Master These 4 Methods to Earn Money from Cryptocurrency
Entering the world of cryptocurrency can feel like finding a cheat code to wealth. Yet, it’s a high-stakes game with the potential for significant rewards—and risks. Investing in crypto requires careful attention and strategy. This article will guide you through four reliable methods to win big in the crypto market while minimizing your chances of loss.
If you are new to cryptocurrency, welcome! You’re entering an exciting space full of opportunities. Our last method is a relatively new approach that I’m eager to share with you.
The Skeptic’s Dilemma
When starting in cryptocurrency, you might find yourself wondering, “Is this really going to work?” You’re not alone; many have ventured into crypto with a healthy dose of skepticism.
“So they succeeded… but what made it work for them?”
Does this sound familiar? Initially, crypto enthusiasts might come across as overly enthusiastic, constantly touting the future potential of digital currency. Despite their fervor, they might just be onto something. With smarts and patience, cryptocurrency can indeed yield substantial profits.
Years ago, Bitcoin surged to nearly $20,000 but then plummeted to under $3,000, capturing the attention of investors worldwide. Today, those who took a chance on Bitcoin have enjoyed significant returns. Here are four important strategies that have proven effective over time and can still work for you in 2024:
1. Buy and Hold
The most time-tested way to make money with any asset is to buy in and hold for the long term. This strategy relies on the belief in the intrinsic value of the asset. For Bitcoin and other cryptocurrencies, this means believing in the underlying technology and its future potential.
One of the easiest ways to get started is by opening an account with a reputable exchange, such as Coinbase. Initially, even if you’re not ready to make a huge investment, you can buy small amounts to gain confidence.
For example, I started with small investments and gradually increased my stake as my confidence grew. My initial Bitcoin purchase wasn’t until late 2019, two years after my first foray into the market. I made an $8,000 purchase, followed by increments of $10,000, and another $20,000 by January 2021. Likewise, I diversified into Ethereum, using my BlockFi account to gradually accumulate more.
2. Cryptocurrency Savings Accounts
Earning interest on your crypto holdings is another smart way to generate passive income. Platforms like BlockFi allow you to earn interest on your deposits, sometimes at rates significantly higher than traditional banks.
Initially, traditional savings accounts were paying me peanuts, while BlockFi offers interest rates between 5-9% depending on the cryptocurrency you choose. Inspired by these yields, I expanded my portfolio to other platforms like Celsius, which offers even higher rates on major cryptocurrencies like Bitcoin and Ethereum and pays out interest weekly.
Earn up to $50 in Bitcoin by using my link to try out Celsius.
Remember, while the yields are enticing, there’s no FDIC insurance. Hence, there is always an associated risk, meaning your capital could be at risk depending on the platform’s financial health.
3. Trading Cryptocurrency
Trading cryptocurrencies can be lucrative but is typically not advisable for new investors due to its complexity and risk. Instead of day trading, which involves continually monitoring charts and candlesticks, consider less intensive forms of trading, such as volatility trading.
Crypto Volatility Trading
Consider the case where many people bought Dogecoin at around 14 cents via Robinhood and saw the coin shoot up to 75 cents, leading to a significant profit. This kind of rapid market movement can be capitalized on through strategic buying at dips and selling at peaks.
Do note, however, that the IRS wash sale rule does not apply to cryptocurrency as it does to securities. This lack of regulations allows for more frequent trading without the waiting period, letting you capitalize on short-term market movements. But remember, while the potential for gains is high, so is the risk of losses.
4. Using Crypto Bots
The last method involves automating your trading processes using bots. Many who were initially skeptical of crypto have been won over by the efficiency of these automated programs.
I never thought I would say this: I’m trading cryptocurrency using bots.
Gladly, you don’t need to be a day trader or a coder to use these bots effectively, thanks to user-friendly software.
Grid Trading
Grid trading involves placing multiple buy and sell orders at predefined price intervals. For example, if Bitcoin is fluctuating between $55,000 and $57,000, you set a grid range to buy when it drops to $53,000 and sell when it surpasses $55,000. The key is to profit from the price volatility rather than a long-term price increase.
Platforms such as Bitsgap allow you to seamlessly integrate various exchanges and set up grid bots to automate these trades. Although setting it up may seem complex, it becomes significantly simpler through educational resources and training programs.
Many investors start with demo accounts to gauge the system’s capabilities before committing real money. For instance, over nine days, a demo account showed a 7.12% return on a hypothetical $5,000 investment.
However, if you’re ready to dive in, the initial suggested investment per bot ranges between $3,000 and $5,000, based on my experience. You can potentially scale up by diversifying into multiple bots for various altcoins, thereby maximizing your trading opportunities and profits.
Grid trading is profitable when price fluctuations are frequent. You can try various coins beyond Bitcoin and tailor your strategy based on the market volatility.
Always Be Testing
One of the benefits of platforms like Bitsgap is testing bots in a safe environment. For instance, a demo bot showed a promising 7.12% return on $5,000 in just nine days.
For more insights and detailed strategies, check out Dan Hollings’ program, known as The Plan, for valuable advice on using crypto bots.
By continually testing and refining your approach, you can significantly improve your returns and minimize risks.
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