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The Most Important Rules of Investing in Crypto

Successfully navigating crypto investments’ volatile and intricate realm requires a prudent approach and in-depth market knowledge. To make wise crypto investments, it is crucial to establish a set of essential rules that can guide your decision-making process and minimize risks. This article will explore fundamental rules that will help you make informed investment choices in the crypto space.

Here are the most important rules for crypto investors.

#1 Don’t invest more than you are willing to lose

Successful and prudent investors emphasize the importance of investing only what you can afford to lose. This advice holds across all markets, especially in the volatile world of cryptocurrencies, where rapid and substantial price fluctuations are common. Reckless investors who risk their life savings on a few stocks are destined for failure.

The crypto trading market has experienced remarkable growth and significant drops in value. It remains a relatively young market, lacking regulatory oversight and facing technical challenges at its early stages. Consequently, unfortunate situations like hacks, frauds, and sudden sell-offs can occur seemingly out of the blue.

#2 Diversify your investments

Diversification takes on multiple forms — from the assets you purchase to the specific investments within each category. Experts typically advise allocating only a small portion of your portfolio to cryptocurrencies. In contrast, the remainder should be given to lower-risk options like real estate or equity. The exact allocation depends on your risk tolerance, belief in cryptocurrencies, and financial standing. If retirement is still decades away, consider a higher exposure to cryptocurrencies, allowing ample time for recovery in case of unforeseen events.

Furthermore, diversifying within your cryptocurrency portfolio is prudent. While investing solely in Bitcoin and Ethereum (ETH) is logical, given their established status and long-term viability, don’t put all your eggs in one basket if you wish to invest in smaller altcoins.

#3 Secure your investments

Ensuring the utmost security for your crypto assets is of paramount importance. Create a secure wallet to store your cryptocurrencies and activate two-factor authentication for enhanced protection. Exercise caution regarding phishing attempts, utilize reputable exchanges, and keep your private keys offline.

This is only sometimes discussed, but investing in crypto without a VPN is associated with significant risks. Using a VPN for crypto trading, you can encrypt all the data you send and receive over the Internet. This means that with a good VPN for PC, you will not be a victim of data interception. Moreover, advanced services like VeePN also protect against phishing and certain types of viruses. Plus, they hide the IP address, making it impossible to trace who owns the wallet.

#4 Avoid emotional decision-making

Cryptocurrency markets exhibit significant volatility, evoking emotional reactions like panic selling or FOMO (Fear of Missing Out) buying. Emotional responses may impair judgment and lead to suboptimal decision-making. Maintain adherence to your strategy, avoid impulsive actions, and rely on meticulous analysis instead of emotions to guide your choices.

#5 Think long term

To navigate the unpredictability of the crypto market, consider adopting a long-term investment strategy spanning 10 to 20 years. Attempting to time the market through short-term trades is complex and often leads to investor losses. Instead, focus on identifying projects with robust leadership and utility that exhibit potential for substantial growth in the forthcoming decades.

Although it can be challenging to adopt a long-term perspective due to the industry being in its early stages with many uncertainties, this approach will offer a broader outlook during extended market downturns and discourage emotional decision-making. For instance, had you invested in the top 50 cryptocurrencies five years ago, you would have experienced an approximate 700% increase, even though many projects did not survive the crypto winter of 2018.

#6 Research

Always thoroughly research any cryptocurrency before making a purchase. With our busy lives, investing a small amount in an altcoin that catches our eye online may be tempting. However, it’s crucial to remember that misinformation is rampant. Only you can determine your investment strategies and goals. While research doesn’t guarantee success, it significantly minimizes the risk of scams or investing in crypto with low long-term potential.


Crypto represents a novel asset class. Recently, individuals have experienced pressure to invest in crypto to capitalize on prospects. Some individuals made impulsive crypto investments, sacrificing short-term financial stability and other monetary objectives to avoid missing out. If you are contemplating purchasing crypto, fortifying your financial situation and conducting thorough research on the industry is imperative. This approach ensures that a potential future crypto market downturn will be disheartening but not financially catastrophic.

About the author

Clifton Richard has been in the cryptocurrency market for the last 4 years. He caught all cycles, including bullish and bearish. Clifton was able to multiply his fortune by 50 times. Remembering his mistakes in investing at the beginning of his career, he wants to help new investors prevent them.

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