How to get into Crypto? Where to start? | A Beginners Guide.

This article is not financial advice and only focuses on summarising my experience getting into crypto and provides some useful pointers to help navigate your crypto journey…

There are lots of news flowing around these days related to crypto… stories about insane gains, countries adopting bitcoin and a lot of news spreading FUD (Fear, Uncertainty & Doubt) related to crypto. This is quite normal since we are currently in a Bull Market (a market period where Crypto prices increase). There is a lot of hype and many of my friends were already very much invested… so I got into crypto myself due to FOMO (Fear of Missing Out).

I had no clue or any prior experience on investing and there was a lot of information to grasp to properly understand the space and invest responsibly. As you might have guessed already, I will be highlighting / explaining some of the technical jargons used in crypto and trading in general throughout this article so that it would be easier for a newbie like me.

There are tons of resources online, YouTube channels talking about crypto… and many are just spreading HOPIUM (promoting unrealistic hype). Hence, I want to share with you the best content to learn about crypto and not be misguided. I have summarised all these resource at the bottom for your convenience.

Cryptocurrency very simply is a digital currency which can be used for transactions and store of wealth. The key innovation is that most cryptocurrencies are decentralised, and use a technology called blockchains and cryptography for security. The decentralisation aims to avoid government intervention. For an example inflation in fiat money (money issued by governments e.g., USD) arising due to excessive money printing. However, still there could be interferences due to government bans (the Chinese government has banned crypto) and restrictions imposed.

There are thousands of cryptocurrency projects which focuses on different use cases… these innovative ideas have led to many innovative concepts such as DeFi (decentralised finance) and NFT’s (non-fungible tokens) which could revolutionise the financial system. There are many different wealth creating opportunities for the early adopters… and I urge you go through the following resources to understand the full extent of crypto & the use of blockchains: YouTube videos by: aantonop, Coin Bureau, Book: The Bitcoin Standard (Saifedean Ammous).

Cryptocurrencies are “still” a highly volatile asset class, hence very risky & rewarding. Thus, one must only invest what she/he is willing to lose. It is expected that with maturity, adoption, and clear regulation the asset class would evolve. Also, it is important to note that there are many SCAMS (Rug-Pulls, twitter, YouTube / online scams, honeypots). So always… always DYOR (do your own research), read and learn about the scams, how to safeguard yourself and how to use proper wallet mechanisms to safeguard your crypto. You can learn more about these on the Coin Bureau YouTube channel.

The basic strategy for making a profit is very simple: “buy low sell high”.

(Right now being in the middle of a Bull Market it’s not possible to buy really cheap, compared to a Bear Market (a market period where Crypto prices decrease) period. What a time to enter crypto… wish I had entered in early 2020… more about this in another article)

There are 2 main strategies you can follow to make a profit.

HODL — hold your investment for a long term, where your crypto would increase in value. For an example 1 Bitcoin (BTC) was only $1 in 2011 April and today its $42,000 (2021 — September). That’s a 42,000X increase! However, it is important to identify / pick sound Cryptocurrency projects to invest, because not every project would survive in the long run.

The other approach is to actively trade cryptocurrencies. This requires way more effort and knowledge to become a responsible trader compared to a gambler… it is very much interesting and eventually I ended up studying and going deeper and deeper into the area. I will summarise some important elements and point towards resources for the interested reader.

If you can predict how the market would act… whether the price would go up / down or sideways…. You can successfully trade or invest to reap profits.

But this isn’t an easy task… and you can never know for certain… there is always risk. The reason why us normal investors (retail investors) tend to lose money and the institutional investors (the big players) to make more money is that they are more disciplined and follows a structured approach for managing their risks and capitalising when opportunities present itself in the market. So, to do so there are 3 main types of analysis which is very useful. The knowledge on these aspects have helped me drastically to improve my trading strategies.

1. Fundamental Analysis — This is a form of analysis where we focus on macroeconomic factors to measure the potential of different cryptocurrencies. We need to be aware of broad economic conditions and also learn more about the target crypto currency projects. Understand the utility of the projects, their roadmaps, tokenomics, partnerships, ecosystem etc. When you start learning about multiple crypto currency projects you develop some knowledge to compare them based on their pros and cons, and this analysis also helps you to be up to date about what happens in the crypto space. I mainly use Twitter, Reddit (r/CryptoCurrency) and Guy’s Youtube channel Coin Bureau, to update myself. Guy’s youtube channel is a great source of information since I don’t have time to go deep into crypto projects myself since this is not my full-time job.

2. Technical Analysis — This is where graphs come into play. We try to forecast the direction of the prices based on historical price and volume data. I started reading the Book: Technical Analysis of the Financial Markets (John J. Murphy), to learn technical analysis and would recommend it to anyone. I love this type of analysis as it helps me remove the emotional component associated and helps me be more disciplines in my trades. There are many technical analysis concepts, indicators and tools which will come handy in your trading. You can use the TradingView platform, which is free, to view the price charts for different cryptocurrencies and familiarise yourself with the different tools and the interface (Normally the exchanges you choose will also have these tools available). I also follow Benjamin Cowen, Bob Loukas on YouTube and PlanB on Medium for technical analysis and helps me learn more every day.

3. On-chain Analysis (On-chain metrics) — This type of analysis is unique for crypto. As I briefly touched earlier, crypto uses a technology called blockchains. This is a decentralised ledger which anyone can monitor, and all the transactions are very transparent. So, we have the information about transactions happening in the network, monitor wallet addresses (transactions happen between wallets, so at a given time we could identify the value within wallets). This provides a vast amount of information on what’s happening… the psychology in the market.

For an example we can analyse whether the whales (individuals / entities with large amounts of wealth in their wallets) are buying or selling… which provides insights on their feeling towards the current market. We can use this info to improve on our own predictions. You can follow William Clemente on twitter, Coin Bureau on YouTube and experiment with tools like CryptoQuant, Glassnode for more insights.

To summarise first go through the shared resources and get a basic feel of what crypto is and start small… invest a small amount to experience the market volatility (10–20% daily gains, flash crashes…), understand your emotions…. Learn some simple analysis of the markets… engage in social media discussions on reddit and twitter to understand the others in this space… and in about a month or so you would have a good foundation to navigate crypto…

All the very best.

If you enjoyed this article and like to read more, please follow me on medium and twitter and share this article.

Thank You.

What is Crypto & Bitcoin: YouTube- Coin Bureau, aantonop, Book: The Bitcoin Standard (Saifedean Ammous).

Fundamental Analysis: Youtube- Coin Bureau, Reddit- r/CryptoCurrency, Twitter

Technical Analysis: Book: Technical Analysis of the Financial Markets (John J. Murphy), Youtube- Benjamin Cowen, Bob Loukas, Medium- PlanB, Tools- TradingView

On-chain Analysis: Coin Bureau, Twitter- Will Clemente, Tools- CryptoQuant, Glassnode

Source: https://medium.com/@s1mplev99/how-to-get-into-crypto-where-to-start-a-beginners-guide-942e21ae6ff7?source=rss——cryptocurrency-5