Crypto Beginner's Guide: Five Steps to Master the Core Principles of Cryptocurrency Investment

Why Should You Enter the Crypto Market Now?

Cryptocurrencies have evolved from a niche topic into a mainstream investment category over the past decade. Public companies like Tesla and MicroStrategy are allocating digital assets, and traditional financial institutions are also expanding into related businesses. What is driving this wave?

Compared to the three major advantages of traditional investment markets:

First, greater profit potential. Traditional markets such as stocks, forex, and bonds are deeply dominated by institutions, making it difficult for retail investors to find excess return opportunities. In contrast, the crypto market is still in its early development stage, with frequent volatility, offering opportunities and risks alike—perfect for investors seeking high returns.

Second, extremely low entry barriers. Buying crypto can start from just $2-10, which is much more affordable than stocks or bonds that often require minimum purchases of hundreds of dollars. This means even beginners with small capital can participate.

Third, trading without time and space restrictions. Traditional markets are limited by trading hours (Monday to Friday, fixed times), while the crypto market operates 24/7 year-round, allowing investors worldwide to buy and sell freely without regional limitations.

Choose the Trading Method That Suits You

Before entering the market, you must confirm your preferred trading method. Based on trading scenarios, there are mainly two routes:

Route 1: Direct Trading on Exchanges

Includes centralized exchanges (requiring KYC verification) and decentralized exchanges (no identity verification needed). Both support spot and contract trading. These platforms allow you to hold crypto directly and are suitable for investors with long-term plans.

Route 2: CFD Trading

Trade crypto price movements via CFD platforms without actually holding coins or using wallets. These platforms are usually under strict financial regulation, offering relatively secure funds. More importantly, a single account can trade stocks, forex, indices, gold, and other assets simultaneously, ideal for risk diversification.

When choosing, consider your needs: for long-term holding, go with exchanges; for short-term trading with safety, choose CFD platforms.

Safety Checklist Before Starting Trading

Regardless of the method you choose, these checks are essential:

Platform Legitimacy Verification — Confirm whether the platform operates legally in your region, especially whether deposit and withdrawal methods are locally available.

Regulatory License Verification — Prefer platforms holding internationally recognized licenses such as ASIC, FCA, FSC. Don’t rely solely on platform claims; verify directly on the regulator’s official website, as scam platforms may forge licenses.

Fund Segregation Mechanism — Ensure the platform keeps user funds in separate accounts from operational funds.

Basic Trading Process — The process is similar across platforms: download the app or log in to the website → register and complete identity verification → deposit funds → select a coin and place an order. Be cautious: if a platform allows deposits without verification, it’s a major red flag.

Key Cryptos to Watch in 2025

Beginners should start with higher market cap and relatively stable coins:

BTC (Bitcoin) — Market Leader

Current price around $87.26K, known as digital gold. Last year, it completed its fourth halving, reducing mining rewards from 6.25 BTC to 3.125 BTC. Historical patterns show that each halving triggers a new bull run.

Now, institutional interest in BTC remains high, especially after spot ETF approvals, significantly lowering the cost for institutions to allocate. Technical upgrades like Layer 2 scaling solutions and Rollups are improving network efficiency and reducing transaction costs, laying a solid foundation for long-term appreciation.

ETH (Ethereum) — King of Smart Contract Ecosystems

Price approximately $2.93K. As a representative of blockchain 2.0, ETH’s core innovation is “smart contracts”—programs that automatically execute on the chain. Developers can deploy complex applications directly in a decentralized environment, greatly accelerating innovation.

Unlike BTC, ETH has no supply cap, leaving room for ecosystem expansion. With applications like DeFi, NFTs, and GameFi emerging rapidly, ETH’s ecosystem activity continues to rise, boosting its value recognition.

DOGE (Dogecoin) — Community-Driven Dark Horse

Price around $0.13. After a short-term correction of about 20% earlier this year, large holders have been adding to their positions against the trend. What supports this confidence?

First, a strong community base. Millions of DOGE fans worldwide boost its popularity and help it resist declines during market volatility. Second, increasing practicality. More merchants and platforms accept DOGE payments, from online to offline, strengthening real-world use cases and market recognition of its value.

XRP (Ripple) — ETF Anticipation Strong

Price about $1.87. After SEC approval of BTC and ETH spot ETFs, industry experts are optimistic about XRP becoming the next ETF candidate. If XRP ETF approval is granted, it will attract institutional capital, driving the price upward.

SUI (Sui Chain Native Token) — Emerging Public Chain Dark Horse

Price around $1.41. Developed by Mysten Labs, it’s a high-performance Layer 1 blockchain known for its unique object model and Move language technology. Ecosystem growth is rapid, with a market cap exceeding $5.25 billion and TVL over $1 billion.

From DEX, lending, to NFT markets, GameFi, and social applications, Sui’s ecosystem is expanding quickly. Analysts generally believe that as long as the price stabilizes, it could challenge the $5.5 high point and trigger a new wave of gains.

Top Five Pitfalls for New Investors

Frequent Trading Traps

Once mastering basic operations and technical analysis, many start watching the charts constantly, entering and exiting trades frequently. The result? High transaction fees and depleted judgment. Even if the direction is correct, overtrading can prevent profits. Controlling trading frequency and reducing operations often yields better returns than frequent trading.

Ignoring Market Risks

No one can predict the market with 100% accuracy; mistakes are normal. But many hold onto losing positions or add to their positions against the trend, leading to liquidation. The Luna incident is a classic example—many recognized the risk but tried to catch the rebound, only to suffer severe losses from the sharp decline.

Ignoring Take Profit and Stop Loss

Greed for more gains and hope to recover losses are common among beginners. But not setting stop-loss or take-profit can be costly. Sudden gaps or extreme volatility can cause losses to skyrocket. The 312 crash event left many with huge losses because they didn’t set stop-loss orders.

Why is Stop Loss and Take Profit So Important? They help keep risks within your predefined range. After setting a stop-loss, even if a gap occurs, the system will automatically close the position at the nearest target price, preventing further losses. It’s a fundamental risk management tool, essential for both spot and contract trading.

Lack of Trading Discipline

Many traders act on emotion without a clear plan—being aggressive at times, conservative at others, based solely on mood. This often leads to greed during rises and fear during declines, making poor decisions at the worst moments. Establishing a clear trading plan and strictly following it is key to long-term profitability.

Insufficient Knowledge Reserve

Entering the market without thorough understanding of fundamentals and technicals, relying instead on news or following trends, often results in being exploited or caught in traps. Investing time to learn about coin fundamentals, market cycles, and technical analysis methods is highly worthwhile.

Final Advice

Crypto investing has no shortcuts, and mistakes by beginners are inevitable. The key is to identify and correct errors promptly, rather than repeatedly falling into the same traps.

A saying for everyone: Mistakes are not scary; repeating the same mistakes is. Take time to reflect, optimize your strategy, and restart—this is the true path to long-term profits.

Additional Knowledge: Crypto vs Virtual Currency — What’s the Difference?

Virtual currency refers to digital tokens circulating online that can be used for transactions but may not employ encryption technology. Crypto, on the other hand, is a special type of virtual currency generated using cryptographic techniques to ensure transaction security and privacy. Simply put, Crypto is a subset of virtual currency, but not all virtual currencies are Crypto.