It wasn’t that long ago that Dogecoin was all the rage. People were flocking to buy and trade the coin, seeing its value surge before it crashed.
And then, more recently, the news about FTX losing billions from its ledgers made the news.
And the news of Bitcoin reaching $60,000 wasn’t all that long ago, either.
All the positive information about the value of cryptocurrency has helped fuel its popularity as an investment vehicle for people.
So while FTX is an outlier, there may be some need to regulate crypto, and some governments, like the US, are even considering their own Central Bank coin.
Still, having Crypto like Cardano to Bitcoin, Ethereum, and more, is an attractive investment opportunity that is more relevant than ever.
If you’re considering investing in Crypto until governments begin to regulate them, there is a slight risk involved. However, the volatility of Crypto is also part of its attraction.
In centralized finance, the government regulates and controls the amount and value of a currency.
In contrast, in decentralized finance, or DeFi, the currency’s value is based on the supply of coins and the demand they generate. In other words, the market price is determined by the availability and popularity of any given coin.
Like all investment strategies, diversifying a portfolio to limit risk exposure is the best idea. A mix of aggressive and safer, longer-term investments are the best way to determine any risks and get better returns than traditional investments.
Day Trading: Day trading Crypto is a short-term strategy that is made possible by how volatile the currency is and how much liquidity is associated with DeFi in general.
To succeed in cryptocurrency day trading requires a deep understanding and knowledge of blockchain tech and market trends.
An intelligent method for day trading includes frequent trades of more than one cryptocurrency. To succeed, day traders need trading simulators and stock screening tools to determine the short-term potential of each transaction and crypto.
Yield Farming: Another investment opportunity is through DeFi yield farming. Yield farming crypto is an investment vehicle where the owner of a token or coin loans out their ownership to another party in return for a percentage of that loan.
For example, if you’re going to try your hand with yield farming crypto, you would need to own some coins and be willing to loan them to another investor with the idea that you’d be reimbursed at a percentage of the value of the coin at the time of the loan.
If you had Bitcoin at 20,000 and loaned it out at 5%, you’d get $1000 back with your initial $20,000, for a total of $21,000.
Often, people will look for a loan on a coin to gain an advantage on the market, similar to a stockholder trying to use their ownership to influence a board of directors toward a particular action.
Staking An Interest: A passive way to earn money through crypto is the strategy of staking an interest. When crypto is unused, by staking it, the owner locks the crypto in a blockchain, adding validity to it and earning interest for locking it.
When you stake your coin, you are allowing a pool to utilize it, and you get a small APY of about 4% for your efforts. The downside is that while locked, you can’t liquidate the coin, but the plus side is that if the coin devalues during that time, you’re still paid the amount and rate that you locked your coin.
Long-Term Investing: Similar to traditional stock holdings, a long-term investment strategy is to buy and hold onto crypto for months and years with the hope that it will appreciate more over that period than it could potentially lose.
As part of a diversified strategy, for every high-reward and riskier investment you have, you want to balance that against longer-term, safer coins like Bitcoin and Ethereum.
Cryptocurrency has a boom-and-bust cycle that has made people rich and immediately risks it all. But the popularity of crypto is that it offers much more return than the typical stock market, primarily by its liquid nature.
Since the industry is unregulated, it is easier to buy and sell coins than traditional stocks and coupled with the ease of transactions with higher returns. As a result, it becomes easy to understand the popularity of cryptocurrency as an investment vehicle.
