Can You Make Money Trading Cryptocurrency? – Effective Strategies You Need To Know
What are the ways to earn income abound online? You really just have to take time to look around and learn. If you have a day job or a primary source of income, the Internet is also another treasure trove of opportunities for earning passively. Perhaps the most exciting possibility of our time is virtual money or cryptocurrency. But can you make money trading cryptocurrency?
Earning From Trading Cryptocurrency
Cryptocurrency trading has drawn a lot of attention, especially among traditional traders and those who have money to pour in for profit. There is not much difference between trading cryptocurrency and trading stocks, currencies, and commodities. Trading in both operates on the same principles of buying and selling. With cryptocurrency, you also buy when the price is low and sell when the price is higher. But what makes people so attracted to cryptocurrency is that it can be faster to earn a large profit here.
So really, can you make money trading cryptocurrency? You could, but you cannot just give up along the way or go blindly. Otherwise, you’d end up getting scammed. What’s good is that there are proven ways to earn money from crypto trading, and many of these strategies are quite novel compared to just good old buying and selling.
Before diving into these exciting strategies, it would be good to begin with, the basics, like what you need to know first. And the first thing that you ought to know is that you need to commit to a lot of learning and reading and analyzing.
- Begin by analyzing crypto coins. There are over 5,000 crypto coins available but avoid the confusion by sticking to the ones that are popular.
- Read through their whitepaper, or the document which explains the nature of these coins’ projects, their unique selling proposition, and what would influence investment decisions. These documents can help you understand what makes a certain crypto coin’s price rise and fall, thereby making you decide if this fits your investment goals, giving you a hint at when to buy or sell once you’ve chosen to invest in these.
- The next thing you need to consider is the wallet where you will keep your crypto coins. Since the Internet is replete with a lot of scammers, it is always prudent to go for the popular ones, which are usually the legitimate storage for your assets. Of course, besides popularity, check investors’ reviews on these wallets’ quality of service, too. Arguably, a good indicator of a reliable wallet is if it is developed by a legitimate software development company. Once you have decided on your crypto coins and your wallet of choice, you can now explore the strategies that can help you make money out of cryptocurrency.
Strategies To Earn In Trading Cryptocurrency
There are some strategies you can choose from to gain profit from cryptocurrency.
Buy and HODL. Much like regular, traditional investing, buying is a common strategy to earn a profit out of cryptocurrency. HODL simply means hold, as in buying and holding in traditional investment parlance. The use of this misspelled term, a user’s typo that emerged from Bitcoin Forum message boards, has caught on and is now understood as cryptocurrency jargon.
The key to buying and HODLing is to choose assets that shift in value quickly because their prices fluctuate on a regular basis. Coins like Bitcoin and Ethereum are a popular choice among those who want to make a profit steadily from buying and HODLing.
2. Earn dividends, even without selling them. Some crypto-coins give a dividend by just buying and HODLing them in a wallet. COSS, CEFF, NEO, and KUCOIN are some of the crypto coins you can resort to if you wish to simply earn dividends.
3. Going technical by running cryptocurrency master nodes. Did we lose you there? Let’s break it down. A node is a computer that connects to a cryptocurrency network. This node makes up a blockchain. The term blockchain refers to a digital record of transactions. A master node is a device or a computer wallet that stores a full record of online transactions or blockchain activities, real-time.
To record real-time transactions, these master nodes have operators, and they are incentivized for this job. When you run a cryptocurrency master node, you are setting up a certain number of crypto coins and eventually earning rewards from them. This is a way of earning passive income from cryptocurrency, although you would need to put up a significant number of crypto tokens.
4. Staking crypto coins. To stake crypto coins, you need to hold crypto coins in a wallet, and by doing so, you earn additional coins. Another way to put it is by locking certain crypto coins for a certain period of time and then earning double from it. NAV, Coin, PIVX, Neblio, and Decred are coins that can be staked.
5. Do Cryptocurrency Microtasks. These microtasks are small to-dos you can do for cryptocurrency platforms or for individuals, like viewing advertisements and videos, answering surveys, testing apps, and many others. In exchange for these small tasks, you earn some fees. Unlike trading cryptocurrency, which naturally takes a lot more risk, offering your services to a cryptocurrency company is a lot more prudent. Match your skills with what the cryptocurrency company needs at the moment so you can arrive at a great job fit. Websites like Bitcoins Rewards, Coinbucks, and Bituro are some of those that you can explore for microtasks. If you search well enough, some cryptocurrency companies do offer some good money considering the tasks they ask of you.
6. Day Trading. If you are good at poring over and analyzing stocks, then day trading is one of your best options to make money in the world of cryptocurrency. As a day trader, you may also earn potentially higher than all the other strategies shown here, but of course, this requires a bit of skill and effort, too. For starters, you can brush up on studying charts of stocks, their performance, and trends by honing your fundamental and technical analysis skills.
Technical analysis is all about looking at the historical trends in the performance of a crypto asset in terms of price. This is quite volatile because these historical movements are influenced by human psychology – fear, apprehension during a crisis, euphoria on holidays, and how these affect crypto asset prices.
Fundamental analysis, on the other hand, does not just take into account the historical performance of an asset but considers everything about this particular crypto asset that influences the action of its price.
7. Cryptocurrency Faucets. Much like performing microtasks for cryptocurrency companies, users of cryptocurrency faucets get rewarded when they perform and finish tasks asked of them by an application. Find out more about making money trading crypto here!
How else can you make money trading cryptocurrency? There are a lot of other ways, but since this is a relatively new, unregulated sector, take it with a grain of salt. The best stance is to dip your toes into this strange new world that we’re all moving towards sooner or later, but think twice about diving in just yet.
UPDATED April 6, 2021
By: Hunter Shultz
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UPDATED April 6, 2021
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