There are now over 15 000 cryptocurrencies accessible worldwide, with a total market capitalization of about 10,000 trillion Ugx. There’s no sign of this growth slowing down as the technology gains more popularity and new use cases are discovered. 

The fact that Bitcoin, the most well-known cryptocurrency, achieved an all-time high market capitalization of almost $1.3 trillion in November 2021 demonstrates how cryptocurrencies are becoming more widely accepted as part of mainstream investor portfolios.

However, like with most things, several waves of adoption have occurred. If you weren’t an early adopter and are now regretting your decision, don’t worry; it’s not too late.

The truth is that the cryptocurrency market is here to stay, and while it may appear to be a hard world to enter, it isn’t. Here are a handful of tips to guide you through your crypto currency investments.

1. Take the first steps and start now!

When it comes to cryptocurrency investing, the old Chinese proverb “a thousand miles begins with one step” holds true. Even if it’s only 100,000 Ugx, make that first investment. Giving yourself some (even very tiny) market exposure will cause you to begin tracking the investment’s success. 

Being in the market is the best approach to improve your expertise and understanding of an investment. Of course, no one becomes an expert overnight (and be wary of those who claim otherwise); it takes time and continuous study, which you can only begin once you’ve made that initial commitment.

2. Don’t wait.

Cryptocurrencies are significantly more volatile than traditional assets, which is part of their attraction because it can help an investment portfolio earn larger returns, but it also means that timing an investment is difficult, if not impossible. Most markets are like this. If you’re concerned that the market may crash as you enter it, decide how much you want to invest in total and then invest 10% of that amount every week (or month) until your entire allocation is invested. This method, known as dollar cost averaging, will significantly reduce your risk in the event of a market decline and give you a better understanding of the day-to-day complexities of trading.

3. Don’t put all your eggs in one basket.

Cryptocurrencies come under the ‘riskier investment’ category of an investor’s portfolio due to their volatility, and as a result, investors should be aware that the risk profile is high, and allocation should be limited to a few percent. Huge risk, on the other hand, can lead to high return (as with bitcoin over the years). You may benefit from the overall rising acceptance of this new technology by diversifying your cryptocurrency portfolio rather than betting on a single cryptocurrency. Do your homework and determine which coins have a strong investment case; cryptocurrency isn’t just about bitcoin.

4. Long term hold

If you look at all of the graphs over the last five years, you’ll notice that investors who have held their cryptocurrency investment for more than five years have all made good long-term returns. This means that if the market falls, you should resist the desire to sell everything you own. Holding your investment for a long time can also help you avoid the volatility. While the biggest cryptocurrencies may fluctuate between 5% and 20% on any given day, the long-term trend has been upwards.

5. Security

Most individuals are significantly more concerned about online security than they were, say, two years ago, thanks to the rise of online banking and banking apps. It’s even more crucial in the case of bitcoin trading. Make sure the trading applications and digital wallets you use have two-factor authentication, if not three-factor authentication, and don’t reuse passwords you’ve already used. If you’re going to work with exchanges or fund managers, be sure they’re respectable by checking with multiple sources.  Refer to our recent article to learn more about Crypto wallets.