More Aussies are interested in investing in crypto than ever before, with one in three confident that bitcoin will eventually be transacted more widely than regular currency.
Overall, one in six Australians owns cryptocurrency, new research by Global Prime has revealed.
But crypto interest is peaking among Gen Zers, with almost one in three meddling in the cryptoverse.
However, with an increase in cryptocurrency investing, director and co-founder of Global Prime Jeremy Kinstlinger has highlighted the need for caution, particularly as a case of FOMO spreads.
“Fear of missing out [FOMO] is real,” said Mr Kinstlinger.
“Usually when you start hearing about a cryptocurrency asset from friends or online, it’s because it has already gained a significant amount, and you should be careful of jumping in before doing your research. The biggest gains to be made are from ‘hidden gem’ cryptocurrency assets which your research has shown is a good trade to take. Keep in mind that these can also be riskier, as they may be new.”
According to Mr Kinstlinger, here are the top five insights for first-time traders and investors to be aware of before they take the plunge with cryptocurrency:
Do your research
“Cryptocurrencies are a very nuanced ecosystem that is constantly evolving. You need to have your eye on the recent developments.”
According to Mr Kinstlinger, a great start is to follow 20–30 active Twitter accounts that cover cryptocurrency and check in on your feed daily.
Have a trading plan
“When trading cryptocurrency or any other asset, it’s important to go in with a plan,” he said.
“Know how much you are potentially willing to lose on the trade and automate a stop loss which will close the trading position if it drops to that level. You can use position sizing to determine what your risk levels should be.”
Be prepared for a steep learning curve
He cautioned that keeping up with development in crypto can almost become a full-time job.
“Be prepared for a steep learning curve, but also a highly rewarding experience if you’re willing to put in the work to understand how trading works and the risks involved.”
Know the risks involved
“If you haven’t learnt about the risks involved with trading including risk management, position sizing, and learning to control impulses, then you’ll most likely lose money in the long run,” the director said.
“Be on the lookout for scammers and hackers — there are many cryptocurrency scammers operating, and ways that you can be hacked or have your money stolen if you aren’t careful.”
We’re still in the early days
Cryptocurrencies are still a relatively new asset, and as such, you should expect volatility, Mr Kinstlinger said.
“In a lot of cases, the entire cryptocurrency market will move in tandem, and if the prices are going down, then all your cryptocurrency assets’ prices can go down together.”
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