It seems like everyone is talking about cryptocurrency these days — and for good reason too! The world of crypto has revolutionized finance as we know it, and it’s making people millionaires left and right. (Bet your personal finance teachers never saw that coming!)

We all want to get in on the crypto gold rush, but it’s confusing trying to figure out all the investment options. Luckily for you, we’ve collected a set of four possible cryptocurrency investment strategies you can use. 

By the end of this article, you’ll have everything you need to start profiting off of crypto!

What Is Cryptocurrency?

Contrary to what all the buzzwords in the news indicate, cryptocurrency is easier to approach than you’d think. A cryptocurrency is a type of peer-to-peer (P2P) digital money. That means users control the currency instead of banks and governments.

We call it P2P because cryptocurrency transactions happen directly on a distributed database called the blockchain. This decentralized ledger is secured with powerful cryptography to keep trust in the currency.

Crypto can be used to: 

  • Buy and sell physical or digital items. 
  • Send payments internationally. 
  • Even be held as an investment. 

Since the bull runs the crypto markets have seen in 2021 and earlier, investors have been flocking to crypto land as a way of diversifying their portfolios. 

Different Ways to Invest in Cryptocurrency

There are several ways to invest in the world of crypto:

  • Investing in crypto-focused companies.
  • Buying crypto assets and holding them long-term.
  • Day trading cryptocurrencies.
  • Grid trading cryptocurrency pairs.

Let’s go into each one:

Investing In Cryptocurrency-Focused Companies

Since the crypto boom first began, countless companies have sprouted up to serve the needs of the fast-growing community. 

Cryptocurrency exists within a much wider ecosystem of moving parts. That could include crypto-adjacent firms uninvolved in blockchain or even finance. Here are some examples of cryptocurrency companies you can invest in:

  • Nvidia ($NVDA): Nvidia makes powerful computer processors, many of which are popular tools to mine crypto with. One could say they’re selling shovels during the gold rush.
  • PayPal ($PYPL): PayPal lets users buy and hold digital currencies like Bitcoin and Ethereum. As one of the biggest payment platforms in the world, their adoption of crypto is a strong sign for the community.
  • Coinbase ($COIN): Coinbase is the purest crypto stock in this list. It enjoys the title of being one of the most popular cryptocurrency exchanges in the world.

Pros

  • You can hedge against crypto volatility by investing in feeder companies instead of coins.
  • You might be more comfortable with stocks.

Cons

  • You don’t own any actual cryptocurrencies.
  • Stock market returns are unlikely to beat returns on crypto.

Holding Crypto Assets Long-Term

When crypto investors talk about holding cryptocurrencies as long-term investments, they usually mean Bitcoin. The Godfather of modern cryptocurrencies (Bitcoin) follows a deflationary protocol. That means there is a limited number of Bitcoins that can ever exist — 21 million, to be exact.

Limited supply and flow make Bitcoin a scarce resource, akin to gold or silver. For this reason, many call Bitcoin a store of value. So, if you buy Bitcoin and don’t sell for years, you could see a very healthy return on your investment.

Pros

  • This is a simple investment strategy anyone can follow.
  • You own your cryptocurrency, no one else.

Cons

  • Bitcoin’s value fluctuates a lot, so you’ll need a lot of discipline not to sell in a panic.
  • You risk not diversifying your crypto strategy.

Day Trading Cryptocurrencies

Recently, the crypto economy has attracted several day traders to its ranks. Crypto’s volatility and low barrier to entry make it a profitable sector — but also at great risk.

To day-trade cryptocurrencies, first determine if you’d like to own the coin or just speculate on its price performance. In the former case, you need to register a wallet and get on a crypto exchange. For the latter, you need to find a broker.

Day trading comes with its own tools and intricacies: trading on margins, swing trading, and more. Before you start buying and selling any coins, do your research.

Pros

  • Day trading offers high-leverage options to multiply your investments quickly.
  • Trading Forex is a good introduction before you move into crypto.

Cons

  • Day trading is very risky, especially for beginners.
  • Long education period
  • Monitoring your trades on a daily basis is a full-time job.

Grid Trading Cryptocurrencies

Grid trading is an investment trading strategy that involves buying and selling at pre-set prices. A grid trader may set up orders to purchase a cryptocurrency when it falls below a certain price. Then, they sell it again when it rises past the upper limit. 

Trading on the grid is a popular strategy in Forex markets, and is especially beneficial in the highly volatile cryptocurrency markets. Many brokerages will offer an automated system to do this for you. You can also set up your own cryptocurrency trading bots!

Pros

  • Set up the right way, grid trading can bring thousands in income with relatively low risk.
  • If you grid trade with bots, you can be almost completely hands-off with your investments.

Cons

  • You might have difficulty finding the right cryptocurrency pairs to trade.
  • Bot configurations can be confusing.

You Can Start Your Crypto Investing Journey Right Now

Cryptocurrencies are undeniably the future of finance, and if you don’t invest now you could miss out big time. If you’re interested in the last strategy we discussed, grid trading, you might want to consider The Plan by Dan Hollings

In The Plan, marketing genius Dan Hollings outlines the crypto bot trading strategy he’s spent three years perfecting. By using automated bots and grid trading, you turn crypto market volatility into passive income.

Curious to find out more? Click HERE

Frequently Asked Questions

Is cryptocurrency a good investment?

Cryptocurrencies will only become a bigger part of our lives moving forward. Investing in crypto is a smart move that diversifies your portfolio and prepares you for the future.

How do I start investing in cryptocurrency?

Cryptocurrency exchanges like Binance, Coinbase, Huobi, and Kraken are excellent places to start investing in crypto. If you want full custody of your investments, make sure you get a crypto wallet.

What are stablecoins?

Stablecoins are cryptocurrencies that have their value pegged to traditional assets like fiat currency. Examples include $USDC and $USDT.