Just like digital currency, crypto gained substantial popularity when COVID-19 was declared a pandemic. It was during the onset of the pandemic that people were highly advised to avoid physical contact when making transactions. However, the concept of holding and trading in cryptocurrency is quite new to some of us. For us to be on the same page, we should begin with a brief description of crypto before proceeding to complex details.

Crypto is also known as digital coins. This currency only exists electronically and its creation incorporates the utilization of blockchain technology. In the same way, cash and coins can be stored in a digital wallet, cryptocurrency can be stored in crypto wallets. To avoid crypto accounts being accessed and jeopardized by cybercriminals, digital coins are encrypted, for security. Unlike digital currency that has a centralized system of authority, crypto does not incorporate a third party that is accountable for the oversight of transactions between the involved parties.

Trading in crypto has become a highly sought-after form of investment. Even so, crypto is very volatile, making it difficult to predict the currency rate that will be prevailing even in the near future. Despite these fluctuations, crypto is gradually gaining global acceptance with some top-ranking corporations accepting its use in making and receiving payments. More knowledge on crypto can be gained by taking the Dan Hollings cryptocurrency training course.

How Much to Invest in Cryptocurrency to Make Money?

With regards to making investments, there is no conventional way of going about it. This is because the market is made up of different kinds of investors. While some are risk-takers, others are highly risk-averse. Therefore, those who love risk cannot invest the same as those who avoid risk. Given that crypto is a risky investment, some research should go a long way before embarking on the investment journey.

Even so, prospective investors are advised to allocate at the very most, 5% of their portfolios to risky assets such as digital coins. Within short durations, cryptocurrency is subject to massive swings. Depending on the trade placed, this can either give you a huge gain or a huge loss. Consequently, caution and crypto literacy is needed. The ideal amount to invest in a crypto is not only influenced by personal elements, but also market features such as crypto walls.

Top 3 Factors to Consider When Determining the Amount to Invest in Cryptocurrency

1. Time

Trends are involved in the cryptocurrency trade. Due to its volatility, fluctuations occur frequently and therefore, you need to be keen before placing a trade on exchanges like Bitcoin up. If you are certain that the price is about to surge, you can place a larger trade compared to when there are unclear signals of the direction the trend is about to take.

2. Risk

If you are a risk lover, you can invest more than an individual who is a risk avoider. Also, calculate the amount of loss you would incur in the event that things go south. Only invest the amount of money that you are able and willing to lose comfortably. Keep in mind that every trade you place may favor you or work against you.

3. Diversification

It is always wise to invest your assets in multiple platforms rather than one. Your portfolio should comprise of investments in not only risky but also risk-free assets. Once you have already channeled the proportions that should go to the risk-free assets, the rest can be invested in risky assets like crypto.

Even with the hype around trading in cryptocurrency, do give in to the pressure of getting involved in a rush such that you fail to conduct thorough research. You may end up investing and losing your life savings in an asset that you barely know about. Understanding the right amount for you to invest in a crypto is fundamental and is a guarantee that you will enjoy the journey and also find it profitable.