- 2020 has been quite the year already, and we’re only halfway through!
- Although the crypto market, like all markets, has been extremely volatile this year, many investors are simply holding their investments rather than buying or selling.
2020 has been quite the year already, and we’re only halfway through! Although the cryptocurrency market, like all markets, has been extremely volatile this year, many investors are simply holding their investments rather than buying or selling. We have a few quick tips for those of you who are investing for the long haul in hopes of long term financial gains.
Cryptocurrency news can be guilty of sensationalism just like other media channels. It can be tempting to stay up-to-date all the time on what is happening with your crypto investments and of course that is not a bad idea, but if you notice yourself having emotional reactions to the articles you are reading, perhaps you may need to cut back. Emotion can cause investors to prematurely sell based on a quick decision. It is also never a good idea to buy based on emotion. Try to take a step back and trust that the market will take care of itself. It’s ok to ignore some of the day to day volatility the crypto market exhibits.
If you don’t already have a good wallet for your bitcoin, you need one. A secure, offline wallet is the best way to protect your cryptocurrency. Since bitcoin’s inception millions of dollars in crypto have been fraudulently hacked and taken. Coinbase is probably the one most people trust with their crypto, but there are plenty of great options out there!
Hopefully you’ve already been paying taxes on your crypto investments as the IRS has been requiring it for some time now. Navigating the tax forms can be tedious. If you are someone who is holding onto their cryptocurrency then you’ll have to fill out Form 8949 and if you’ve been mining or earning crypto currency as payment you’ll have to report it as income on your schedule 1.
You’re in the crypto game for the long haul, so don’t try to do your taxes without help year after year. Try out Taxbit to help simplify keeping track of your investments and preparing your tax statements.
Just like your stock, it’s smart to invest in multiple cryptocurrencies - not just one. Over the last few years many new cryptocurrencies have emerged and many of them have gained significant traction. Diversifying your Bitcoin portfolio into currencies like Ethereum, Litecoin, and Ripple can help solve for some of the immediate volatility of one currency or another. This is the same idea behind mutual funds for stocks and is tried and true in that market. Spreading your investments out may cause you to miss out on capitalizing on some short-term gains, but over time it will prove to be the safer way to go for the long run.