Weren’t you startled with every all-time-high (ATH) moment of Bitcoin? For the record, I bet you were. Statista report of 63 million new wallets created in 2020 show what a Fear of Missing Out (FOMO) looks like. Hence, at some point you definitely were, as an investor. That said, FOMO could motivate you to invest in other alt-coins very new to the market. As a first time investor, this is not much of an appreciated approach to begin your investment journey with. Bitcoins are good, but they have a very high entry cost for new investors.
As a result, new investors are most likely to get attracted to some new coins/tokens having a very strong marketing approach. Nevertheless, most of these coins do not have a tried and tested use-case based on their past records. 2017 is a classic example to prove this after the ICO debacle. 99 per cent of cryptos have turned scammy, the reason was over 1500 projects were launched under the ICO banner, 78 percent of such projects were categorised under scam with no proper auditing and real-world use resulting in $1.3 billion in lost revenues for investors.
The crazy thing new traders were driven more by frenzy and euphoria than rationality back then. Thus, they did show a very high exit rate. At no point would you like something similar happening to you. Australian Transaction Report Centre or AUSTRAC has implemented a robust cryptocurrency exchange regulation framework to safeguard crypto investment after the ICO scam of 2017. Despite this, it is necessary to do your own research (DYOR) before buying cryptocurrencies in 2021 for best gains.
There are a handful of traders who are interested into indepth research, but most traders don’t want to get so much into the nitty-gritty of investing in cryptocurrencies. To be safe and secure in your investment journey, you need to keep a different approach in a highly volatile crypto market for sustenance.
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How To Keep a Different Approach While Buying Cryptocurrencies First Time in Australia?
Australia has been one of the only few countries whose stance is optimistic about cryptocurrencies. The prevailing regulations favoring trading in cryptocurrencies have eliminated the concerns of investors as a result. eToro, Coinbase, Bittrex and Coinmama have emerged as preferred cryptocurrency exchanges to buy and sell cryptocurrencies in Australia.
In some of the exchanges, AUD has been paired with major cryptocurrencies like Bitcoin, Ethereum, IOTA, and Tron to simplify the withdrawal directly to the bank. On top of this, Capital Gain Tax imposed on cryptocurrencies and AUSTRAC announcing robust cryptocurrency exchange regulations have made investing far safer in cryptocurrencies in Australia. Despite all these leverages and advantages given by the Australian jurisdiction and RBA or Reserve Bank of Australia, traders must know a few things for reaping the benefits of cryptocurrency trading. A few have been highly recommended below to first time investors since they are more prone to making mistakes.
DYOR or Do Your Own Research
There’s a new trend of YouTube awareness going rampant to educate new investors or drive adoption of crypto. Most new investors do not do their own research, instead take cues from these videos despite the video creators claiming they are not financial advisers. As a first time investor, it is better to do your own research. It is expected that 13% of the Australian population is likely looking at buying and selling cryptocurrencies and not miss the FOMO in 2021. Lots of coins in the DeFi as per Australian FinTech will set the tone for buying cryptocurrencies. Hence, it is most likely to carefully analyze all the projects before investing since not all projects are as robust as Synthetic protocol having its origins from Australia.
Investing Your Need
Didi Taihuttu, a Dutch family invested by liquidating everything they had. In monetary liquidation, they included all of their assets like their business,2,500-square-foot house, even their shoes to buy Bitcoin. The good thing, now they made enough to travel 40 countries by only investing in Bitcoin. Most investors are not respecting the 50:30:20 ratio rule for investing. On the contrary, they are investing way more than they can afford. This could be a bad sign of FOMO. As not everyone can become the Taihuttu family and only make profits from their investment. Hence, staking everything doesn’t make sense.
For the record, take for example Sean Russel, a passionate investor of cryptocurrencies. He invested $120,000 only to burn them out to a crash. As an investor, you must maintain a right balance where 20 percent of savings must only be invested in buying cryptocurrencies or other forms of high-risk asset-class, the remaining earnings should fund other necessary needs to make you sustainable in the investment market for long. Most first time investors are driven more by adrenaline than critical rationale. When you consult with expert cryptocurrency traders or advisers, they can help you set-up a balanced portfolio for sustainability.
Not buying Cheap Coins
To not miss the euphoria, new investors chose fresh projects in the market as their portfolio. The reason being since they are quite cheap and easy to invest for an entry into the market. That’s a very bad approach when you have no idea about the market or the project for such coins. Generally, investors do keep this approach for quick profits via Altcoin investing. The reason being alt-coin season flashing on social media. Though, not every altcoin is bad but not every altcoin is good either. Instead of buying cheap coins, buy coins having vision for sustainability in the cryptosphere. SNX, RUNE, REN and META are some of the top new DeFi projects to watch out for investing in cryptocurrencies in Australia.
Crypto market has been evolving but it works not at par with the traditional stock market. You cannot keep the same tempo as you keep for stocks. Most new investors in the traditional stock market follow others for investment guidance. A crypto market is different because of non-regulations and lack of government support. Therefore, cautious investment is necessary which can help you survive for long in this space.
- Cryptocurrencies Law and Regulations in Australia
- FinTech Evolve under Blockchain Technology
- How Supply Chain is Getting Disrupted by Blockchain?
- Why are African countries turning up so crypto friendly?