All of us are looking at how to invest and make money daily. This is not an easy task to do. Keep in mind that just reading a book ‘cryptocurrency for dummies’ is not enough. In this article, we debunk how to make money in the cryptocurrency sphere.
Ideally, if you want to invest and make money with cryptocurrency, the safest way is to spot the best altcoins to invest in. Traders and investors should learn when they are cheap and then sell them after the price rises.
How to make money with cryptocurrency in general?
In the crypto sphere, it is possible to invest $100 and make $100 a day or even more. It all depends on the time and the project. For example, if you invested in Stratis $3,000 and bought it for $0.01 on August 12, 2016, you would receive $300,000 when the price surged to $1.10. If you would sell it in January 2018, you will become a millionaire, earning more than $4.2 million from the initial investment of $3,000.
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If you are not an early investor but missed the reserve price, you can still buy on occasional declines, but just because you did not buy the coin at the lowest price does not mean you are late. Since development and user adoption naturally take time, many projects can take years to reach their full potential.
To make such investment a trusted platform is needed. Binance is the best place to buy altcoins spot. More information about Binance you can find in our Binance exchange review, and if you are looking to maximize your profits with leverage, visit our best cryptocurrency exchange review article.
Bitcoin the digital gold
As long as you have invested in cryptocurrency, patience is your friend.
The following rule describes the best conditions to enter a trade: “Be fearful when others are greedy, and be greedy when others are fearful.” That means waiting while everyone else is buying and buying when everyone else is selling.
When investors are “greedy” and buy, this will cause the token price to continue to rise, and you may pay too much for the token, especially in the case of a price correction (temporary price reduction) later. If you find that there is no solid reason behind the pump (no new development, no partnership, or important news or updates), you’d better wait for the price to drop again before buying.
Best way to trade cryptocurrency is HODL
That is the practice of insisting on long-term investment without giving in to the urge to sell. That is a meme that originated from a spelling error made by Bitcoin investors on the Bitcointalk forum. Later, people began to use HODL to express their persistence in life.
Many cryptocurrency investors claim that they make more money from long-term investment than trading, while others claim that trading makes more profit. If you are a novice, it is recommended that you postpone the trading and let a professional or more experienced person do it.
Here is the list of useful terms in the cryptocurrency field:
- Sats — the abbreviation of Satoshis (a division of Bitcoin), 1 Satoshi = 0.00000001 Bitcoin;
- Fiat — fiat currency, your standard currency, such as US dollar, British pound, Euro, Chinese yuan, etc;
- ATH — the highest price in history, the highest peak of the asset;
- Bull market — a market where the price of coins increases, encouraging buying;
- Bear market — a market where coin prices fall, encouraging selling;
- Feeling bullish — feeling that investment will add value;
- Feeling bearish — opposite of the bullish, feeling that an investment will lose its value;
- Weak hand — the person who buys the coin sells once the price drops;
- Strong hands — investors who insist on using coins no matter how low the price drops;
- Bloodbath — when many coins fall sharply;
- Moon — sharp rise of the assets price;
- Shakeout — when the price of a cryptocurrency drops to such a low level, many worried investors sell at a loss;
- Whales — Investors who own a large amount of cryptocurrency, because they hold a large amount of cryptocurrency, people believe that they can influence the price of the coin by buying, selling and selling a large number of coins;
- Buy wall — when the buy order for a particular coin is much higher than the sell order. Rumor has it that whales can be used to buy orders to increase the price of coins;
- Sell wall — when the sell order is much higher than the buy order. There are rumors that whales can use stores to lower the price of cryptocurrencies (usually so that they can accumulate more money on their own);
- FUD — Fear, uncertainty, doubt. Negative news about cryptocurrencies is spreading. FUD may cause investors to doubt their investments and sell them, or prevent other investors from buying tokens;
- Pump & Dump — A plan in which a group buys a cryptocurrency when the price is low and spreads hype, causing unsuspecting investors to buy it, and then causing the price to “rise”, and then new investors are “sold” by early investors as they make a profit. After the sell-off, prices fell and the deceived investors called “bag holders”;
- Bag Holder — Investors who hold possible bad investments (also known as “left hand bags”), they may become victims of a pump & dump scheme, or they may have bought bad coins at ATH;
- FOMO — fear of missing out, the moment when investors are buying coins frantically so as not to miss the price increase, it usually happens in the pumping phase;
- New blood/fresh meat — is another word for novices or new investors;
- DYOR — do your own research;
- Premine — Premine means that developers allocate a certain amount of coins to a specific address before the source code realizes to the open community. Usually, when this happens, developers will reserve a certain amount of coins for themselves for specific reasons;
Always take profits
As soon as your trade goes profitable – secure your profits. By booking profit in Bitcoin, you can use Bitcoin to buy new cryptocurrencies or increase your current holdings of altcoins. If your investment made large gains (10x-100x), just take profit in Bitcoin or Fiat, buy more same coins when the price drops, or do research and find good cheap cryptocurrency invest in.
Ripple coin, one of the cheapest coins with good potential
Diversify investment in traditional investments, such as gold/silver, stocks, index funds, mutual funds, real estate investment trusts, etc.
It is recommended that you cash out no more than 50% of your cash, as sometimes it is hard to define the top and the value of the cryptocurrency may continue to increase in the future. So in order not to fill FOMO stick to your strategy.
Every time your investment reaches the highest level in history, you book a certain profit from the investment. This is very effective before a bear market because, before a bear market, the price of most cryptocurrencies will fall as investors dump their tokens, allowing you to buy them back at a lower price.
What makes cryptocurrency go up and down?
One of the reasons for the high price of cryptocurrency is the supply of its tokens. Naturally, if the supply of something is scarce and the demand is great, its value will increase. Other factors that may cause the price increase of cryptocurrencies to include:
- New developments and announcements. If a cryptocurrency has a huge community, a simple announcement or new feature will cause a huge wave of purchase behavior, increasing the price of the coin.
- Cryptocurrency developers will complete tasks before the deadlines and goals of the roadmap, which may lead investors to buy more cryptocurrencies due to increased confidence.
- Cryptocurrencies from small exchanges are added to larger, more popular exchanges (increased user adoption)
- Pumping and dump groups, usually with very small and suspicious cryptocurrencies, are easier to operate.
- Hype, people with a large following and influence, can urge people to invest in cryptocurrency, John McAfee is an example.
- The actual use and adoption of a cryptocurrency, thereby reducing supply and increasing demand
Crypto trading is a hard work
Be aware that cryptocurrency trading is hard work. The moment the price of an asset fluctuates might be very stressful. Knowledge of psychology and emotional control are the basic aspects of trading. It is not enough to have a working trading strategy. To become successful in trading, one should know how to manage the trade emotionless to predict the time to open and to exit the trade.