Crypto investment has quickly becoming mainstream. In 2021 alone, JP Morgon, Goldman Sachs and Citibank have all announced dedicated department to invest and manage crypto assets for their customers.
Crypto investment could be daunting for new comers. There are a lot of things you could do for crypto, like trading and buying tokens (like trading stocks), staking (like lending your stocks to others) or buying DeFi investment products to earn yield (like buying mutual funds). Executing DeFi investments could be technical and troublesome, which is why Coinomo is here to provide an easy to use one stop shop.
Cryptocurrency provides a huge amount of price volatilities, unseen in any other markets like stocks or commodities. You might have heard a lot of stories of over-night windfall and were driven to the crypto world by FOMO (Fear of Missing Out). There’s nothing wrong with that, but with steep price rices, there are also steep falls. Thus, direct trading in the cryptocurrencies might give you steep losses in high market volatilities, just like stock market during the bear market. So, why should you bother with crypto? You should, if you want to:
- Protect your savings against inflation
- Do not want to miss out the next big thing – cryptocurrency
- You are young or vibrant or both that you believe the underlying values of crypto
So, you have decided to read on? Let’s start.
Understand why crypto market is so volatile?
Unlike stocks, which is tagged to companies with real life businesses, the price of cryptocurrencies is purely driven by supply and demand. High volatility means you could lose or earn a lot of money, so only use money you could spare with for this.
What are the types of coins?
Maybe most peopley only know about the most popular coins like Bitcoin or Ethereum. However, there are actually hundreds if not thousands of coins out there. Some have large circulation, some small. Large circulation coins (e.g. like BTC & ETH), are like large cap stocks like Apple or Microsoft. They are relatively stable, many trades are done on them all the time, you would not need to worry about not able to buy or sell these coins. Small circulation coins are like penny stocks, they may increase or decrease in value with exorbitant percentages in a day, but you may not be able to find people to buy them when the price is really down.
We normally call coins other than bitcoin as Altcoin, which literally means alternate coins. You can check out the various types of coins and their circulation volume on Coinmarketcap.
Languages and terms in the crypto investment world
1. Pump and Dump
Have you ever heard “Buy DOGE now, again at Elon Musk’s pom-poms”? Pom-poms or Pump means an attempt to lead the opinion of investors or traders on certain coins. Well, if people’s attention increases on the coin, of course the price of the coin will increase.
While Dump is the opposite of Pump. So when the price of a coin has gone up, sometimes interested parties will sell their coins or tokens. And if many people sell a coin or token, of course it will make the price of the coin or token fall.
So, if you want to trade crypto tokens yourself, you better be watching out for market news and key opinion leaders’ twitters to take note of the signals of Pump or Dump.
Whale in the cryptocurrency world means big traders with a large capital and a market mover, who can dictates price increase or decrease by his trading actions. Needless to say, if a whale is in the move, you should in the watch out to be sure you move with him or her.
FUD stands for Fear, Uncertainty, and Doubt. FUD is a strategy for investors who want to lower crypto prices so they can buy them cheaply.
They will spread information whose content is bad news and can cause anxiety or fear for investors who just want to go along with it to immediately sell their coins or tokens.
You might think it’s a typo, but it is actually a crypto anagram for “HOLD”. The term came around when back in the days, one Bitcoin forum user with the username GameKyuubi commented “I am hodling” when the value of Bitcoin fell 39% from US $ 716 to US $ 438. Well, from then onwards, the word HODL became a term in the crypto world. But lately the term HODL stands for Hold On for Dear Life. (Just imagine if that guy is still “hodl”ing, he might be a whale himself for all we know.)
HODL is thus a strategy to hold and do nothing, when the price is down.
5. To the Moon
This term basically means when a crypto coin is rising fast and has reached its peak value or trading volume. The term first appeared on certain crypto forums and Reddit, but eventually became popular.
6. ICO (Initial Coin Offering)
If in the stock world there is such a thing as an IPO (Initial Public Offering) to raise funds in the stock exchange, while in the Cryptocurrency world this activity is called an ICO (Initial Coin Offering) or TGE. (Token Generation Event). Just like IPOs, ICOs aim to raise funds in the form of cryptocurrencies from investors like you via the internet.
Start Crypto Investment with Coinomo
As you can see above, investing directly in cryptocurrencies could be very risky. So as a beginner, how to invest in crypto? You can invest via our investment, where we offer handpicked DeFi (Decentralized Finance) investment products, that is less risky than direct trading. So what’s DeFi? Download our app and find out more.
Download Coinom, now!
Disclamer: Crypto investment involves high risk. Please make your investment wisely.