Identifying investment opportunities in the crypto market

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Identifying investment opportunities in the crypto market

Identifying investment opportunities in any market is a true skill. The better you are at it, the better your results will be. Of course, like any other skill, it only gets better with time and training. Nobody should allow mistakes to scare them, and the ones who truly achieve this are the ones who succeed.

How do we define an investment opportunity?

In order to be good at identifying investment opportunities, you have to know what you are looking for.

In general, investment opportunities are defined by being able to buy any kind of asset at a bargain price, assuming only a medium level of risk.

You are going to ask yourselves what is a bargain price and a medium level risk. Classifying an asset’s price as bargain at a point in time is very subjective. You should generally refer to historical value and trends when evaluating this. Now, we should define risk.

Most normal people consider an asset riskier when it is facing a negative trend. The truth is, a negative trend is when the smart and experienced investors are starting to consider that asset “an opportunity”. Why? Because when the price has been at an all-time high for a longer timespan, it is becoming more likely that the situation will change. When it goes down, on the other hand, it will settle around its intrinsic value. That is the best time to buy. The down trend will never last forever, if the asset is something real and not a scam.

Applying this to the crypto market

The crypto market has always been different from the others. You know, they are the most successful digital assets in terms of the public’s trust and so on. Many things are different, such as the possibility of trading 24/7/365 and the lack of too much government control.

Historically speaking, when Bitcoin or most of the other coins is close to another milestone (as we speak, it is approaching $6000) it is seeing a small retracing period. That, for example, is a buying opportunity that you can use to accumulate coins. Of course, you also need to evaluate if the asset you want to buy is still at a good price. The ones who were buying in the retracing period for $15,000 in 2017 have only been for a short time on a profit.

Of course, it is important to apply most of the good investment strategies at a point in time in order to maximise your gains. For example, if you want to accumulate coins over a longer period of time when you consider it is a good investment opportunity, consider dollar-cost averaging.

Conclusions: the art of identifying investment opportunities

Identifying investment opportunities is truly a skill that can bring fruitful results if you know how to master it. Although the crypto market is generally associated with high risk, if you know how to identify opportunities you will reduce it considerably. Any investment is a “high risk” if you know nothing about it. That is why it is important to be well informed at any time.

Anyhow, if you want to add something, feel free to leave a comment below. If you want to get in touch with me personally, use thisĀ link.

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