How to be a responsible crypto investor in 2024

The market dynamic can sometimes affect the multiple reasons why people choose to invest in crypto. Due to increasing volatility and regulatory issues, investors find it difficult to access new projects and protect themselves from inflation when the market goes through a bearish trend. 

Moreover, the cryptocurrency market is constantly changing and affected by supply and demand, user sentiment and competition. So, as an investor, it may be challenging to keep up with all these elements, especially when you have barely learned how to buy Bitcoin with credit card and are unsure of your portfolio’s stability. 

Many investors have yet to learn to diversify their purchases, contributing to increased risks and fewer growth opportunities. So, in 2024, we’re learning to be more responsible with our crypto investments to leverage high yields and build consistent portfolios in the long term. Here’s how to do it. 

Exploring different sides of crypto projects

All crypto projects are inherently different, as they’re built with distinct use cases and on unique blockchains, so their profitability depends on several features. Upon investing in a specific crypto asset, you must analyze its market capitalization, trading volume, and liquidity and even get into its development team.

It’s important to research on your own and avoid being driven by trends and price fluctuations because these are often biased or will lead to FOMO (fear of missing out). Remember that upon investing in crypto, you must be as objective as possible and consider a multitude of aspects before any action.

Avoiding chasing fast profits

One of an investor’s biggest mistakes would be chasing rapid profits, especially in crypto. Considering how volatile crypto assets are, it’s more likely that you’ll lose money than increase yields because prices change in a matter of days and weeks, and shrinkage can sometimes be massive.

Although it’s possible to adopt a short-term strategy, the risks involved are considerable, so approaching a long-term investing method is always superior. You not only create more financial stability over the course of a few years but can also access better investing opportunities as you gain more experience.

Protecting your assets

Cryptocurrencies live on blockchains, one of the safest and most transparent online environments we’ve come up with in the past years. The use of cryptographic technology ensures security and efficiency in preventing fraud and unauthorized activities, but that doesn’t mean phishing attempts aren’t happening.

In 2023 and previous years, many investors were stripped of their investments from their digital wallets due to a lack of security and awareness. This year, you’re taking control over your wallets and switching from online to offline, or cold wallets, that protect you from any kind of hacking system.

Abstaining from panic selling

FOMO is one of the most detrimental investor sentiments because it makes all investors, regardless of their experience, sell their assets during a bearish market, as they fear having a portfolio with no value. In these cases, the assets that have been sold out of panic will be purchased by investors who will take advantage of this factor.

However, panic selling does nothing but strip you of your assets, so you’ll have to start from the beginning by diversifying your portfolio. This means starting from the bottom with funds, research and time to reach a certain level. Still, despite the market’s condition, if your portfolio is solid enough, there’s no need to throw your investments because volatility will be on your side when the bullish market starts.

Monitoring your results

Unfortunately, crypto investing involves much more than allocating some resources and watching the numbers change on the charts. It requires strategic movements that will later pay off the effort and time-consuming research, meaning you must also monitor the results of your actions to gain more experience.

You could use trading or investing software that will automatically provide valuable insight from 

where you can learn from your mistakes. There are so many things to track when investing in crypto, from the market trends, prices, macro impacts and whale activities, that doing it on your own is almost impossible.

Respecting regulations

The crypto industry has a long way to go until it will entirely blend in with modern society. Still, governments and companies are making efforts to include it in current systems and businesses. Hence, regulations are added and changed constantly, meaning you might need to be up-to-date with the latest crypto buying, taxation, and purchasing laws to avoid problems with the governments.

Avoiding these requirements will cause problems and create a false image about crypto investors that they want to avoid settlements. This isn’t true, as most investors wish for a better legal framework on crypto to be able to expand their possibilities and reach global projects for diversifying their portfolios.

Approaching advanced tools

The crypto world is considerably different from traditional finance, meaning a pen and paper won’t do it for analyzing your profits. Hence, you might need to acquire and learn how to use specialized tools, from software to hardware products, in order to yield significant results and avoid exposing yourself to risks.

Most of these gadgets and systems tend to be costly, especially if you decide to mine Bitcoin, one of the most expensive activities in crypto. So, you either need to be financially prepared to sustain these activities or turn to more affordable ones, such as following the course of cheap cryptocurrencies, investing in spot ETFs or entering a mining pool to minimize your input and risks. At the end of the day, you’re not obliged to invest in Bitcoin or create dApps on Ethereum, so always start with what’s most approachable.

Bottom line

Crypto remains a high-risk investment. However, if you follow the steps in this article you can reduce those risks to some extent.  Being a cryptocurrency investor now is more difficult compared to ten years ago when Bitcoin was making waves. Partly that’s due to varying attempts to regulate the crypto markets. However, as difficult as it may be, investors can succeed if they’re responsible for their assets and don’t risk their finances.

Please note: this article does not represent financial advice.  Investing in cryptocurrencies carries inherent risks, and individuals should conduct thorough research and seek professional financial advice before making any investment decisions.