Cryptocurrencies shot to limelight in 2017 when bitcoin started soaring from around $1000 at the start of the year all the way to incredible highs above $19,000 by the end of the year. 2018 is shaping up to be particularly interesting for stakeholders in the cryptocurrency trading markets as the industry starts facing serious headwinds on different fronts. The voice of skepticism and criticism are louder than ever before, governments are taking decisive steps to regulate cryptocurrencies, and some naysayers can’t seem to stop predicting doom on the horizon.
However, the current weakness plaguing cryptocurrencies might turn out to be a blessing in disguise for bold traders who are not scared of making contrarian moves. The legendary Warren Buffet once said that the easiest way to make money in the market “is to make be fearful when others are greedy and be greedy when others are fearful.” Right now, many people in the cryptocurrency industry are “fearful” and there’s probably no better time to be “greedy.” This piece provides insight into four different ways to be involved in cryptocurrencies if you are scared of falling prices.
Traditional Buy and Hodl
The easiest way to play cryptocurrencies is the traditional buy and hold strategy – you buy a cryptocurrency, wait for the price to increase, and then, sell it for a tidy profit. There are more than 1,500 altcoins in the market; hence, you’ll need to commit considerable time and resources to conduct due diligence on any cryptocurrency you want to buy. You’ll also need to be resolute when screening cryptocurrencies so that you can effectively sift the hype from altcoins that have substance.
A smart way to improve your odds of success as a buy and hold investor is to use dollar-cost-averaging strategies. Dollar cost averaging helps you spread out the purchase of your positions over a period in which you buy a fixed amount of cryptocurrencies weekly or monthly irrespective of the spot price. At the end of the year, you’ll discover that you’ve bought your overall position at the average trading price instead of buying up a bulk position all at once, only for prices to improve after the following week.
Become a Crypto Day Trader
If you are more adventurous and you’d love to increase the ROI of your exposure to cryptocurrencies, active trading is the way to go. A cryptocurrency trader is fundamentally different from a cryptocurrency investor in that the trader buys different cryptocurrencies and sells them at a higher price in a relatively short time (usually within hours or the same day at most). To be a successful cryptocurrency trader, you’ll need a deep understanding of the markets – you need to know how different news headlines are likely to move the markets.
Cryptocurrency traders will also need to learn how to master their emotions so that they can follow a trading plan even when they are tempted to make emotional decisions. More importantly, a trader will need to be ready to spend more time monitoring the markets, placing, and executing trades.
Invest in Crypto-related Ventures
You may want to look for opportunities to invest in crypto-related ventures if you are not bold enough to make direct investments in cryptocurrencies or you lack the expertise or time to trade the cryptocurrency markets. Investing in crypto-ventures is not the same as buying into an ICO or token sales – an ICO doesn’t make you a shareholder. You’ll need to look for other opportunities to provide seed funding, your expertise, experience, or other stuff to a company that wants to do something in the cryptocurrency space in exchange for a stake (stock) in the company. If the company succeeds in its venture, you’ll be entitled to some of those gains as a shareholder.
Become a Cryptocurrency Miner
If you are a business-minded tech enthusiast with a passion for hands-on involvement, cryptocurrency mining is another interesting way to get exposure to cryptocurrencies. However, you’ll need to do your maths right and know if your mining operations will be profitable. You’ll need to factor in the cost of expensive mining equipment, cost of electricity, and your time. Many people believe that mining cryptocurrencies might only make financial sense when done in large quantities.
You’ll also find opportunities to join a cloud mining platform where people pool resources to set up a mining operation. You should conduct due diligence on any mining pool or cloud money group you want to join in order to be sure that you are not handing over your money to scammers.
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