How to Properly Invest in Cryptocurrency - Guide for Newbies

Despite their awesome technological breakthroughs, cryptocurrencies are mostly known for their price volatility and the ability to make money for their investors. It’s normal to get more excited about the investment potential rather than all the technicalities. After all, those who invest are the ones who fund the projects in the first place, which made all the breakthroughs possible.

How to properly invest in cryptocurrency if you are still new? With so many scams and traps in the crypto space, you are probably wondering how to really invest properly while mitigating as much risk as possible. Fortunately, you have come to the right place. This guide teaches you all the important things you need to know about investing in cryptocurrency.

Before we go to the “where” and “how”, first of all, we need to understand the golden rules to minimize financial losses.

While cryptocurrency investment might look a bit more complicated than average investments, the rules remain the same. And yes, these rules are important to follow if you want to be serious with crypto investment. Here are four golden rules of cryptocurrency investment.

The biggest problem with cryptocurrency investors is that they don’t know exactly what and why they invest in particular cryptocurrencies. The usual theme sounds like this “I invest in project XYZ because my friend or family member also invested in XYZ and he made a lot of money from it”. 

But this is the wrong mindset to have. When you invest in a cryptocurrency, you need to know exactly why you invest in that coin. You need to know what problems that particular cryptocurrency is trying to solve, and more importantly, the tokenomics.

For example, how many people do you know that have been HODL-ing a top cryptocurrency token simply because it’s listed inside the top 20 of market cap rankings? Too many. Study what the project is all about, study the backers, study the founders, and more important, study its token use cases. Make your informed decision after you study everything, not before.

Unfortunately, risk management is not only about crypto trading, but also about crypto investment. At the end of the day, you can only get good ROI (return on investment) if you have good discipline with your investment strategies.

On many occasions, a lot of investors actually lose money on crypto because they don’t know how to manage their risk properly. You need to know how to manage your risk, how much money you should put, and stick to your stop loss strategies when the worst scenario happens. Don’t move your stop losses nor your take profit strategies just because your mood changes. 

Having a good risk:reward ratio for every crypto investment is a must.

Have you ever heard the phrase that price action often repeats itself? This is true in many cases, including in cryptocurrencies. However, just because the past means something, it doesn’t mean price action will always repeat itself.

Many crypto investors often bet on market cycles around the Bitcoin Halving event. They believe the bear market will reverse when we approach the next Halving (2024) and we will get into another bear market around 2026.

This might be the case as well this time, nobody knows, but nothing is 100%. The market is highly speculative, always was, and always will be. Even if you believe the mantra that crypto price action will always repeat itself, you should always manage your risk accordingly.

This sounds like a classic investment tip that everybody knows already, but for some reasons, many chose to ignore it. Cryptocurrencies are high-risk assets, and you should never put more money than you can afford to lose.

Many crypto investors go all in, and sometimes, they even take debt just to invest more in crypto. You must always remember that things can go wrong very fast in crypto. That also means you can easily make a lot of money when you have a market rally.

There’s no reason to go all in crypto. Always save some cash for yourself in case of rainy days.

Now you have learned all the golden rules in investing, it’s time to learn where to start investing. In case you don’t know how, you can actually start investing in a local fiat-to-crypto exchange in your own country. There’s no global answer to this question, you need to ask a local crypto community (or Google) on which website you can trade your fiat currency to crypto.

You should compare at least two or three of the biggest local exchanges to compare the rate. You can trade your fiat to BTC, ETH, or stablecoins like USDT or BUSD.

Once you have traded your fiat to any of these cryptocurrencies, you should create your own non-custodial wallet, and withdraw your crypto over there. One of the most commonly used crypto wallets is Metamask, which you can read the guide here. 

Keep in mind that Metamask cannot store BTC, so you might want to go elsewhere for that (e.g. Exodus, Trust Wallet, or Blockchain.com)

But for the sake of this guide, better if you trade your fiat to ETH or any Ethereum-based stablecoins. Withdraw your tokens to your Metamask so you have full control of your crypto assets.

From Metamask, you can always trade your ETH or crypto tokens to other crypto tokens. For example, if you want to swap your ETH to Despace token (DES), you can connect your Metamask to our own decentralized exchange, DeSwap DEX.

If you are interested in learning how to use a decentralized exchange to instantly swap from one crypto token to another, we have the tutorial here.

You can keep the new token inside your Metamask or other non-custodial wallet applications. That’s actually the safest place to keep your crypto, rather than leaving them on centralized exchanges (where you trade your fiat in the first place). 

Always remember to never share your private keys or wallet backup phrases with anybody. Those are the most important things which you should always keep to yourself.

This is also one of the most frequently asked questions in this space. How much money should you invest in crypto? Well, once again, there is no universal answer to this. We don’t provide financial advice either since every individual has a different risk appetite.

One thing for sure is that you should never put more money that you can afford to lose (as we have covered in the above section). Nevertheless, only you can answer how much you are willing to lose. You can start with however little you are willing to spend.

In many countries, crypto exchanges often let you invest with just $5 or even less. But again, that depends on your local fiat-to-crypto exchanges. Every company has different minimum limits.

If you make it to the end of this article, congratulations, that means you have shown interest in cryptocurrency investment. But of course, just spending your money to invest in crypto is not the end of it. There are so many things to learn to help you make a more informed investment decision in the future. 

Fortunately, our website is designed to do exactly that. We are here to help you from the very beginning. Go to our Start Here page and learn all the important fundamentals regarding crypto and blockchain technology.