Holding cryptocurrency is one of the easiest ways to make money with digital currencies. It involves buying crypto and keeping them for a long time as they grow in value. It is a popular trading option given that you don’t have to keep checking your balances all the time. Instead, you only set a given time period or an exact value where you exit the position.
Even though crypto holding might be simple, it comes with various pitfalls that can mean losses or gains lesser than necessary. Here are some tips to ensure you get the most out of holding crypto.
Enter a position on the lows
Making a profit when holding crypto is quite easy. You only need to buy on the low and sell on the high. However, most people never want to buy cryptos when on the low. Instead, they are always looking to sell.
By buying on the low, you increase your chances of profits when the market corrects and you gain the most. For example, Bitcoin was trading around $4000 in April 2020. This would have been the best time in recent history to purchase the coin. However, most traders never did as they never thought of a possible upturn. Yet, by mid-2021, the coin had hit $65,000. A trader who has purchased and held their tokens from early 2020 would have made massive profits.
Therefore, always look out for coins that are generally lower, rather than waiting for the appreciation. Buying on the low also means you can take a larger position and in case of losses, you don’t have as much risk.
Understand the market
Before you consider holding crypto, you have to understand the general market. Given the decentralisation of blockchain, the cryptos depend on market demand and supply for value. It is in your interest to understand these market factors before choosing a token to invest in. Look into the news and trends, and other developments when making a crypto investment.
At the same time, you need various market analyses like technical and fundamental analysis. Most of these analyses tend to be factual and should inform your decisions.
Avoid FOMO
Given the volatile nature of crypto, the crypto values will change from time to time. However, it is in your best interest to avoid making irrational decisions based on a few market changes. Most of the crypto traders have been victims of FOMO and they list it as their main regret.
If you are looking to get the most out of your holding strategy, then avoid copying what everyone else is doing. Instead, rely on the market analysis and the market outlook to make a decision. With FOMO you set yourself up for losses and other crypto scams.
Stick to timelines
Every time you enter a position, you set the time to exit. This can either be based on a given period or when the token hits a certain value. However, with the price changes, you might feel pressured to change the agreed timelines. For example, you might want to hold longer when the value keeps increasing.
Instead of keeping the position open, exit then create a new one with new timeliness. You need the discipline to get the most of every position.
