In life, many have the financial goal of multiplying their assets and reserving them for future programs. To achieve your goal, you’ll need a flawless plan. To execute a plan, you need the right strategy to invest in a technical cryptoexchange platform. In the Cryptocurrency universe, you can’t trade your digital assets without a proper strategy. Many investors trade without knowing how crypto trading works and how often the market price fluctuates. It’s because not everyone is aware of crypto trading in this world. Only a few are aware of this. Only a small amount of people trade with analysis and crypto investment strategies.
While the remaining of them, just trade because investing in crypto brings them benefits and a good financial investment option. But, the core of the crypto trading Script lies beyond all of these.
Let’s start by clarifying what cryptocurrency is and what it means to invest in cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a digital currency or digital asset or virtual currency that people buy with our fiat currency Issued by the government like USD, or GBP). On cryptocurrency exchange platforms, digital currencies are bought, sold, and traded to earn profits.
Cryptocurrency exchanges provide many features and a strong foundation other than these. Right now it’s crucial to uncover the reasons behind the widespread enthusiasm for cryptocurrency investments.
Why do Crypto Enthusiasts invest?
People invest in crypto mainly because of two reasons. One is a cryptocurrency exchange software that is built and operated on blockchain technology. Blockchain is secure and decentralized.
It uses cryptography to secure the transactions which gives the traders major trust and confidence in investing.
Another point is that cryptocurrency markets exhibit greater volatility compared to traditional stock markets, which means prices can fluctuate rapidly, allowing traders to achieve significant gains potentially. At this point, we can understand how cryptocurrency investing operates.
How does investing in Cryptocurrency work?
Investing in Crypto mainly relies on acquiring, and holding cryptocurrencies with an anticipation that the value will increase over time. Here are the basic steps that are involved in investing in crypto.
- Familiarizing oneself with cryptocurrency is the preliminary step in investing in crypto.
- Deciding the Cryptocurrencies in which you are going to invest. Other than the famous Bitcoin and Ethereum, there are several cryptocurrencies out there. Each one has its own applications and growth potential.
- Acquiring a digital wallet will help you manage and handle your cryptos. Your wallet will produce a public key and a private key to safeguard your transactions.
- After attaining these, you need a medium to buy, sell, or trade the cryptocurrencies. You can research the exchange platforms available in the market, such as Binance, Coinbase, Kraken, and Kucoin, and can register and open an account.
- Then you can purchase a crypto with the traditional currency and buy or sell using different trading methodologies like spot trade, margin trade, futures contracts, and order types for your convenience.
- They are monitoring the market trends constantly as the crypto markets are extremely volatile.
- One has to be aware of the tax and regulations of the crypto exchange platforms as each exchange charges a different amount for transactions.
Many exchanges have different features in their product. However, this is the basic outline of crypto investing in any exchange forum. At this point, you certainly need to know why anyone needs an approach to invest in crypto.
Why craft a master plan for crypto investments?
Everyone can enter the crypto podium. But to sustain and make a profit in the long run one needs well-analyzed strategies. The crypto market is unpredictable, so, it’s always advised to formalize your intentions while trading.
We’re now positioned to delve into the dynamics of cryptocurrency investments.
7 Golden Crypto Investment Strategies that you don’t want to miss
Here we’ll disclose cryptocurrency investment strategies and illustrate them with examples to ensure a clear grasp of the concepts.
Strategy 1: Capture and Clutch
It means capturing and holding the cryptocurrencies. It’s commonly heard as Buy and hold in the crypto slang. People buy crypto and keep it in their wallets for an extended period. And they don’t care about the market fluctuations during this time. It is because of the belief that the price of cryptocurrency will increase over some time. This concept mainly focuses on long-term profit.
Example: Let us assume that you’re buying a Bitcoin(BTC) at 60,000 USD and holding it in your wallet for a particular period. Then the price of the BTC increases and becomes 65,000 USD. You can sell your asset at this moment or you can hold it for another point in time and sell it according to your preference.
Strategy 2: Seizing the Day
In this method, people buy and sell their virtual currencies within the day. The core idea of this strategy is to realize profits on a short-term basis. They will analyze the market movements on the entire day and then decide to buy or sell at the right time. It is also known as Day trading. It involves a prompt decision due to the rapid market volatility.
