If you’re looking to earn profit in cryptocurrency, you’ve come to the right place. These 7 proven ways to earn profit in cryptocurrency will teach you how to take advantage of the blockchain technology and help you invest safely and smartly, so that you can make money without taking any unnecessary risks. Try out some of these proven ways to invest in cryptocurrency today!
1) Understanding the Fundamentals
No matter what kind of trading you’re doing—day or swing trading, or holding for a long-term investment—understanding fundamental analysis is critical. But not just any fundamentals; you need cryptocurrency fundamentals, which include: Market Capitalization: This refers to market cap, or a measure of how much value investors have placed on a currency. Shares are issued by publicly-traded companies and market cap is calculated by multiplying price per share by number of shares outstanding. In cryptocurrency, market cap refers to price times circulating supply. Typically, large coins see greater volume and therefore have higher prices. A high market cap coin with low volume is called an overvalued lagger and can be due for a rebound later down the road.
Typical investing analysis might take market cap into account, but with cryptocurrency, a big part of understanding market capitalization is how many coins are held by investors versus how many are actually circulating. If most coins are owned by investors—not transacting on exchanges—the price could be artificially inflated due to less demand and low volume. Coin Market Capitalization refers to total value of all circulating coins in circulation, and you can use sites like CoinMarketCap or WorldCoinIndex to see their values. For example, right now Bitcoin has a total value of $217 billion USD and there are 16.9 million bitcoins circulating (there will never be more than 21 million). This puts BTC’s coin market cap at $10,679 per bitcoin.
2) Investing in Cryptocurrency is Always Risky
Though crypto is a much safer way of investing your money, it’s still risky. The biggest risk you face is investing too much money in one coin. If a coin value falls sharply, you can lose all your investment (or most of it) if you don’t plan for it. Investing for Short Term: If you want to invest in crypto just to make some quick bucks then there are many websites where buying and selling happens. Though, always remember that we should not be too greedy and try holding coins for longer duration of time so that we can enjoy maximum profit.
HODL! HODL! HODL!: In cryptocurrency world, HODL means Hold On for Dear Life. It was coined by an investor named Brad Jansen during Bitcoin crash in 2013 when BTC price fell from $1,000 to $200. The phrase became viral among Bitcoin community and has become somewhat of an inside joke among traders and investors. However, it also highlights an important aspect of trading cryptocurrencies – they are volatile assets and prices fluctuate a lot!
A common mistake people make is panic selling when prices drop – especially if they have lost faith in cryptocurrency as a whole. This is often referred to as weak hands because people sell off their cryptocurrency holdings when prices drop instead of realizing what could actually be causing price fluctuations.
3) Keep it Simple – Only Invest What You Can Afford to Lose
Investing can be confusing, and while there are many approaches to investing in cryptocurrencies, one thing is certain: if you don’t understand what you’re doing, you could lose money. That’s why it’s important not to put all your eggs in one basket (or cryptocurrency) and stick with simple strategies that will help limit your risk. Additionally, keeping track of gains and losses is a smart way to ensure that you’re making money with your investments.
Finding reliable cryptocurrency investment opportunities can be difficult, and there are many approaches you can take when exploring how to invest. However, it’s best to start simple and go from there. If you’re just looking for a new way to grow your wealth, consider investing as a long-term investment with regular contributions of as little as $10 per month until you’ve hit your initial target. The power of compounding is an underestimated force that has fueled some of the greatest financial growth stories around; leverage it by investing regularly over time.
Higher Risk Tends to Lead to Higher Returns: Even with solid strategies in place, investing in cryptocurrencies requires an investment into each coin you plan on buying—meaning purchasing more coins than simply trading funds back and forth between various currencies or exchanges.
