Be sensible and follow all the basic rules of investing. Some people have got burnt fingers by not following some of the most basic good sense rules which affect all forms of investing. I have made a listing of the main ones to consider. Here they are.
Number one: Invest only discretionary cash in Cryptocurrency
The money you are using to purchase Bitcoin, Ethereum, and stuff like that must be money you can fully afford to lose. It should be discretionary spending money. You wouldn't visit the races or even the betting shop with your retirement fund and make use of that to risk. Cryptocurrency investing has to be treated in the same manner. It is highly volatile. The main rule would be to purchase cryptocurrency with money you can fully manage to lose using only your discretionary spending money.
What is discretionary extra cash?
That is approximately an individual's own priorities and circumstances. One person may consider money set aside for a holiday for the islands as discretionary spending but somebody else may not want to risk that money in Bitcoin.
Number two: Assess the risk
As with any investment you should assess the risk. There is no secret that Bitcoin is volatile however if you simply abide by rule primary then there will be little or no change in your financial situation in the event the cryptocurrency market requires a tumble. Market volatility isn't only risk investors in some countries are presented with. China imposed a blanket ban on all crypto transactions to be able to stop all cryptocurrency related activities.
Number three: Don't get greedy
Greed gets the better of a lot investors. They begin to see the value of their Bitcoin skyrocket and decide to use money which they should not be speculating with, for choosing more Bitcoin. Having some form of exposure to the cryptocurrency market adds a thrilling string to your financial bow but don't try to get rich quick by diverting all of your money to Bitcoin and ignore other forms of investment.
# 4: Diversify
Spreading your risk helps prevent losing all of your money in one go. Several investors lost all of their money in one major financial hit during the 2008 Gfc when companies they invested their life savings with went under. They invested all of their eggs into one basket.
What has this have got to do with buying Bitcoin? Hacking is really a danger with Bitcoin therefore having money spread among different platforms will lower your chances of this happening.
# 5: Use different platforms
Hacking can be a possibility which may see your cryptocurrency disappear. It's a good idea to invest your cryptocurrency among different platforms such as Blockchain, Binance, Blockfi. etc. This way if one of those platforms gets hacked you won't lose my way through one go.
Number six: Find a safe place to hold your password
This is important because several GPT-integrated trading tools will only allow you a particular number of wrong passwords and after that you will be permanently locked from the site.
You do not need this happening to you.
There are several things that can go wrong in the crypto-market but with meticulous planning you can mitigate the risks.