How Newbies Survive in the crypto market

Investing in encryption can be a nightmare for newbies. Most of the related content is either overly exaggerated or filled with jargon. This article aims to provide a practical survival guide for crypto newbies.

The Cruel Reality

The volatility of the crypto market is enormous. Bitcoin can plummet by 50% in just a few weeks. In 2022, Bitcoin dropped from $69,000 to $15,000, a decrease of up to 78%. Some altcoins may even fall by 90% or more, and some may never recover.

A wrong decision can lead to an instant loss of all your investments. However, many people have still gained life-changing wealth in this market. The key is how to protect yourself.

Key Survival Strategies

1. Reasonably control the investment scale

Only invest funds you can afford to lose. This is not just advice, but a key to survival. "Can afford to lose" means that this money will not affect your daily life, emergency needs, or important expenses.

Simple test: If losing this money would significantly change your lifestyle, don't invest. For example, if you have $10,000 in savings, consider investing at most $1,000 in crypto assets.

2. Understanding Market Volatility

The volatility of the crypto market is not just a numerical change, but also an emotional test. Your investments may experience multiple significant ups and downs within a week, which is quite common in the crypto market.

Many people excitedly buy in when the market is booming and panic sell when it crashes. Even if the overall market is doing well, this behavior can still lead to losses.

3. Start with mainstream coins

For newbies, Bitcoin is a relatively safe choice. It has the longest history, is least likely to go to zero, and is easier to understand. Avoid investing in small coins or new coins at the beginning; those projects that promise high returns often come with greater risks.

Remember, you can buy a small amount of Bitcoin; you don't need to buy an entire one at once. First, understand the behavior patterns of mainstream coins, then consider other options.

4. Use a dollar-cost averaging strategy

Regular investment is an effective strategy. For example, investing a fixed amount each month instead of putting in a large sum at once. This method can help you buy at different price points and reduce overall risk.

In the long run, a dollar-cost averaging strategy is usually more effective than trying to time the market.

5. Understand the different types of risks

There are various risks in the crypto market:

• Market Risk: The overall market may decline significantly.
• Individual token risks: specific projects may fail
• Platform risk: The exchange may go bankrupt or be hacked.
• Technical risk: Smart contracts may have vulnerabilities.
• Regulatory risk: policy changes may affect the market

6. Use leverage with caution

For newbies, leveraged trading carries extremely high risks. While leverage can amplify gains, it can also amplify losses. It is best to avoid using leverage until you are familiar with the market.

7. Filter information noise

The market is filled with various predictions and suggestions, but few can accurately predict short-term trends. Focus on learning the basics, gradually build small positions, and understand the assets you hold.

Avoid focusing on sources that promise guaranteed returns or claim to predict the market.

8. Protect your assets

Properly safeguarding your encryption assets is crucial:

• Do not store large amounts of funds on the exchange for a long time.
• Use hardware wallets to store large assets
• Secure backup recovery phrase
• Never share your private key or recovery phrase

Common Mistakes for Newbies

• Invest funds beyond your capacity
• Pursuing quick gains
• Not understanding the investment targets
• Emotional trading
• Blindly follow others' advice
• Ignore asset security

Simple Newbie Strategy

1. First 3 months: Learn about Bitcoin, small-scale experimentation.
2. 3-6 months: Start dollar-cost averaging Bitcoin
3. 6-12 months: Consider joining Ethereum
4. Year 2 and beyond: Cautiously explore other cryptocurrencies, but keep it within 10-20% of total investment.

Always keep learning, ignore market hype, and do not invest more than you can afford.

Summary

The crypto market does present profit opportunities, but improper methods can also lead to significant losses. Successful investors are often those who first protect their principal and then cautiously seek appreciation.

Start small, learn while you invest. Remember, the goal is not to get rich overnight, but to seek long-term steady wealth accumulation while avoiding major losses. The market will always have new opportunities, but the premise is that you must have the ability to continue participating.