Newbie Guide to Encryption Investment: How to Survive in a Fluctuation Market

Cryptocurrency investment can be full of risks for newbies. This guide aims to provide practical advice for beginners to help you survive and thrive in this highly fluctuating market.

Understanding Market Risks

The cryptocurrency market is highly volatile. Bitcoin once plummeted by 50% in just a few weeks, dropping from $69,000 to $15,000, a decline of up to 78%. Some smaller coins may even drop by more than 90%, with some never able to recover. One wrong decision can lead to significant losses.

Nevertheless, many people have still gained life-changing wealth in this market. The key is to understand how to protect yourself.

Investment Strategy Recommendations

1. Reasonably control the scale of investment

Only invest funds that you can afford to lose. This is not just advice, but the key to survival. "Can afford to lose" means:

• It is not your essential living funds.
• Not an emergency reserve
• Not money used for daily expenses
• Absolutely not borrowed money

A simple test: if losing this money would affect your lifestyle, then don't invest.

2. Be mentally prepared

Market fluctuations are not just changes in numbers; they are also an emotional test. Your investments may experience a 20% increase and a 30% decrease within a week. This extreme fluctuation can bring about strong emotional ups and downs, potentially leading to insomnia or frequent price checks.

Most people tend to buy at high prices when the market is excited and sell at low prices when they are in a panic, which can lead to losses even when the overall trend is positive.

3. Start with Bitcoin

For newbies, Bitcoin is a relatively safe choice:

• Longest Duration
• Recognized by institutional investors
• Easy to understand

Avoid investing in small coins or new projects at the beginning; consider it after you have a deeper understanding of the market. Remember, you can buy a small amount of Bitcoin; you don't need to buy a whole Bitcoin at once.

4. Adopt a fixed investment strategy

Regular fixed investment is an effective way to reduce risk. For example, investing a fixed amount each month instead of making a large one-time investment. This approach can:

• Buy more when the price is low.
• Buy less when the price is high
• Avoid timing difficulties
• Reduce emotional decision-making

In the long run, dollar-cost averaging usually achieves a better average cost than trying to guess the market bottom.

5. Understand the different types of risk

• Market Risk: The entire market may decline significantly.
• Individual coin risks: Even if the market as a whole is favorable, individual projects may still fail.
• Exchange platform risks: The platform may suffer from hacking or bankruptcy.
• Technical Risks: Smart contract vulnerabilities, project attacks, etc.
• Regulatory Risk: Changes in government policy may affect the market

6. Stay away from leveraged trading

Leverage trading poses extremely high risks for newbies. While it can amplify profits, it can also magnify losses. In a highly fluctuating market, it is easy to incur total loss of principal, or even debt.

7. Focus on learning, ignore short-term noise

The market is flooded with various predictions and speculation, but no one can accurately predict short-term fluctuations. Focus should be on:

• Learn the basics
• Gradually establish small positions
• Understand the assets you hold
• Don't overly focus on daily price Fluctuation

8. Protect your assets well

• Do not keep large amounts of funds on the trading platform.
• Use a hardware wallet to store large assets
• Securely back up and keep your recovery phrase safe.
• Never share your private key or recovery phrase with anyone.

Common Mistakes and Simple Strategies

Common mistakes made by newbies include: investing too much money, frequently switching coins, not understanding the investment target, emotional trading, and blindly following trends.

It is recommended to adopt the following strategies:

1. First 3 months: Learn about Bitcoin, try small amounts.
2. 3-6 months: Start dollar-cost averaging Bitcoin
3. 6-12 months: Consider joining Ethereum
4. Year 2 and beyond: Cautiously explore other projects, but keep it within 10-20% of total investment.

Always keep learning, ignore short-term speculation, and do not invest more than you can afford.

Conclusion

Cryptocurrency investment has both opportunities and risks. Successful investors typically do not pursue quick profits but rather prioritize protecting their principal before seeking steady growth. Start with small amounts, learn while investing, and do not let greed overpower reason. Remember, the goal is not to get rich overnight, but to avoid significant losses while seizing opportunities for long-term appreciation.