You have to determine what level of risk you’re comfortable with taking. “The amount of money you should allocate to cryptocurrency should mirror the allocation of any speculative investment,” says Michael Kothakota, CEO of WolfBridge Wealth in Raleigh, North Carolina. All assets are vulnerable to market risk, but cryptocurrency investors should be aware of how extreme price movements can be with this asset class in particular.
Dollar Cost Averaging (DCA) means investing a fixed sum on a set schedule (e.g., $50 weekly). This approach averages out the impact of price fluctuations, reducing stress and emotional investing. OKX makes DCA easy with recurring buy features—just set your amount and frequency. The inherent volatility of crypto isn’t going away, but the added risk of self-custody can be mitigated. Once you’ve picked a platform, you’ll need to sign up and verify your identity.
A typical strategy is to allocate the majority to Bitcoin/Ethereum and the rest to other tokens. Be prepared for large price swings – historically Bitcoin has been about 3–4× more volatile than broad stock indices2. If you lose your private key, you lose access to funds forever. Ethereum’s arrival in 2015 was a turning point, ushering in a new era of programmable blockchains.
To start investing in crypto, investors must first create an account with a broker. Brokers have online trading platforms that enable investors to buy and sell crypto 24/7. The price volatility of cryptocurrencies makes them an interesting proposition for investors. It is possible, as with any asset, to make or lose significant amounts of money, although this process can be How To Invest In Cryptocurrency exacerbated within crypto. Price swings are often driven by conversations about the revolutionary nature of cryptocurrencies, as well as by wider economic factors. Investing in cryptocurrency offers the potential for significant gains, but it comes with high risks and price volatility.
Step 3: Choosing Which Cryptocurrencies to Invest In
- What started as a niche experiment has grown into a global financial powerhouse, with bitcoin now having a market cap of over $2 trillion.
- From understanding blockchain basics to choosing the right coins and platforms, we’ll cover everything you need to begin investing with confidence.
- 46% of retail investor accounts lose money when trading CFDs with this provider.
- Cryptoassets are unregulated, so there is less protection available to them as an asset group, compared to stocks and bonds, for example.
If a position moves against them, they’ll still have money in reserve to trade with later. The ultimate point is that you can’t trade if you don’t have any money. So keeping some cash in reserve means you’ll always have a bankroll to fund your trading. Proven, widely adopted cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) are great for beginners. US exchanges typically require users to be at least 18 years old due to know-your-customer (KYC) and anti-money laundering (AML) regulations. OKX stands out for low fees, industry-leading security, and a wide asset range with an intuitive app.
A blockchain is a distributed database where transactions are grouped into blocks. Each block links to the previous one via cryptographic hashes, forming an immutable chain. No single party can alter past transactions without consensus. This technology underpins all cryptocurrencies, allowing peer-to-peer transfers of value without banks. Rae Hartley Beck first started writing about personal finance in 2011 with a regular column in her college newspaper as a staff writer.
A wallet is a tool for storing and managing your digital assets—more secure than leaving coins on an exchange, especially long-term. If prices drop, avoid panic-selling – these swings are part of crypto. A steady, diversified approach is usually better than trying to time the market. Every investor wants to make money, but not every investor can afford to lose money.
Bitcoin (BTC)
Regardless of which cryptocurrencies investors choose, the best crypto investment platforms depend on individual needs—whether prioritizing security, liquidity, or ease of use. Selecting the right platform ensures reliable transactions and aligns with an investor’s strategy. This works best for investors who believe in blockchain’s long-term potential and want a lower-maintenance strategy.
Although most often used to describe cryptocurrencies, the term “cryptoasset” can also be used to refer to non-fungible tokens (NFTs), utility tokens, stablecoins and more. As an investor in cryptocurrency, you need to decide how much of your portfolio to allocate to digital assets. Some of the most popular coins include Bitcoin, Ethereum, Solana, Dogecoin and Tether (a stablecoin). So before investing, understand the potential upside and downside. If your financial investment is not backed by an asset or cash flow, it could end up being worth nothing. Sign up for OKX today—it’s secure, beginner-friendly, and gets you into crypto markets with confidence.
How to Invest in Cryptocurrency: Step-by-Step Beginner’s Guide (2025 Edition)
- The prices of cryptocurrencies, even the most established ones, are much more volatile than the prices of other assets like stocks.
- It is possible, as with any asset, to make or lose significant amounts of money, although this process can be exacerbated within crypto.
- Make sure you understand the risks, including high volatility and transaction fees, and don’t invest more than you can afford to lose.
- Selling a losing position hurts, but doing so can help you avoid worse losses later.
You have to pay tax on trading cryptocurrency or using crypto to buy goods. These events are taxable either at capital gains rates for buyers and sellers or at ordinary income tax rates if you earned it through mining or staking or were paid via crypto. You’ll need to add money to your account before you can start investing. You can get money into your account by setting up a bank transfer or using your debit card. Funds may be available instantly or may take a few days to settle before they can be used, depending on your bank, the exchange you’re using and the method you used to transfer funds. Any scenarios or examples provided are for illustrative purposes only.
In the case of USDT, it aims to keep its parity with the U.S. dollar. Ethereum distinguishes itself from bitcoin in that it functions more like a decentralized computing platform than as a currency. It lets people run applications, commonly referred to as DApps, to run on its blockchain instead of relying on a central server. Crypto prices experience extreme fluctuations, sometimes rising or falling by double digits within hours.
Final Thoughts: Choosing the Right Crypto Investment Method
Finally, don’t overlook the security of any exchange or broker you’re using. You may own the assets legally, but someone still has to secure them, and their security needs to be tight. If they don’t think their cryptocurrency is properly secured, some traders choose to invest in a crypto wallet to hold their coins offline so they’re inaccessible to hackers or others. This is a marketing communication and in no way should be viewed as investment research, advice, or a recommendation to invest.
Some investors buy crypto because they believe it will receive more mainstream acceptance and adoption in the future. Bitcoin was launched in 2009 as a response to the financial crisis and amid concerns about the reliability of the mainstream banking sector. Crypto investing comes with unique risks—staying informed helps keep your funds safe. OKX offers a wide selection of these coins and more, with easy asset discovery tools and educational spotlights. To use platforms like OKX, you typically need to be at least 18 years old—this is required by most US regulations under know-your-customer (KYC) and anti-money laundering (AML) laws. Sign up with an email and strong password, then complete identity verification by uploading an ID.
Sudden regulatory changes may restrict access to certain assets or affect investor confidence. HODLing is a crypto investing term that originated from a misspelled word for “holding.” It refers to buying cryptocurrencies and keeping them long-term, regardless of short-term market fluctuations. Investing in any asset, such as stocks or bonds, involves assessing its risk-return. In the case of crypto, the risk-return level is significantly higher than it is with other asset classes.
Crypto investing FAQs
Traders buying a cryptocurrency today need tomorrow’s gains, not yesterday’s. In the US, cryptocurrencies are treated as property for tax purposes. This means you owe capital gains tax when selling crypto, using it for purchases, or converting it to other coins if you’ve made a profit. After purchase, consider moving your assets to a secure wallet (covered below) or keep them on the platform for active trading. A hardware wallet (Ledger, Trezor) offers the highest level of security. For convenience, secure software wallets like MetaMask or Trust Wallet are good alternatives.
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