4) Initial Coin Offerings (ICOs) are Risky Too
Initial coin offerings are when a company issues their own digital currency or token in exchange for bitcoin, ether or other cryptocurrencies. ICOs have become a popular way for early-stage startups to raise capital, and it’s never been easier. After all, it’s hard for investors to pass up on the chance of getting in on an ICO that could turn out big. Plus, unlike with traditional investments like stocks and bonds, you can buy into an ICO at any time—not just at pre-set IPO times (if there is one). However, investing isn’t as simple as jumping into one coin or another.
Regardless of what cryptocurrency you decide to invest in, there are a few key things you should consider before buying. First, only invest an amount that you can afford to lose, since most of these cryptocurrencies have yet to prove themselves and could fail completely. Second, research your cryptocurrency thoroughly and compare it with others. If it’s not better than other options, don’t waste your money on it—the more thorough your research is, the more likely you’ll be able to avoid scams or bad investments. Finally, always diversify your portfolio as much as possible so that if one crypto doesn’t work out for some reason or another (such as a hack), at least some of your assets will remain intact instead of being wiped out completely.
5) Prepare Yourself Mentally
Investing in cryptocurrency is a little scary for some people because it’s so new and there are a lot of unknowns. Before you even think about investing, spend some time educating yourself on cryptocurrencies. Read up on Bitcoin and Ethereum, study their history, and explore their future potential—and while you’re at it, start learning everything you can about economics. The better prepared you are mentally to invest in something (and yes, that includes cryptocurrency), the less anxious you’ll be when things aren’t going well.
Investing can be risky, but it doesn’t have to be. The cryptocurrency market is extremely volatile—the price of a single Bitcoin can swing by more than $2,000 in one day. If you’re new to investing and feeling overwhelmed, don’t worry—you’re not alone. But keep reading for some excellent strategies on how to profit from cryptocurrencies. Start with our beginner’s guide and use that as a reference when trying out other strategies.
6) Do Your Research – Know When to Buy, Sell, or Hold
Investing can be difficult, but it’s important that you do your research. The price of a cryptocurrency fluctuates often and there are plenty of noise from news or hype that can make an investor susceptible to emotional decisions rather than logical ones. For example, it’s hard not to get emotional when FUD (fear, uncertainty, and doubt) pervades an altcoin community. But what if I told you there was a way to solve that? What if I said you could put your emotion aside and sell or hold anyway? That’s what coin control is for. It allows you decide which coins you want to sell or keep—and which ones you don’t.
Now, you may be wondering how that helps you make more profit. Well, it allows you to maximise your investment potential. Imagine there’s a cryptocurrency with a price of $10. You invest all of your money, or what you can afford. But if it tanks and drops by $5, you’re not left with any options. But if coin control was available, you could simply sell some of your investment and avoid those losses altogether. You would essentially keep your money in play but still manage risk effectively.
This might seem like a small step, but it has big implications. Say you’re investing $100 over two months and your goal is $500. If you don’t use coin control, at most, you could make only $100 back. But with coin control, you could make $150 back if the price went up or keep both coins if it dropped a little—which would increase your total profit from $200 to $250. That extra investment can be significant when compounded over time!
7) Don’t Panic and Stay Patient
Investing can be tricky and it’s easy to get frustrated when you don’t see gains right away. But before you sell off your investments, remember that your portfolio needs time to mature and that market trends tend to peak over time rather than immediately (especially if you’re invested for longer periods of time). For example, if you buy stock in a company based on its product idea, like Tesla or Uber, give it at least 2 years before selling it—even if things don’t go as planned. Overall, there are things investors can do now to maximize their long-term returns but patience is key.
One of these strategies is dollar-cost averaging, which involves purchasing a fixed amount of crypto assets at regular intervals. If Bitcoin crashes and you panic sell, you’ll get average prices across all your purchases, rather than losing all your money on one big trade. The other important strategy that will maximize your long-term profit is selling any investments that have lost value since purchase. This way, you don’t take a loss on assets that are taking longer than expected to mature. Remember: when it comes to investing (especially in crypto), patience is key!