6 Crypto Investment Strategies

The world of cryptocurrencies is exciting and unique and has evolved over the last few years. They allow consumers to buy or sell a digital asset to be able to do something that you cannot do in any other currencies or markets. One of the newer trends in this market is cryptocurrencies such as Bitcoin, Dogecoin, and Ethereum, which have had tremendous success thus far. As they continue to soar in value and popularity, more crypto-related companies are popping up all over the place. Discussed below are crypto investment strategies that you can use to increase profits.

1. Harness Volatility

One of the major features of cryptocurrencies is their volatility. However, this feature can be harnessed for profit in several ways. It is important to understand that the volatility does not necessarily have to be negative. The main focus in the industry is unpredictability and the fact that it takes time for a coin to stabilize. Therefore, investors can easily take advantage of this feature by buying and selling coins at opportune moments when they are low and high, respectively. Another benefit of buying low and selling high comes from taxes. When the value of a coin is increasing, it might be advantageous to sell off some of your coins to avoid paying taxes on your profits. This is one of the oldest and simplest tricks in the book, but it can be highly effective if done correctly.

2. Invest Early

The safest investment strategy is to purchase when the entire market is in a slump. In most cases, the investments involved can be difficult to execute. Thus, investors must employ careful strategies to complete the transactions by buying low and selling high. Another tip is to invest in coins that are well-known and safe. For example, Bitcoin has been around for years, while Monero has been gaining more popularity as of late as it is more secure and private than other cryptocurrencies.

3. Invest in Undervalued Cryptocurrencies

New cryptocurrencies that are not well-known or established can be risky investments at first. As the market continues to mature, these coins can become valuable in the long term as they become more popular and respected. These currencies can also be lucrative investments because of their low prices and potential for massive growth. One example is Ripple, which saw a huge surge in value earlier this year.

4. Invest in ICOs

Initial Coin Offerings provide investors with their first opportunity to invest in cryptocurrencies. There are many ways to profit from these ICOs, including investing in the pre-sale and keeping your tokens until they increase in value. Investing in undervalued cryptocurrencies is also a strong way to make money by purchasing tokens at a low price and selling them later once the value has increased.

5. Diversify

Investing in cryptocurrency is similar to diversifying a portfolio of stocks and bonds. You could lose a substantial portion of your investment if one specific coin fails while others succeed. It is important to spread the risk and not put all your eggs in one basket, even though it can be tempting. Investing in different types of cryptocurrencies can help you handle the volatility more easily, but you must also be sure they are compatible. If a coin is paired with another that does not do well, your investment could fail.

6. Dollar-Cost Averaging

Dollar-cost averaging is a great way to invest in cryptocurrency because it can help reduce risk and increase profits over time. Many people will try to time the market, but this can be difficult. Instead of trying to time the market, you could purchase a set amount of coins at regular intervals. For example, you might decide that you are going to purchase $100 worth of cryptocurrency every month. This can help reduce your risk when the value fluctuates and also creates an opportunity for greater profits when the value goes up.

Conclusion

Cryptocurrencies are a gamble, but there are ways to maximize profits and minimize risk. Throughout the history of cryptocurrencies, there have been plenty of successful investors. None of these investors strictly followed a single strategy but used different strategies that were all successful in their own right. For example, Ethereum rose significantly in value and has become highly profitable for investors who invested early in the market. Another example is Bitcoin, which became the top coin in market cap.