Introduction
Timing often defines success in cryptocurrency investment; the best opportunities often arise after bear markets. The crypto world is complex, brimming with risks but also unparalleled opportunities. Secure asset management is paramount—something a non-custodial wallet like NEAR Mobile excels at. Among various crypto assets, NEAR Protocol stands out as a compelling investment. This guide is your roadmap, demystifying how to invest in crypto and maximize your potential for success.
What is Cryptocurrency from an Investment Perspective?
Cryptocurrency presents a unique investment class, sitting somewhere between currencies and commodities. Unlike traditional assets such as bonds or equities, most cryptocurrencies don’t produce income or dividends. They derive their value primarily from demand, serving as a medium of exchange or a store of value. This aligns them closely with fiat currencies, which also don’t generate income but are valuable for their utility in transactions.
However, the crypto sphere has introduced nuances that make it distinct. For instance, staking models allow holders to generate returns by actively participating in the network, resembling interest or dividends in traditional markets. Additionally, the tokenomics of each crypto project can vary, defining how inflationary or deflationary the asset might be. NEAR Protocol is a good example of this complexity, as it offers robust staking rewards while also fuelling an ecosystem intended for widespread adoption.
Why Invest in Crypto?
Investing in cryptocurrency can provide numerous advantages that may not be readily available in traditional markets. Here, we focus on two key benefits: portfolio diversification and the potential for high returns.
High Potential Returns
The crypto market is still maturing, presenting investors with unique and timely opportunities for significant gains. For example, at the time of writing, it appears that the SEC is on the brink of approving the first spot Bitcoin ETF. This development could catalyse a new wave of institutional investment into the crypto space, potentially driving up prices. Moreover, the cryptocurrency markets are often more volatile than traditional markets and are still largely influenced by non-professional traders. This creates an environment ripe for smart, calculated investments to yield substantial returns, as non-professional investors are more prone to making trading errors and taking extreme positions.
Diversification from Traditional Markets
While the correlation between cryptocurrencies and traditional asset classes like stocks and bonds has increased in recent years, crypto still presents a viable diversification strategy. Its relatively low correlation with traditional markets can be a hedge against systemic risks. During times of market stress, cryptocurrencies have occasionally demonstrated the ability to act independently, offering a cushion against market downturns. This uncorrelated behaviour adds a layer of risk mitigation, enhancing the resilience of your overall investment portfolio.
Investment Strategies
In the world of cryptocurrency investing, selecting the right strategy and sticking to it is paramount for success. Adherence to your chosen approach mitigates the impact of emotional decisions and short-term market noise, especially in a market as volatile as crypto. Below, we outline some of the most prevalent investment approaches:
Long-term Holding (HODLing)
This strategy involves purchasing a portfolio of cryptocurrencies and holding them for an extended period, ignoring short-term market fluctuations. The idea here is simple: due diligence at the onset can reap long-term rewards. Additionally, holding long-term minimizes transaction fees and reduces the chances of making impulsive, emotion-driven mistakes.
Short-Term Trading
For those seeking more immediate returns, short-term trading can be an option. This strategy relies on pattern recognition and staying abreast of the latest news to predict short-term price movements. While it can offer substantial rewards, it’s not without its downsides: high transaction fees and the complex nature of short-term market movements make this approach riskier.
Contrarian Investing
Investors often find value in taking positions contrary to mainstream sentiment. However, contrarian investing shouldn’t be akin to «catching a falling knife.» Your stance should be backed by solid fundamentals rather than just a desire to go against the grain.
Is NEAR a Good Investment?
NEAR Protocol offers a strong investment case with its focus on ease of use for both developers and end-users, high scalability through sharding technology, and its Blockchain Operating System initiative. It has strong fundamentals, impressive financial performance, and a roadmap that shows commitment to its mission. It also offers staking rewards, providing another revenue stream for holders. (For a deeper dive into whether NEAR is a good investment, click on the image below to check out our full analysis).
How to Invest in crypto
So you’ve decided to take the plunge into the crypto market, and you’ve set your sights on NEAR Protocol. Fantastic choice! But where do you begin? The steps below outline a straightforward path to start your investment journey. Keep reading to understand how to invest in crypto.
Sign Up with NEAR Mobile
Your first step is to create an account with NEAR Mobile. As a non-custodial wallet, NEAR Mobile ensures you have full control over your digital assets. Check our tutorial to create here or import your NEAR account here
Acquire NEAR Tokens
With your account set up, it’s time to acquire some NEAR tokens. The app’s built-in Transak feature allows for seamless purchase with your preferred payment method. Check our guide on how to buy NEAR here
Begin Trading on Decentralized Exchanges (DEXs)
Once you’ve acquired NEAR tokens, you’re ready to explore further investment opportunities. Decentralized exchanges offer a wide array of tokens to diversify your portfolio. Ref finance is a great option for that
Security Measures
If you ever choose to use centralized exchanges, always transfer your assets to your non-custodial wallet after trading. This minimizes the risk of hacking and ensures that you maintain control over your investments. You do not want to be the next FTX victim
Derivatives and Dual Investment
Entering the realm of crypto derivatives and dual investment can be like stepping into a high-stakes poker game. The allure of high returns is powerful, but it’s crucial to understand the risks and hidden costs involved.
The Leverage Game
Derivatives like options and futures can amplify your gains but remember that leverage also escalates your risk profile.
Binance Dual Investment
Binance offers a unique type of investment known as «Dual Investment,» where users can either «Sell High» by selling an out-of-the-money Call option or «Buy Low» by selling an out-of-the-money Put option. These financial instruments often offer attractive APR returns due to the high premiums associated with options on volatile assets like cryptocurrencies. However, it’s crucial to recognize that these high APRs serve as compensation for the risks associated with holding a short position on an option. While you receive a substantial upfront payment for selling the option, the potential losses are theoretically unlimited. Always scrutinize the language used in presenting these opportunities, as the outcomes might not be as rosy as they appear when compared to simply holding the asset.
Risk Management and Hidden Costs
While derivatives and dual investment tools like those offered by Binance can be lucrative, they often come with hidden costs. The fees for these instruments are not always transparent, making it challenging to determine if you’re getting a fair deal. A strong risk management strategy is essential when venturing into these more complex investment avenues.
Conclusion
Investing in the cryptocurrency market offers a tantalizing blend of risks and rewards. From the high growth potential of assets like NEAR Protocol to the diversification benefits that crypto brings to traditional portfolios, the opportunities are as diverse as they are compelling. However, the key to capitalizing on these opportunities lies in a well-thought-out investment strategy and secure asset management.
Complex financial instruments like Binance’s Dual Investment offer intriguing avenues for growth but come with their own set of risks that require a deep understanding and a critical eye. To navigate these complex waters securely, using a non-custodial wallet like NEAR Mobile is essential. Always remember, the higher the reward, the higher the associated risk. Make sure you’re not only chasing returns but also conducting the due diligence necessary to make informed decisions—and keeping your assets safe while you’re at it.