putting into place stop-loss orders, understanding maximum risk levels and grasping psychotrading concepts.

Stop-loss is an automatic order that you have pre-set to sell your crypto assets if it drops to a certain level. This is a good tool for anyone who has clear boundaries on what their loss limits are and wants to prevent them from dipping below them.

Knowing your max risk levels is all about having a maximum amount of your crypto portfolio that you are willing to lose. A common rule that many people abide by is that you should not risk more than 1% of your total investment capital on a single trade. This helps to ensure that you won’t lose your entire portfolio on a bad investment or trade.

Finally, psychotrading is the psychological aspect of buying, selling and trading crypto. It is understanding the fear of investing, the potential greed that comes from gaining and having the mental discipline to control yourself.

6. Storing Your Crypto Securely

Your final and probably most important tip is the safety of your crypto. Hacking and phishing schemes are a real risk when it comes to digital assets and should be your top priority. Using a cold hardware wallet, rather than a hot online wallet, is your #1 tool for safeguarding your crypto for the long term. There are many great cold wallets on the market, but if privacy and security are important to you, then Material Bitcoin is a stand-out choice.

Material Wallets offer an indestructible hardware wallet that is fire, water and shockproof. You can store your Bitcoin, Ethereum and USDT on one of the steel plate wallets using the super easy interface to transfer your crypto from an exchange to the secure Material system.

The Final Step

In the exciting world of crypto investing for beginners, there is so much that you can utilize to your advantage. Some might require more technical understanding than others, but we hope that these 6 tips will help you to get started.

No matter what method or strategy you decide to use, just make sure that you keep your investments safe in a reliable cold wallet, and no matter what, don’t give out your private keys or passwords to anyone.

If you have further doubts, make sure to consult our FAQ section.

FAQs

What is the best investment strategy for crypto?

The best strategy is one that matches your risk profile. Emotions play a big role in investing, so education and understanding of the market are very important. For beginners, the holding strategy is usually the safest bet.

What is the best strategy for cryptocurrency trading?

New traders should look into swing trading with cryptocurrency CFDs. But, it’s essential to have a basic understanding of the market and to manage risks effectively.

What is the number 1 rule of crypto?

Never invest more than you can afford to lose. This rule is the foundation of risk management in crypto investing and should always be followed!

What is the best way to keep your cryptos safe?

The safest method for storing cryptocurrencies is using a crypto cold wallet. These wallets, like that of Material Bitcoin, keep your assets offline and secure from online vulnerabilities.