Know This BEFORE Buying Crypto
IMPORTANT POINTS to understand before buying crypto:
Even if you are already in cryptos, it can help to read it again. I often have people bring up matters to me, especially listening to mainstream media or FUD (fear, uncertainty or doubt) articles, and I have to refer them to these points to help them.None of this is financial advice. I am not a financial advisor. This is simple but vital key pointers, what I would tell myself if I were getting into cryptos for the first time. Enjoy! I hope it helps you tremendously.
1. Watch out for FOMO or “fear of missing out”. Don’t buy based off your emotions (due to media hype, or a coin suddenly rising up in value a lot). The market moves in “market cycles” and there are always good buying opportunities. Try to relax about it.
2. You don’t need to buy an entire Bitcoin. You can buy $25 worth. Or $5! YOU DO NOT NEED TO BET THE HOUSE! You do not need an entire bitcoin, even though some crypto influencers will tell you this is an important goal. You do what is best for you.
2021 update: Bitcoin has 10Xed to over 60K, and while some will tell you that $100 may still go a long way, I suspect the majority will be buying alternative coins to bitcoin where $100 can realistically go a long way.
2022 update: I will buy some BTC when it reaches the bottom of its market cycle and everyone is depressed. :-)
3. Never spend money you need for survival. Do not put in an amount and hope it will grow by a certain date so you can purchase something needed for survival. A “good investment” gives you regular cash flow, and this is NOT to be seen as that. The market is too unpredictable at this early stage. The closer we get to mainstream adoption of cryptos, the more stable they should become.
4. Always do your own research. Listen to multiple viewpoints, learn and form your own opinions. This is the only way to be confident about your cryptos future. EDUCATION is the key. As Grant Cardone says, “If you’re gonna do the Bitcoin, you need to do some research.” Research is especially important before choosing to buy “penny coins” or more speculative coins without strong partnerships or a working product yet. Be wary of "hype" from ANY source touting the next million-dollar coin. You don't need to buy expensive crypto reports.
5. Ignore FUD (fear, uncertainty, doubt) about Bitcoin from the news!!!!! Bank and company CEOs spread FUD to drive prices lower so they can buy in (see 2018 bear market), and then announce that they are in fact investing in what they just criticized (JP Morgan, Goldman Sachs…). The world’s largest countries and financial institutions have high interest in this arena. Regulations are coming in the US and in major countries around the world, and with them, Wall Street and mass adoption. Until then expect the price to stay low, manipulated down to scare out people like us. Simply have faith and PATIENCE.
6. I never trust ANY third party to hold my cryptos, and this includes leaving them on an exchange. Most do not realize this important point: You do not actually own your coins after purchasing them on an exchange. They should be moved to your own personal wallet. If you leave them on the exchange all year you risk being hacked, the exchange shutting down, etc. Buy a hardware wallet. Or download a free desktop wallet or phone wallet and transfer your coins as soon as you can. Where do your coins actually exist? On the digital, unhackable, unchangeable blockchain, not in a wallet or exchange. (Therefore, you don’t HAVE your coins until they are in your wallet.) Once they are off the exchange, they appear on the blockchain and can be easily managed from your secure wallet. Top exchanges are pretty safe, but I won’t trust them 100% for the long haul. I never trust ANY third party to hold the majority of my cryptos.
7. Don’t listen to any one person’s timing and amount predictions. Understand and focus on the overall market trend. It’s enough just to know I’m in a growing market. Patience is everything. Don’t worry over it or get too disappointed at times. Have faith (which comes from your hard-won knowledge and confidence) and go live your life!
8. Crypto trades are TAXABLE-EVENTS for now. To avoid that hassle, simply purchase your cryptos directly with USD. If you do use a swap exchange or advanced exchange or simply trade one coin for another, etc on Coinbase, keep a record of your transaction. Exchanges will record this for you and you can export it under Transaction History, but swap exchanges will not, so you must write down or screenshot what coin you sold to buy what at what price and date. Hold a newly purchased coin for a year minimum to avoid short-term high capital gains tax when selling back to USD or trading for another coin. I find it easier to NOT do this too soon if I am holding my coins in a wallet vs on an exchange where I can easily sell or trade. I expect tax laws to be clarified at some point. I am not a tax advisor.
