Cryptocurrencies have become an investment category. Although some countries are yet to fully adopt crypto, some others like El Salvador are already using crypto as a legal tender.
On your part, you are looking for ways to make a profit from cryptocurrency trading. It is quite easy once you get the hang of it. That is what you will learn in this article and many others on CoinJournal.
How to profit from the crypto market
Here are the five (5) major ways to make profits from trading cryptocurrencies:
1. Use the buy and HODL strategy
The buying and holding of cryptocurrencies remain one of the best ways to make profits from crypto.
It is based on the concept of Holding on to Dear Life (HODL). The idea is to hold your crypto coins, irrespective of the trends and volatilities in the crypto market.
HODLing is a viable strategy for long-term investments. With this, you can hold a crypto coin for more years before selling. Think of it as buying Bitcoin for $500 or less a decade ago and selling for $60k earlier this year when the value of BTC rallied to the $60k region.
We must mention that HODLing is not for the faint of heart. Some of the best ways to maximise your HODLing strategy are:
- Get a dedicated wallet, preferably a hardware/offline wallet to store the crypto coins you want to hold for the long- term.
- Only invest the amount of money you can comfortably forgo or lose.
2. Put your crypto to work and earn dividends
Some crypto assets pay dividends to investors. This is a passive income opportunity that is harnessed by many cryptocurrency investors looking for ways to make more money from crypto trading.
The dividends paid here differ by the crypto coins you are holding. While some can pay decent dividends, others only pay lower.
You have to research dividend-paying cryptocurrencies to be sure of the ones that pay dividends. Also, evaluate the worth of the dividends to see if they fit into your acceptability.
One other thing you must do is to confirm the duration of the dividends. Some cryptos can pay dividends quarterly, while others pay annually.
Also, note that the dividends are payable in crypto tokens. So, don’t expect to be paid in cash.
3. Earn cryptocurrency directly
You may not want to take the route of trading your crypto to make more money. There are a couple of other options worth considering. Earning cryptocurrency is one of such popular options.
These are some of the ways to earn cryptocurrency directly:
Create cryptocurrency content
You can write on cryptocurrency topics. These topics can be given to you by Bounty Hunters who are mandated to come up with content that qualifies them for airdrops.
You can also find opportunities to create cryptocurrency content on certain platforms, including Steemit and Y’alls. These platforms pay the content creators using the native coin or token of the platforms.
Work with a cryptocurrency company
The boom in the cryptocurrency market is not limited to spiking the prices of different cryptocurrency asset classes. It has also been extended into the corporate world, where companies now focus on crypto-related services.
Consider working with some of these cryptocurrency companies and get paid in crypto. Some of the job opportunities include:
- Blockchain developer
- Technical analyst
- Cryptocurrency blogger
- Cryptocurrency marketer
- Human Resource Manager (HRM)
- Blockchain cybersecurity expert
4. Take the risk and trade
Why sit on the fence when you can trade crypto and make profits from the same? Understandably, you are scared of losing your money considering how volatile the crypto market can be.
These are some of the profitable ways to get right in the action of trading cryptocurrencies to make profits:
This strategy is used by most cryptocurrency traders who want to make “quick profits.” The trading process involves opening a position or buying a crypto coin and selling it the same day.
One downside of day trading is that it is quite hard to predict the trend on a daily timeframe. You will also have to spend most of the time watching the market.
Invest your funds with a hedge fund
Not ready to take risks or don’t know how to trade? Consider investing your funds with a cryptocurrency hedge fund management company.
This way, you will earn passive income at a specified time.
Play the arbitrage game
The cryptocurrency market is yet to be fully regulated. One of the disadvantages of this is that some cryptocurrency exchanges set or fix the prices for the assets listed on the platforms.
As a trader looking to make profits, you can use arbitrage trading. All you have to do is to find out the differences in the prices of cryptocurrencies across different exchanges. Let’s assume Cardano (ADA) sells for $2 on Binance today and sells for $2.2 on HotBit. That is a 10% price difference. You can buy 500 units of ADA from Binance for $1,000 and sell all for $1,100 on HotBit.
One of the major drawbacks to arbitrage trading is that the price of the asset can fluctuate before you sell, thereby causing you to lose money.
5. Stake your crypto and earn interests
Have you ever received interest from your bank for leaving your money with the bank? The same scenario plays out in the crypto market only that this time, you will earn crypto instead of cash.
The concept is called Staking. It involves staking your crypto coins to help the network to be more secure. It also helps the network to easily verify transactions.
In return, you will be paid a specific interest for locking up your crypto coin.
There are several ways to put your crypto coins to work for you and earn more money in return. Note that each of those options comes with risks and promising returns.
Therefore, find out the option that aligns with your risk management strategy and stick to it.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.