Example: If you wish to buy ETH for a low price of the day. From the beginning of the day, you can start to analyze the market price. The value of one ETH swings between 2,300 USD to 2,500 USD.
Based on your analysis, you may conclude that the value of the ETH will drop below 2,300 at the end of the day. Then finally you’ll purchase one ETH <2,300 USD. To calculate market fluctuations, there are certain tools that you can rely on and make your decisions which will be discussed in the next section.
Strategy 3: Dollar-Cost Averaging
It is a periodic investment plan. Crypto investors allocate a fixed dollar amount to buy selected cryptocurrencies at regular intervals, irrespective of their fluctuating prices. This specifically focuses on consistent gains. The major advantage of implementing this strategy is that it doesn’t require any frequent monitoring of market oscillations.
Example: You’ve allocated a standard amount of 25 USD for a week and buying BTC no matter what the price is. By investing consistently, you’ll accumulate more shares when prices dip and fewer when prices rise, leading to an averaged-out cost per share over time.
Strategy 4: Buy Low, Sell High
Out of all, this is the basic strategy that everyone will use to take potential gains. It’s so simple that, examining the market prices and making a purchase when the price of a crypto is low and selling when the price of that crypto is high.
Example: At the end of July 2024, the value of the BTC took a massive rise of 68,000 USD. But within a week, the price decreased suddenly near 10,000 USD and finally touched 57,000 USD. In this scenario, the right time to make a purchase may be the first week of August and to sell will be at the end of July.
Strategy 5: Arbitrage
This technique is when the crypto asset holders buy crypto in one exchange and sell it on another exchange by estimating the prices of those respective exchanges. It’s the smartest approach that seasoned traders perform. Utilizing a cryptocurrency exchange app will ease your work of implementing this strategy.
Example: The value of the BNB is 400 USD in one exchange and 450 USD in another exchange. Investors use arbitrage to buy BNB at the former and sell at the latter.
Strategy 6: Staking
Staking is the process of holding your crypto assets for a certain period to obtain rewards. That period can be fixed(long term) or flexible(short term) where traders can opt according to their precedences. As this process supports the operation of blockchain networks, we receive a certain percentage of cryptocurrencies as a reward for it.
Example:
Once you opt for staking, the exchange provides the maximum quota that you can commit to stake. Then after locking the amount and the period to stake, the platform calculates the interest value in a percentage.
The interest rate varies by the coin. Then after taking some time, when the staking period is completed, the reward amount will be transferred to your wallet. You may receive the same crypto which you staked or any other crypto as a reward.
Strategy 7: Banking on Crypto Giants
In the crypto trading landscape, it is always best to invest in leading cryptocurrencies like Bitcoin(BTC), Ethereum(ETH), Tether(USDT), Solana(SOL), and BNB. Because they have a colossal market capital and a great market volume in the market.
As per the data, BTC has 56%, ETH has 14%, and Tether(USDT) of the market share. This procedure is suitable for all but it’s most preferred for beginners.
Apart from all the above mentioned, the strategies do change according to the market scenarios. So, you’ll need some extra advice to apply these while investing in crypto.
Bonus tips to consider when putting these strategies into practice
- The crypto markets work in a robust and updated technology Blockchain. You have to take some time to comprehend this tech.
- Always ensure you don’t invest more than you can comfortably risk losing.
- Use some safe storage like hardware wallets, or paper wallets in case of hacking.
- Use some common sense instead of falling for other’s random predictions about the markets.
- Never forget to notice the cryptocurrency exchange software’s regulations and guidelines and those taxations before making transactions.
You can use some tools like the Relative Strength Index(RSI), Bollinger Bands, and Fibonacci Retracement to research market trends and make wise decisions.
All these strategies and tips will guide you in many ways but we should not forget that this Crypto market is known for its volatility.
Sometimes these techniques might not work and you may tend to lose your assets. Even though these strategies are used by many experienced traders, we’ve to alter them as per the market situations and our financial goals as well.
Besides all of these, you can create your strategy to attain a healthy trading ecosystem. Doing good research and adopting a decent and valuable crypto exchange script will eradicate all the market risks to a large extent. Leverage these insights and create an impact on the crypto universe.
