Bitcoin, Ethereum, Solana, Polkadot, Avalanche, DogeCoin, what do all these cryptocurrencies have in common? They were once worth far less than they are today.
Most of these could’ve been had for pennies on the dollar a few months, or a few years ago. And they’ve experienced unprecedented growth in recent months, with three to six-figure returns.
Every investor should devote a portion of their portfolio to crypto, to gain exposure to the rapid and uncapped growth it offers. And there are many investing strategies to use for your crypto investments, depending on your risk tolerance and how active you’d like to be in the process.
So what are the best ways to be investing in crypto? Read on below for five crypto investing tips and strategies to maximize yield potential.
1. HODL
HODL is the slang term for “hold.” All it means is to hold your crypto over the long haul. The word originated from a misspelling of the word “hold” and has been used in the crypto community ever since.
It’s especially important in crypto because the high level of volatility causes many crypto newbies to panic sell and miss out on the coming rebound. Those who have held onto volatile cryptocurrencies like bitcoin or DogeCoin have made a lot of money.
Wondering what the difference is between these two popular coins? Check out this article for more information.
2. Staking
Some people are content to hold their crypto and ignore it. Others want to earn some yield on their holdings. That’s where staking comes in.
Simply buying bitcoin and other crypto assets, and holding them in the right place, allows you to stake it, which means participating in network security. Those who stake earn some of the transaction fees that come from the use of the blockchain.
3. Advanced Investing Strategies; Yield Farming
Yield farming is a strategy used heavily in the Defi space (decentralized finance). This strategy optimizes your ROI and has the potential to earn you a lot more yield on the crypto assets you choose to hold.
Yield farming can take a lot of different forms. But most often, you’ll provide liquidity to crypto exchange pools. When you do, you’ll receive new tokens that represent your staked assets in the pool. You’ll earn interest for your service, but you can also go and use those new tokens to earn further yield.
4. Crypto Loans
Another more advanced strategy, you can use crypto loans to gain more exposure to price movements and interest-yielding activities.
By offering up some of your cryptos as collateral, you can borrow additional crypto against your collateral. You can then use that borrowed crypto to go and invest it in other ways, such as staking, yield farming, or other yield-bearing activities.
5. Get NFTs
NFTs technically aren’t cryptocurrencies, but they are tokens on the blockchain, just like a cryptocurrency. Rather than a currency, they are digital collectibles. And they’ve experienced massive growth in 2021, becoming a multi-billion dollar industry in their own right.
Investing in NFTs can be lucrative, as you can often buy into new projects for around 0.2 ETH. It’s common for many NFT projects to increase in value to 1 ETH or more, enabling you to take some cool profits in short periods of time.
Determine Your Risk Tolerance
The crypto market is still brand new, which makes it lucrative, exciting, and insanely risky all at the same time. However, there are some investing strategies that are considered very safe, and others that definitely have more risk.
Finding the right balance is up to you and your own research.
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