One of the most important and widespread applications of Bitcoin is as an investment. If you’re purchasing Bitcoin, chances are you’re doing so because you want to make a profit. Based on its volatility and other factors, investors need to gauge the benefits. That is why before you get started with investing, you need to find out all the major strategies and tips.
Different Bitcoin Investment Types
Since Bitcoin has constantly increased in value and popularity over the last decade, there have been different types of investments.
Buy Bitcoin on Its Own
For starters, you can invest by purchasing Bitcoin on its own. You can buy a fraction of a BTC or a whole coin, depending on your budget, from a platform like Godex or Coinbase. Some platforms, such as Coinbase, require your personal information and support fiat currency while others, such as Godex, give you anonymity but provide you only crypto-to-crypto.
Directly Purchase Bitcoin
You can also profitably invest in Bitcoin by buying it directly from a seller. It’s best to purchase it from someone you know and trade with them or join a trusted community and trade with members there. It’s direct, private, and rewarding.
Invest in Blockchain ETFs
Here, the ETF is investing in a company that is focused on the development of blockchain or is related to Bitcoin. It allows you to invest in a basket of stocks similar to a mutual fund and also provides real-time trading where you can keep track of every price change.
Bitcoin Investment Strategies
You can implement the following strategies after buying BTC:
Buy and Hodl
Hodl is a deliberate orthographical error used among crypto investors to refer to buying the coin and holding onto it without selling. You should do this when you believe in its long-term profit.
Smart holding involves buying BTC in small installments to allow for building long positions. Here, investors ensure their investment. You can buy it daily, weekly, monthly, and bi-weekly, etc.
Keep in mind that investing is different from trading. Trading BTC involves buying it at a low price and selling at a high price. You’ll be making a profit from the price fluctuations. Buy Bitcoin when you think it has dropped to a very low price, then sell it when it appreciates again.
Helpful Tips for Bitcoin Investors
Apart from these strategies, here are some useful tips that you should keep in mind while investing/trading BTC.
- When you open a trade with Bitcoin, have a specific profit target. You have to know when to let go of a position as BTC is volatile so you may overexpose and lose profit. Set an exit price for profit so you don’t record losses.
- It’s also important to diversify your portfolio. Once you’ve got the hang of Bitcoin, give altcoins a chance too. Top ones such as Ethereum, Litecoin, and Monero are known for following the BTC price movement. You can check using this tool: 1 XMR to BTC and trade the currencies for each other.
- Finally, you have to accept that Bitcoin is volatile, so investing in it will involve high risk.
Invest in Bitcoin
You can decide to invest in Bitcoin using long or short positions depending on your price prediction and experience. As long as you follow the strategies and tips in this guide, you can successfully invest in BTC and move to altcoins.