As it is known, making an investment in Bitcoin or in cryptocurrencies as a whole is risky. To prevent or minimize this risk, there are certain strategies to put in or follow while making investments in Bitcoin which will be discussed here.
Several questions have been arising from different individuals on the exact amount of money to begin investing with Bitcoin, how to use Bitcoin to make money (visit:https://axrain.com/the-rise-of-bitcoin-understanding-the-basics-of-cryptocurrency/), and so on. In a funded Bitcoin wallet, it is important to use just 10% of your capital for investment using a Dollar-Cost-Averaging strategy.
Well, there are other factors to consider while trying to make a Bitcoin investment. In this article, we will be discussing those factors and how much you should start investing with Bitcoin.
Before investing in Bitcoin, an individual need to consider certain things like; risk tolerance, financial status, and investment objectives. these are the things that play a role in determining how much you can invest in Bitcoin. The substituents paragraphs will be explaining the factors to put into consideration before investing in Bitcoin.
Your Risk Capital: In as much as Bitcoin has the potential to provide substantial profits, it is also risky due to the fluctuation it is crucial to invest what you can afford to lose without having a detrimental effect on your financial status. There is a popular saying “INVEST WHAT YOU CAN AFFORD TO LOSS”.
Risk Tolerance: The price of Bitcoin is volatile, which can result in substantial profits or losses. Determine your level of comfort with investing and your level of risk tolerance. You may consider merely investing a small fraction of your total investment capital in Bitcoin if you have a low-risk tolerance.
Proper Research: Before investing in Bitcoin, it is essential to make proper research and educate yourself about Bitcoin and other cryptocurrencies to familiarize yourself with it.
Educate yourself about the market dynamics, the underlying technology, and the variables that may affect the pricing. Alternatively, you can consult a professional or a financial advisor who has much experience and is knowledgeable about Bitcoin and other cryptocurrencies before investing.
How Much Should I Invest In Bitcoin To Start?
If you are a newbie in the crypto space trying to invest with Bitcoin, it will be quite challenging how to start that or which amount of money, to begin with. As said in the above paragraph, it is advisable to use 10% of your investment capital and also use Dollar-Cost-Averaging (DCA) strategy at different prices. You can begin your investment journey starting with as low as $10. In this part, we will be looking at what the DCA method of investing is.
What Is Dollar-Cost-Averaging (DCA)?
This is an investment strategy that enables an individual to invest a certain amount of money in small increments at regularly scheduled intervals. In this strategy, a change in market price is used in making investments over a long period.
The main objective of DCA is to lessen the impact of market volatility, which is a major challenge to crypto investors because it entails the routine purchase of a certain asset for a predetermined dollar value. Instead of investing all your capital at once, using this strategy will help to smooth out the average price when you make a purchase. DCA helps to minimize the risks of investing in $BTC.
If $10 is invested in $BTC for every week for the past three years. The investor would have spent $1,570 on $BTC. The amount would be $11,782 (+650%).
Summary
Before investing $BTC, it is important to consider your risk capital, and risk tolerance, and conduct proper research. You can start your investment journey with as low as $10.
For novice investors who are more likely to be led by their emotions and make poor decisions, the DCA method is an excellent option for proper investment. This method is for long-term investment for a good profit yield.
