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Cryptocurrency has been trending since mid-2017. And people seem to fall into two groups: those who believe in the blockchain technology and are investing, and those who are skeptical and renounce the market as a bubble. But what many want to know is whether or not its too late to move into the crypto space and develop a profitable portfolio.

Though many experience the nagging urge move all of your assets into cryptocurrencies and avoid any chance of FOMO (fear of missing out), it’s important to be aware of the attached risks– and to understand your own risk tolerance. Potential investors should apply caution and consider several factors before investing. And due to the volatility of these coins, you should never invest money into the cryptocurrency market that you can’t afford to lose.

Investing in blockchain assets is extremely high-risk. The volatility of the market is what attracts a lot of potential investors, who see opportunities to gain a lot of value in a short amount of time. But the downside to the market’s volatility is that the market could also crash at any moment (and it has many times in recent history). Emotionally-driven investors may run the risk of buying high and selling low during the market’s dips if they’re not fully confident in their assets. That is why you need to design an investment strategy before venturing into cryptocurrencies.

Before investing, consider asking yourself: 

What do you really want from cryptocurrency; is it to gain capital quickly or gradually?

What long-term value or utility do these coins serve in various industries?

How much can you afford to lose? What percent of your investment should be in cryptocurrencies and what percent of your investments should be in other markets?

Do you really understand the technology? And how much time do you have to stay up to date about the market?

If you know you have the time and resources to monitor the market regularly, you may do well with short term investments and ICOs. Many of the most successful cryptocurrency investors are so in tune with market trends that they’re able to predict when cheap crypto assets are going to blow up. But to weather the extreme ups and downs of the often hype-driven market, it’s best to keep a large percentage of your assets in coins with strong fundamentals– such as Bitcoin, Ethereum, and Litecoin.

Many investors have developed strategies that help them protect themselves against massive market dips. For example, some recommend withdrawing your initial investment in cryptocurrencies after six months and continue trading with your gains or earnings. So for example, if you initially invested $100 in a coin, and your investment grows to $300, you may want to consider removing your initial $100 and continue with your $200 gain. This way, you’re protected from losing your initial investment.

Ultimately, you must stay informed and do your research before investing in crypto assets. This often means wading through tons of hype, myths and misinformation. Your research should inform your investment strategy, which should be re-evaluated on a continual basis. Understand how to read charts, what kind of dips and surges in the market are to be expected, and how to really analyze the utility and long-term value of investment opportunities– just as you would with investments in the stock market.

The comments, views, opinions and any forecasts of future events reflect the opinion of the quoted author or speaker do not necessarily reflect the views of Frontier Desk or any partner of Frontier Desk. This post is not a guarantee of future events, returns or results and are not intended to provide financial planning or investment advice.

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Barry Falls Jr
Barry is a graduate of the University of North Carolina at Charlotte, where he studied sociology, journalism, and business entrepreneurship. He has over five years of experience working with small web-based startups to assist them with growing their engagement and creating online communities around their brand. He's the editor of Frontier Desk.

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