Back in January, I announced that my premium readers and I over at Capital Wealth Letter were “getting serious” about cryptocurrency.

As I explained back then, I used to be something of a sceptic about this space. But a few years ago, I decided to dive into this emerging asset class with an open mind. I read everything I could get my hands on – and even put a little bit of my own money to work.

Since January, I’ve been sharing some of my knowledge with readers as we dip our toes into the cryptocurrency waters. As I explained, while our core mission will still be centered on equities, I think it’s important to expand our horizons a little bit. Because if I’m right, then we’re talking about a once-in-a-generation opportunity…

Some of you who have been following along already have sent in some excellent questions and thoughts. And today, I want to address a common line of questioning I’ve received by talking about how I think you should approach cryptocurrency investing in general.

Specifically, if you’re already interested in this space, I want to share some tips for general safety as well as for increasing your chances of success. And I may elaborate on some of these ideas in more detail later. But for now, let’s dive in…

10 Tips For Success With Cryptos

1) Start small. Open an account at an exchange, like Coinbase, and buy a small amount of bitcoin at first as a test. (We recommend $500 or less.) Remember, don’t we’re not betting the farm.

2) Create a bitcoin wallet. Your bitcoin wallet stores your private keys. Once you create your wallet, write down your backup phrase (and keep it in a safe place). This will ensure you can still access your bitcoin even if you forget your wallet password.

3) Avoid holding excess bitcoin at exchanges. Bitcoin exchanges can be vulnerable to attacks by hackers. Instead of holding excess bitcoin on an exchange, transfer it to your bitcoin wallet.

4) Use two-factor authentication (2FA) on your accounts. Single-factor authentication involves only a username and password. 2FA adds an extra step, like entering a temporary PIN sent to your phone.

5) Be prepared for volatility. If you haven’t noticed, the prices of bitcoin and other cryptocurrencies are extremely volatile. This makes them unsuitable for conservative investors or those without a high-risk tolerance.

6) Have a plan. All investors — regardless of what they’re investing in — need to have a plan. For example, your plan might be to allocate 1% of your portfolio to bitcoin as a portfolio diversifier with the potential for outsized gains. And you might formulate a rule that you’ll only add to your position after bitcoin’s price has fallen 30% or more. Stay disciplined and stick to your plan… or else the extreme volatility will have you buying high and selling low.

7) Limit cryptocurrency exposure. Bitcoin and cryptocurrencies can have a place in a diversified portfolio. But cryptocurrency assets should total no more than 10% of your investable assets. When determining your allocation, keep in mind that bitcoin (or any other cryptocurrency) could one day plummet to zero.

8) Keep track of your transactions. This will make Tip No. 9 easier.

9) Pay your taxes. This should go without saying, but pay your taxes. The Internal Revenue Service (IRS) considers bitcoin and other cryptocurrencies to be property for U.S. federal tax purposes. You must pay taxes on your realized gains. Fortunately, tax advisers are adapting to this new landscape and are issuing guidance to clients. Don’t be afraid to get their help.

10) Don’t buy on margin. Some trading platforms allow you to buy cryptocurrencies with borrowed funds. This is never a good idea. Margin trading of cryptocurrencies is an easy way to quickly lose a lot of money.

Closing Thoughts

Remember, these tips are not all-encompassing. There is much more to say about cryptocurrencies, what might be in store next, and how investors can profit.

But stepping out of your comfort zone just a little bit can be worth it. Back in January 2021, when said that we liked Ethereum as one of our top picks for the year, readers had the chance to make as much as 400%.

And that could be just the beginning…

The cryptocurrency world is constantly evolving. The next big thing could be right around the corner. And over at Capital Wealth Letter, we plan to be there when it happens…

That’s why I just released a brand new report covering the three best crypto investments available right now – and how you can profit. If you’ve been waiting for a second chance to get in on crypto, I believe now’s the time to cash in on crypto’s comeback.

Go here to get all the details now.