9. Crypto is a fun game to play! There’s no reason to get worried or afraid. If you are, then you’ve probably bought too much. Don’t lose any sleep over this. Remember, just a little can go a long way at this stage in the game if cryptos really are the future. Keep learning, too. The more you understand, the more fun it is! I know you never think of yourself as being “greedy” right? Well, in this market you could be. Just recognize it and remind yourself not to over-invest. Stick with what is comfortable. We are still early and you don’t need large sums, in my opinion. And if you make large sums, don't forget to take some profit (not financial advice). It's harder than you may realize. This may end up being your biggest regret, according to most people I know.
10. I buy with small position sizes, as this newer market is still volatile. If I have $1000 to spend, I may spend it in chunks (and perhaps diversified in various coins). If the prices are lower next week or month, cool! I buy more and “cost average” down my coin buy-in price. I don’t go "all in" at one time, unless I've studied the market cycle well and feel very comfortable doing so. Best to average in buys just like we average out the sells.
11. Don’t worry about getting the best price. No one can “time the bottom” of the market (although I am learning how to get pretty darn close!). Before I buy, I imagine possible scenarios that could happen and decide ahead of time that I'll be okay with any market scenario. It's the expectations of overnight success that you have to get rid of if you want to be able to hold on for the long haul. By the way, news doesn’t affect price as much as we think. Maybe political news can. It’s really just profit-taking and normal market cycles. After several straight up months, expect a down month. The market needs to take a breather some time before it’s next run up. Keep cash on hand for those market dips! Bear markets can last years, so remember to take profits in the good times (again, not financial advice!).
12. I DON’T TRADE AROUND COINS IF I BELIEVE IN THEM LONG TERM. If I buy at a higher price and it dips, I buy more at a lower price and “cost average” (LTC bought at $100 and same amount of LTC at $50 = average of LTC at $75 now instead of $100). I don’t sell. Many end up losing money as they trade around their coins...Trades are also TAXABLE so that’s another reason… Up or down, I HOLD (“HODL”) STRONG!!!!!!!!! Only cashing out at a worthwhile point according to my PLAN. It helps tremendously to know your plan before you buy, so you have an idea of what price you'd like to sell. (I will be using my cryptos in daily life, so selling for USD is not a big part of my own plan!)
This last point is so often violated. I have probably been more successful than others because I simply held on and DID NOT TRADE AROUND MY COINS out of impatience and greed. I just believed in my projects to someday "make it" and prove my research right, rather than try to play the market movements in the meantime, which is very risky.
I hold until my targets are hit per my plan. It sounds easy, but is rather difficult to do such a simple thing as hold onto your coins and not sell them at the wrong time.
14. TAKE SOME PROFIT ALONG THE WAY:
It's easier to be patient for the long-term coins when I take some profits along the journey.
Most people rarely take their profits when they get them, always expecting more and more. But the market moves in waves, up and down, up and down, in an overall up-trend over the years for the strongest coins like BTC and ETH especially.
Taking profits on the ups means it's easier to deal with the downs that WILL come. Rather than magically knowing the exact top and bottom of the market cycle we are in, which is fairly impossible, I find it best to average out my sells as I averaged in my buys.
Stay confident. Be patient. Stick to your plan.
No financial advice is contained in this post. Please consult a licensed financial advisor.
Coin Bureau -- Buying Crypto SAFELY: Complete Beginner's Guide!! 🤓
https://www.youtube.com/watch?v=fiw5rp3zoo0
CryptoCasey -- How to Buy Cryptocurrency for Beginners (UPDATED Ultimate Guide)
https://www.youtube.com/watch?v=sEtj34VMClU&list=PLK6Xq6UOOvACjUz59KSmCI9x8TlL5Qvs9&index=3
