Picking the Right Moment to Invest in crypto: 5 Rules

Investing in virtual currency requires prior information to understand when to put in your investment. Just like investing in any other business, the need to research the most appropriate time you can invest is critical to achieving your desired objective.

The volatility associated with crypto makes it a double-edged sword. This is because the price of virtual currencies keeps flips flopping. Therefore you need to have prior information on the best time to invest in crypto. In that case, this article offers insight into 5 basic rules crypto traders should know before investing.

#Rule 1: Do fundamental analysis

Typically, fundamental analysis is a parameter used by traders to evaluate and study various variables that affect a value. The tool is essential in carrying out both technical and market analysis. While technical analysis focuses on charts of a market to predict how value will act, fundamental analysis on how the external factors are likely to affect a value.

As far as crypto is concerned, fundamental analysis focuses on getting more information about a financial market.

Supply and demand informs one of the basic fundamental factors to consider. The main objective of this analysis is to ascertain the number of people using an asset, the circulating supply and whether demand has gone institutional or not. These are factors that can impact price action, with the bottom line, really, being to determine if the market outlook gives the asset an undervalued or overvalued feel.

Apart from supply and demand, other on-chain metrics to consider are:

  • Network growth

    These are indicators that can easily be observed through the data provided by a blockchain. This can easily be done through running a node on the target network. Though effective, the process can be time consuming and expensive and therefore needs patience.

    An ideal alternative is pulling the information from websites designed to inform people about various investment decisions. In this case, sites such as CoinMetrics, Glassnode and Santiment could provide metrics and data based on research and important fundamental insights.

  • Transaction count

    This is a parameter used to measure an activity taking place on a network. The use of moving averages is used to determine how an activity is changing over time. Though used as a metric, the accuracy is questionable since it is difficult to ascertain whether only one party is involved in transferring funds between wallets to inflate activities on the chain.

  • Transaction value

    Though closely related to transaction count, it serves a completely different role. This parameter helps ascertain the amount that has been transacted over e period.

    An example is if a total of 10 ethereum transactions worth $ 50 were made within a particular day, it is predicted that the amount transacted within the day amounted to $500.The transaction is measured as a fiat currency or protocol native unit (ETH).

#Rule 2: Technical analysis

In cryptocurrency, technical analysis focuses on checking real-world data to predict how the future of the market is likely to behave. This involves looking at previous statistics of a specific cryptocurrency. Indicators considered in this case include the movement and volume of the virtual currency.

Generally, technical analysis is considered to provide the most accurate price predictions compared to other parameters used in determining price values. Ideally, technical analysis doesn't guarantee exact results but offers possibilities and predictions.

The system is regarded as the most effective in predicting the price value of cryptocurrency before you can opt to invest.

#Rule 3: Take time to learn/ monitor the crypto market

The crypto market is usually difficult to predict. It is, therefore, necessary to follow up on the exact performance for a while to understand the behavior of your preferred currency in the market.

Though you may be tempted to invest when the price goes up, what you need to understand is that you may not be fully sure how long the price will stay up.

With such unpredictable nature of the virtual currency, it may not be certain whether you will get a good return on your investment. After gaining enough experience in trading your preferred coin, you will be able to understand various trading concepts that will guarantee you a good return on investment.

#Rule 4: Build Your Own Trading Strategy

Building your crypto trading strategy will help you adapt to a particular trading trend that will enable you to succeed in the crypto industry. New traders usually throw in investment and try every concept that never works for them.

Trading from an informed point of view helps alleviate the likely risks that you may encounter in the process. In other words, you may opt to trade with a few coins that you understand how they trade rather than trying out every currency on the platform.

#Rule 5: Invest in small amounts as you grow

Simply put, do not put all your money on one trade or investment. Divide your investments into small parts, and split into various assets or diversify your portfolio.

As mentioned earlier, cryptocurrencies are volatile. Trading requires a high level of caution to reduce the chances of losing your investment. However, how much you may opt to invest in the platform, playing with small portions is paramount in avoiding losing the entire amount in a single trade.

Just like any other gambling venture, the risk involved in investing in crypto is high. Exercising caution is crucial in avoiding unnecessary losses. Investing the entire amount in the network is one of the mistakes in trading you should not make.

Why is it so? Because this can be a serious investment blunder that may be difficult to overturn!

Play wisely and avoid throwing in a lot of money since you may never recover from carelessly throwing your money into such a volatile investment.


It is with no doubt that the crypto industry has experienced exponential growth over time. Though regarded as one of the most lucrative business ventures in the World, prior information is crucial in avoiding risks associated with investing in virtual currency.

The value keeps fluctuating which may make it challenging to realize a return on investment. The bottom line, you need to decide wisely on the most appropriate trading strategy before trying out your luck in the industry.