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A Complete Crash Course to Investing in Cryptocurrency in 2021

A Complete Crash Course to Investing in Cryptocurrency in 2021
03/17/2021 Coin Tasker
3/5 - (2 votes)

The Complete Guide To Investing in Cryptocurrency in 2021

If you look back at the world of investing 20 years ago, you will quickly learn that cryptocurrency didn’t even exist then. This new investment vehicle is unchartered territory for all who participate in it, even down to the developers. The crypto market is volatile, speculative, and filled with unknowns. And yet, it has inexplicably leveled the playing field in many ways. People who just threw a few spare bucks into Bitcoin a few years ago could have very large sized accounts today. At the same time, just buying into cryptocurrency doesn’t guarantee a return. Read over this complete crash course in cryptocurrency investing for the current year.

How Cryptocurrency Became a Viable Investment Vehicle

Only recently has cryptocurrency become regulated in Canada. Prior to June of 2020, any company exchanging cryptocurrency in the nation didn’t really have to follow financial rules. Although crypto is still a very speculative sector, the general public has become a lot more receptive to it. Large financial institutions have gone from swearing that it is a scam to investing billions of dollars into Bitcoin. In fact, Tesla founder Elon Musk just made an investment in Bitcoin in excess of $1 million USD. Slowly but surely, its value has increased by five-fold in less than a year. People are seeing their investment grow, regardless of how the stock market is doing or what the current interest rates are.

Buying Cryptocurrency Safely

Technically, you can buy Bitcoin from a friend just as easily as you can purchase it on a cryptocurrency exchange. However, peer to peer cryptocurrency exchanges come with increased risks. Therefore, you should be making your purchases only on well-reputed cryptocurrency exchanges online. Investors can buy Bitcoin and keep it safe via Wealthsimple. As the first fully regulated online crypto exchange in Canada, Wealthsimple makes it convenient for anyone to buy and sell cryptocurrency. Learn more about safely investing in crypto at the Wealthsimple website. Alternatively, you can use an international crypto exchange.

Having a Plan for Investments

No one can tell you if you should invest in crypto over buying stocks, or putting your money into a fully managed retirement account. Ideally, you will have enough cash available so that you can spread things out and have a few different investments going simultaneously. Either way, you need a plan for investing in crypto and otherwise. If Bitcoin suddenly doubles in price, will you hold onto your investment or will you sell enough to recoup that initial investment? Likewise, if the price swings in the other direction, are you going to be patient enough to refrain from selling until everything settles? No matter what it is you are thinking about doing in 2021 to grow your money, you need a plan for investing.

Learning About Different Cryptocurrencies

Bitcoin is big – really, really big. In fact, when you mention crypto, it is hard to talk about anything but Bitcoin at the moment. Inexperienced investors have made millions off of Bitcoin, which has caused people who normally have no interest in investing to suddenly plunk down their life savings on various cryptocurrencies. First, you need to know what options there are in addition to Bitcoin. There are cryptocurrencies that are similar to Bitcoin, with some of them even having Bitcoin in their name, but based on their value alone, they are not the genuine article. Then, there’s Litecoin, which is a different type of currency, but its pricing fluctuates on current Bitcoin pricing. Find out how different cryptos are priced and find the ones you think have the best chance of rising this year.

Paying Attention to Price

Just like with buying stock, there is a good price to purchase cryptocurrency. Twenty-four hours a day, seven days a week, the price of Bitcoin and other cryptos go up and down, giving investors ample opportunity to find a great entry point. So, you might be ready to start investing in Bitcoin today, but it is more prudent for you to get in when the getting is good. If Bitcoin has just surged to an all-time high, wait it out. When Ethereum is steadily gaining in value, wait until there is a price correction and its value goes down. These price breaks might last for just a few hours, so ensure that you have your indicators all set.

How Much Should You Invest?

You can put a lot of money or a very small investment into the cryptocurrency market. How much should you invest? The answer is, however much you personally feel comfortable investing. If you have paid your bills, saved for emergencies, and have other more long-term investments going, then you may want to put a modest amount towards crypto. Those with more understanding about cryptocurrency may be more inclined to invest in a more aggressive manner. Keep this in mind; you cannot lose what you do not invest, in cryptocurrency or in any other type of regulated investment. Once you take your cash and exchange it for crypto, the value could remain the same for a long time, or it could instantly go up or down.

Digital Versus Hardware Wallets

Whenever you buy cryptocurrency, it will stay within the online account where you purchased it until it is transferred somewhere else. If you have a digital wallet, it can be transferred there for safekeeping. Online digital wallets are pretty safe, but they have been known to be hacked. Work with a company that is regulated by the government if you want to keep your cryptocurrency in an online wallet. Hardware wallets are best for anyone who wants to physically hold the keys to their cryptocurrency. You have to buy a wallet and then transfer your cryptocurrency to a hardware wallet yourself. If you lose the keys or password credentials, there is almost no chance that you will ever be able to recover your cryptocurrency investments though.

Which Cryptocurrencies Are on the Move in 2021?

Of course, Bitcoin appears to be one of the biggest predicted winners of 2021. While this is the most obvious option for newcomers to the crypto market, there is still loads of room for growth for other currencies. Ethereum has gone from being valued at a couple of hundred dollars to more than $1,500 CAD at present. In just the last 30 days alone, Dogecoin, commonly referred to as a “meme coin” has increased by six-fold. XRP, otherwise known as Ripple, has been involved in some controversy, but its value has still managed to go up by a lot. Find out which cryptocurrencies are going to increase handsomely in 2021 by doing the research that is necessary.

Investing in Cryptocurrency – Do You Know What You’re Doing?

Even though cryptocurrency is a great investment, it isn’t as new as some are making it out to be. The fact of the matter is that people treated it extremely cautiously, until Bitcoin exploded. Now, it seems that investors cannot get enough of it. This is causing the price of it to fly. At some point, there may be a leveling out or a correction that brings the value of various cryptocurrencies down. If you know what you are doing, your profits will remain secure. Get involved in cryptocurrency investing when you know what you are doing and feel that you will be able to make financial moves with confidence. And the best way to learn what you are doing is to make your first cryptocurrency investment.

Cryptocurrency and Risk Versus Reward

No one knew that Bitcoin was going to be as heavily valued at its inception as it is today. In fact, some estimate that Bitcoin could eventually be worth 10 to 20 times what it is today in less than a decade. The reality is that early investors in Bitcoin took a huge risk. They did not have a magical looking glass that told them when to buy and sell Bitcoin. Whether it was a hunch, or a hope, or a firm understanding of the technology that drives the crypto market, early Bitcoin investors have been rewarded exponentially from the risks that they undertook. Although cryptocurrency is more respected and stable than it was just a year or two ago, prices could still suddenly plunge. Like the stock market and currency exchange rates, the value of investments constantly moves up and down. You have to find if investing in cryptocurrency is personally worth the risk to you. As more first-time crypto investors buy Bitcoin, Ethereum, XRP, Dogecoin, and more, there will be additional chances for more tenured investors to make money. Remember, you won’t always be able to buy Bitcoin as there are around 21 million in total that will ever be on the market. As people buy more Bitcoin, they are going to be less willing to sell it as its value increases. So, investing in cryptocurrency right now could completely change the landscape of your financial situation in future years. Imagine being able to retire 10 years early from your cryptocurrency investments alone. If you get started investing in the crypto market in 2021, that could be your reality.

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