Do you understand the critical distinction between bitcoin investors who will succeed in 2022 and those who won’t? The successful ones began investing in crypto. When you first invest in Bitcoin and other cryptocurrencies, you have many questions, such as whether Bitcoin is a good investment and how to buy it. In addition, if you are a newbie and you are looking for a trusted platform to trade Bitcoin, you may visit BitIQ
You may become perplexed by questions about where to begin and how to invest in this cryptocurrency. To help you get started more easily, I’ll share my experience, offer recommendations on how much to invest in Bitcoin, and give you tips on how to do so.
How Much Money Should You Put into Bitcoin?
The best way to invest in Bitcoin is to allocate between 5% and 30% of your total investment capital to Bitcoin. It is 5% highly safe and 30% reasonably risky. I wouldn’t advise anyone to invest more than 50%.
In the end, the choice is yours. It also depends on individual characteristics like risk tolerance and the money you can afford to lose, even though market conditions have a role.
Factor 1: Tolerance for Risk
The cryptocurrency market fluctuates a lot. Consider a sum you would be willing to lose when deciding how much to invest in bitcoin. You need to reduce the amount you had in mind and re-ask yourself these questions if even one of these questions has a “maybe yes” response. Consult your friends and family if you’re unsure of your answer. Because you chose to invest, will you hold a harsh opinion of yourself? Do you think about suicide? Do you have trouble sleeping?
The temptation to “panic sell” at a loss will also exist for investors who make excessive investments. Sometimes making a loss can be the right move, but only if the choice is made logically and not emotionally. Consider how much you want to put into it. Think about this sum and visualize your future selves: Will you be okay with losing your entire investment, say $12,000?
Factor 2: Tolerance for Profit
While it may sound like foolish advice at first, consider this: if you invest a sum of money that can cause you to get very upset if you lose it, what will happen if you 20 times your investment?
Many investors experienced this during the cryptocurrency surge in late 2017. They chose (poorly) to invest their life savings, which led them to become millionaires.
Do you think they would have sold their stocks and taken their winnings if they had been too greedy to make a sensible investment? Then investing in Bitcoin in this manner is not the most incredible option. Most of them returned to their previous positions amid the 2018 market crisis.
Factor 3: Timing
When Bitcoin’s price was soaring, I guarantee you heard much more about cryptocurrencies than when it was falling or leveling out. That’s because people and the media have a natural predisposition to follow current trends.
But did you realize that multiple market cycles make up the Bitcoin industry? These market cycles usually span one to two years, with prices increasing quickly and causing bubbles. These bubbles then suffered a disastrous burst.
There are platforms that automatically guide you on the convenient time to trade and make investments. The timing should alter only your entry strategy and the starting amount you had in mind.
Factor 4: Diversification
Any experienced investor will utilize diversification as a strategy to lessen the significance of luck. And this implies that in addition to investing in cryptocurrencies, you will also spread your cash among various other investment vehicles, like gold, stocks, and real estate. Also, you can leave some of your money with the bank to earn a tiny interest rate.