This article introduces you to ten opportunities and hurdles you may face during your cryptocurrency investing adventures.
I bundle challenges and opportunities together because you can turn an obstacle into profit if you treat it the right way.
1. New Cryptos on the Block
Bitcoin, the first ever cryptocurrency, turned ten years old in 2018. But it’s hardly the only cryptocurrency that investors are interested in anymore. For better or for worse, new cryptocurrencies keep popping up left and right, and you can expect that number to increase.
Most likely, only a small fraction of the 1,600 cryptocurrencies available in 2018 are going to make it big within five years. On the other hand, a single cryptocurrency that isn’t even born yet may explode and replace Bitcoin for good in the future.
I mark this concept as both an opportunity and a challenge because you must remain open minded and have a vision for the future in order to screen through the newcomers and pick those with true potential.
2. Finding Economic Data
Finding economic data is mainly a current challenge in the industry. Though many crypto dedicated news organizations exist, finding the true economic data that drives the market can be difficult.
Because the industry has no developed economic system for the industry, sometimes the media can create fear or greed in the market out of thin air, with no solid financial statement to back it up.
To avoid falling into such traps, you may want to consider following more than one crypto news organization and then take what you read with a grain of salt.
Here are some financial and crypto news organizations (in alphabetical order) that you can follow for a better understanding of the markets:
- AMBCrypto – https://ambcrypto.com/
- Bitcoin Exchange Guide: https://bitcoinexchangeguide.com/
- CCN: www.ccn.com
- CoinDesk: https://www.coindesk.com/
- Cointelegraph: https://cointelegraph.com
- Exchangers Directory – https://exchangersdirectory.com
- Forbes: www.forbes.com
- Global Coin Report: https://globalcoinreport.com/
- MarketWatch: www.marketwatch.com/
- Monetize.info – https://monetize.info
- NewsBTC: www.newsbtc.com
- Top Gold Forum – https://topgoldforum.com
At the time of writing, cryptocurrency regulations are just in their infancy. Some countries are ahead of others in terms of regulations, creating an opportunity for their residents to take advantage of the cryptoindustry early.
However, don’t be disappointed if things take time. Lack of regulation is a big concern in the industry, but it may also give early investors the advantage of investing when the prices are low. As more countries regulate the cryptocurrency market and recognize it as a real financial instrument, the prices of the cryptos may go up.
You may ask how a hacking incident can be an opportunity. Well, if you’re a direct victim of a hacking incident, that’s a clear challenge. Hacking is a real issue in the industry, and unfortunately, it may not go away in the future.
However, hacking incidents normally impact the crypto market price in a negative way only temporarily. That’s when it can turn into opportunity for the rest of the market players to buy at lower prices.
Taking advantage of a hacking incident doesn’t mean you should invest in the company that was compromised. You must always do your research and analyze the circumstances.
If a specific cryptocurrency or a crypto exchange is compromised in an irreversible way, you may want to stay away from it. However, the news may impact other cryptos in the market for no fundamental reason other than the fact that they’re part of the same industry. When one player goes down, the negative wave impacts all others as well. You may consider focusing on those cryptos instead.
You may think that the crypto bubble has already burst and is now on its way to stabilization. But nothing suggests that yet another bubble won’t pop up in new cryptocurrencies, or even in existing ones.
With research and analysis, you can identify bubbles by rapid price growth that has no fundamental reason behind it — that is, growth based just on market hype.
That’s the best time to either sell your crypto assets at higher prices or simply stay away from it all until things calm down. The “stay away” part is the true challenge, because you’ve got to fight your FOMO (fear of missing out).
6. New Currencies and Projects
An undeniable wave of new economic systems is building, and it may or may not end with blockchain-backed cryptocurrencies.
Projects going on at the time of writing include Initiative Q, which started as a social experiment in June 2018. It bases its economic model on the fact that every currency has value simply because people have it and stores accept it as a payment system.
The Initiative Q project claims to be “tomorrow’s payment network.” More specifically, it’s doing a social financial experiment with a “future” currency called Q. Early adopters (disclaimer: I’m one of them) can get free Qs by inviting others and encouraging them to invite more people.
The project’s philosophy claims that if enough people have Q, it may become a legit currency that can replace the U.S. dollar and be used globally.
The reason I consider these types of projects to be an opportunity as well a challenge is that you may come across many wannabe future economic models that may contain a lot of risk or may just not have what it takes to get you there.
For example, many people felt Initiative Q was a pyramid scheme and rejected the invitation to join.
Initiative Q, in my opinion, has minimal risk because all it asks for is your name and email address, and its policy claims the company will destroy that data if the project doesn’t succeed.
Here’s what an Initiative Q invite looks like: https://initiativeq.com/invite/SfXhxhTim.
The invitation links activate and deactivate periodically, so there is a chance that when you click the preceding link, it’s in the deactivated period. But following the link, you can get access to Initiative Q’s social media pages, where you may be able to find active links.
Also, if you ask your friends and family members, they may have a link to share. Another possible event is that the project may be canceled by the time you read this!
Though diversification is typically a golden risk-management strategy, too much diversification may be harmful to your portfolio.
Why? Because by spreading too much of your investment fund across so many different assets, chances are you’ll miss out on investing big in the top performers. And if you invest too little in the real winners, your returns will be little as well.
If you’ve done a thorough Invest Diva Diamond Analysis on a specific cryptocurrency and you believe it’s going to make it big, you can consider allocating a bigger chunk of your portfolio to it rather than buying a ton of cryptocurrencies that you’re not sure about. Sometimes only one or two great investments are all you need to get you to your financial goal.
8. Falling in Love with a Crypto
Investing requires discipline and tough decisions. Cryptocurrencies may be charming, but getting too emotional over them may harm your investment account in the long run. If it’s time to say goodbye to a crypto you considered to be a winner in the past, just do it.
Falling in love with what you do is great, but you’re in this business to make profit. Don’t let emotions drive your investment decisions. But keep in mind that your cryptocurrencies likely won’t love you back in a sentimental way.
9. A Down Market
When your crypto portfolio is down, it may take your self confidence and positive attitude down with it. However, you must remember that a losing position isn’t an insult of your intelligence, your family heritage, or anything else personal.
It’s likely just a natural movement of the market based on the market sentiment, and you shouldn’t let it get to you. In fact, you may even be able to use it as an opportunity by expanding your investments and hedging.
A losing portfolio isn’t an indication that you’re a bad investor and don’t have what it takes to make profit in the market. Similarly, a winning investment doesn’t prove that you’re Einstein’s (or Warren Buffett’s) cousin, nor does it indicate that you’ve mastered the art of investing.
10. Using Invest Diva Diamond Analysis
No matter what type of investor or trader you are, the Invest Diva Diamond Analysis, or IDDA for short, is there to guide you along the way. However, using IDDA requires patience and understanding of how the markets work. You can’t just wing it.
Even if a celebrity you love is promoting a specific cryptocurrency, that doesn’t account for fundamental analysis. If you think you discovered a strong trend only on one time frame, you can’t call it technical analysis without checking for other indicators. Make sure all elements of the IDDA are pointing in the same direction before making an investment decision.