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How to evaluate the investment return on cryptocurrency: comprehensive guide
The world of cryptocurrency has been a huge popularity in recent years, and many people have invested their hard -to -earn money into this relatively new and volatile asset class. However, investing in the cryptocurrency can be awesome as it does not know its potential yield. In this article, we will provide a comprehensive guide to evaluating the investment return on the cryptocurrency.
Understanding the cryptocurrency
Before we get into investment yields, it is essential to understand what cryptocurrency is. Cryptocurrencies are digital or virtual currencies that use cryptography for secure financial transactions and decentralized control. The most well -known cryptocurrencies are Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC).
Types of cryptocurrency investments
There are many types of cryptocurrency investments including:
- Direct Investment : Buy a part of the full care of a particular cryptocurrency.
- Stock Exchange Traded Funds (ETF) : A investment fund that monitors the performance of a particular cryptocurrency index or cryptocurrencies.
- Commercial Platforms : Online platforms where you can buy and sell cryptocurrencies such as coinbase, binance or kraken.
Evaluation of investment returns
You need to consider many factors in order to evaluate the investment return on cryptocurrency:
- Market performance : Check out the historical performance of a particular cryptocurrency, including its price fluctuations over time.
- Investment return (ROI) : Calculate your investment percentage by comparing the average ROI of the market.
- Voatity : Value the level of volatility of cryptocurrency prices that may affect investment returns.
- Safety and Liquidity : Take into account security measures implemented by stock exchange and wallets to protect investor assets.
- Regulatory Environment : Be aware of changes in regulatory policies that can affect the cryptocurrency market.
The most important indicators to evaluate
Here are some key indicators to assess the investment return on cryptocurrency:
1.
- Relative Strength Index (RSI)
: A technical indicator that measures the amount of recent price changes to predict future price movements.
- Bollinger Bars : A volatility -based indicator that depicts two standard differences above and below the moving average to identify over -purchased and excessive conditions.
Risk management strategies
To minimize losses, it is essential to manage the risk:
- Diversification : Distribute your investments to different cryptocurrencies to reduce exposure to each asset.
- position measurement : Limit the investment amount based on its financial goals and risk tolerance.
- Stop-Loss orders : Set automatic selling orders when the price reaches a certain level, limiting potential losses.
Investment strategies
Here are some popular investment strategies in the cryptocurrency:
- Long -term investment : Keep cryptocurrencies for a longer period of time to deliver market fluctuations.
- Active Trade
: Purchase and sell cryptocurrencies often to take advantage of short -term price movements.
- Holiday Basic Strategy : Invest in the diversified portfolio of cryptocurrencies, using them as a hedge target for traditional devices.
Conclusion
The investment in the cryptocurrency can be a high -risk, high -profile option. By understanding the cryptocurrency, investment types and assessment of investment returns, you can make a reasonable decisions about your investments.