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Bitcoin is one of the most popular coins for investment, but not the only one. Altcoins provide a great alternative when buying cryptocurrency and help diversify your portfolio.

When choosing a cryptocurrency, think about it: are you planning to invest or trade? Also take into account the risk profile and the type of analysis you are willing to conduct - fundamental analysis, technical analysis or a combination of both. Once you answer these questions for yourself, you will be ready to invest or trade on Binance.

Introduction

Investing in Bitcoin and other cryptocurrencies is a great way to diversify your investments, but it also carries high risk. Therefore, before you begin, it is important to understand the basic concepts and principles. Investing is more than just buying cryptocurrency and hoping for the best.

An informed investment decision requires careful research and analysis. Ideally, you should have a strategy based on your risk profile and should never invest more than you can afford to lose.

Bitcoin or altcoins?

For newcomers to the crypto industry, the question of investing usually immediately comes down to Bitcoin. Indeed, it is the most famous blockchain project and the largest cryptocurrency by market capitalization.

However, there are thousands of other cryptocurrencies (altcoins). Some altcoins have their own blockchain, some use an existing network (for example, Binance Smart Chain or Ethereum). There is an idea behind every project, and each comes with its own potential risks and rewards.

Investing only in BTC or in several crypto assets is up to you. Some people prefer to stick with BTC, others prefer to diversify their savings with altcoins.

On the one hand, diversification of assets removes the risks of investing in only one project. If you have several assets in your portfolio and one of them becomes unprofitable, you will not lose all your money. On the other hand, investing in altcoins can be risky, and there are quite a few scam projects among them. Therefore, it is very important to do your own research before making risky decisions.

With so many coins to choose from, it can be difficult to know where to start. Read more about the different types of cryptocurrencies in the article “Which cryptocurrency to buy besides Bitcoin?”

Trade or invest?

When choosing assets to buy, you need to consider whether you are trading or investing. These activities are easy to confuse, but there is a difference. Investing means choosing assets that you have confidence in and that you plan to hold for a long time. This strategy requires less time and usually involves less risk.

In turn, trading is aimed at obtaining short-term or medium-term profits through regular purchases and sales. To become a good trader, you need to have a lot of time and experience. Traders need to develop more complex strategies, spend more time analyzing markets and trading platforms, and manage greater risks. You also need to consider the money spent on trading and transaction fees.

Remember: Cryptocurrency markets are sometimes more volatile than traditional ones. And despite the fact that traders need volatility to make a profit, its high level still carries significant risk.

The easiest and safest option for beginners is definitely investing. Investors usually operate over years, so short-term price changes are not that important. The decision to invest is based more on the fundamental characteristics of the coin (how reliable the project is and how likely it is to be successful in the long term).

Some people prefer to invest and not worry about short-term fluctuations. Someone wants to trade, trying to maximize profits. Some do both at the same time. It all depends on your strategy, profile and risk appetite.

The decision is yours, but you should never invest or trade more than you can afford to lose.

So, if you're interested in learning more about day trading and swing trading, check out our Ultimate Guide to Cryptocurrency Trading for Beginners.

Fundamental analysis or technical analysis

Deciding what would be a good investment for you requires analysis. The type of analysis depends primarily on whether you are investing or trading. But in any case, both fundamental and technical analysis can be useful.

As already mentioned, when investing (HODLing), short-term and medium-term price changes are not so important. Long-term investing is more about the intrinsic value of a coin or project, and this falls under fundamental analysis (FA).

Fundamental analysis involves assessing the potential of an asset based on the project as a whole, including its utility, team, technical document, development, marketing, management, reputation, long-term goals and other factors.

In contrast, technical analysis (TA) involves studying past price and trading volume data to try to predict future price movements. Data studied includes candlestick charts and TA indicators such as moving averages and trend lines.

Buying your first Bitcoin on Binance

On the Binance cryptocurrency exchange, you can easily buy Bitcoin and other altcoins.

1. To create an account, go to the Binance home page and click the [Register] button in the upper right corner.

2. Next, you will need to verify your Binance account. Our KYC process verifies that you are who you say you are and meet our legal requirements.

3. The easiest way to buy cryptocurrency is to use a credit or debit card and the conversion feature.

You can also transfer fiat currency from your bank account to buy digital assets while trading. For detailed instructions for both methods, see the Binance Beginner's Guide.

Buying your first altcoin on Binance

You can diversify your portfolio by purchasing an altcoin such as BNB, which is a utility token with many use cases.

1. Log into your Binance account, hover over the [Buy Cryptocurrency] button and click on [Credit/Debit Card].

2. You will see a large list of cryptocurrencies available for selection. Make sure you select the correct fiat currency. In this example, we chose to buy BNB with EUR.

3. Enter your card details to complete the purchase and wait for the cryptocurrency to be credited to your account.

What can I do with my cryptocurrency?

Buying, selling, holding cryptocurrencies are some of the strategies that can be used when investing or trading cryptocurrencies. As for long-term storage, you can store your cryptocurrency in your Binance account or transfer it to an external cryptocurrency wallet.

If you decide to store your cryptocurrency in your Binance account, you may want to consider the earning options provided by Binance Earn. Think of it as a kind of savings account that allows you to earn passive income just by storing cryptocurrency in this account.

Summary

Learning how to invest or trade cryptocurrencies takes time. Improving your knowledge is a good way to reduce your overall investment risk, which in turn will lead to more informed decisions. It's easy to panic-sell an asset out of emotion, but you'll be much less likely to do so if you learn about investing and trading. To learn more, read our article “The Psychology of Market Cycles.”