It is undeniably an exciting time to be living. It’s also a thrilling time to invest in cryptocurrencies. Just over three years ago, I was lucky enough to begin investing in cryptocurrency.
There have been a few stumbling blocks along the road. You know, like not selling Dogecoin before Elon Musk’s Saturday Night Live performance when it rocketed beyond $.70. Despite this, I’ve made some decent money. Most significantly, knowing more about digital currency has been a lot of fun for me.
Some of you are brand new to the cryptocurrency world. If that’s the case, welcome aboard!
In this piece, I’ll outline the four ways I’m now profiting from cryptocurrency. The fourth method is the most recent, and it’s the one I’m most enthusiastic about. Why? It’s because it’s the most undemanding! I’ll get to that in a minute.
Continue reading if you want to understand more about bitcoin investment and the four methods I’m learning and earning. Bitcoin reached a high of roughly $19,000 at the time, before plummeting to under $3,000. That’s when I made the decision to no longer be a skeptic or a critic. I made the decision to educate myself and become a cryptography student. That’s when I purchased my first Bitcoin and joined the HODL Army.
As they say, the rest is history. Here’s how that first Bitcoin evolved into the various ways I’ve made money with cryptocurrency.
1. Invest and hold
The first is the classic method of making money through various investments – buying and holding. If I were to buy Bitcoin or any other cryptocurrency, my belief was and continues to be, that I was doing so because I believe in the technology. This, I feel, has the potential to be a significant deal. And if that’s the case, I’m in for the long haul as well. Okay, so I wasn’t there right away. I had to put it to the test first. I achieved this by signing up for a Coinbase account.
You can probably anticipate what happened next: I went “full send” and started buying crypto-like crazy. In fact, it was the polar opposite. It wasn’t until November of this year, almost two years later, that I made my second Bitcoin buy. That was an $8,000 investment. Then, towards the end of November, another $10,000 was spent, followed by a $20,000 purchase in January 2021. With my BlockFi account, I also acquired Ethereum.
At first, I used some of my BlockFi interest payments to buy small, incremental Ethereum shares. Finally, in late last year, I made a significant purchase with $50,000 in Ethereum. Bitcoin and Ethereum are the two coins in which I have the most confidence.
The second way I’ve gained money with bitcoin is by investing in stable coins, sometimes known as cryptocurrency savings accounts. I started with BlockFi and still keep a big chunk of my bitcoin there to take advantage of the high rewards they offer. However, I continued hearing about cryptocurrency savings accounts and figured it was time to give it a shot.
BlockFi pays 5-9 percent interest depending on the cryptocurrency you hold, but my bank’s savings account paid me cents on the dollar. With my bank’s savings account, which pays me a pitiful 0.01 percent, it will take me 37 years to get even close to what I’m making now in my crypto savings accounts.
Stable coins are currently paying over 10% and a little higher on Bitcoin and Ethereum at Celsius. The main difference between Celsius and BlockFi is that they pay you weekly rather than monthly. At the time of writing, my Celsius balance is just over $220,000. Now have a look at my most recent interest payment. Keep in mind that this is a weekly payment!
For the entire month, I made $2.88 in my $330,000 bank savings account.
That being said, a savings account at a bank is insured by the Federal Deposit Insurance Corporation (FDIC).
There is no guarantee or FDIC insurance with an exchange like Celsius or BlockFi, as there is with your bank.
You could put $25,000 in there and have it gone the next day.
If you’re new to bitcoin, this is one method I wouldn’t recommend and one with which I shouldn’t even be tinkering.
But it’s alluring!
I’m not referring to day trading here.
I have no desire to sit in front of my computer and monitor charts, candlesticks, or whatever else day traders do. I mean, I don’t even know the vocabulary, so there’s no way I’m going to be able to trade on a business day. I’ve done this previously, and while I’ve made some money, I’ve also lost a lot of money.
In both cases, everything happened in a blink of an eye. This is not something I would recommend if you are unable to sit in front of a computer or have access to your phone.
This isn’t exactly how I went about it. Here’s what I’m talking about…
When you start looking into cryptocurrencies, you’ll notice how volatile they can be.
“Why wouldn’t I buy at the low and sell at the high?” I thought to myself as I watched Bitcoin’s price swings.
Cryptocurrency Volatility Trading is a type of trading that involves the use of. When you look at any type of chart, stocks, ETFs, or crypto, and you see this pattern, it’s really easy to gain this confidence. Surprisingly, I did not begin with Bitcoin. In fact, I began trading Dogecoin.
I placed $20,000 into my Robinhood account to buy Dogecoin at 14 cents per coin. Fast forward a few minutes; it wasn’t that long. The value of a Dogecoin has risen to 75 cents. On paper, I had a profit, and on paper, I had a $75,000 profit on a $20,000 investment in around 90 days, if my memory serves me well.
If I had sold at the time, I would have had to pay short-term capital gains. The bitcoin tax rules were unfamiliar to me. I’m almost embarrassed to mention it out loud, but I’m now quite conversant with the tax rules. As of present, neither the SEC nor the IRS, nor any other governmental authority, recognizes cryptocurrencies as a security. As a result, the wash sale regulation isn’t applicable!
The wash sale rule states that if you sell anything and seek to recover a loss, you must wait at least 30 days before returning to that investment. If you do, the capital loss is effectively “gone.” However, this is not the case with cryptocurrency, therefore you can sell and buy on the same day. When the price of Bitcoin and Ethereum declined, I liquidated some of those positions and bought Bitcoin and Ethereum. I used my RobinHood account, BlockFi, and Coinbase to take advantage of this.
However, I want to emphasize that this is not an approach I would recommend to everybody. It’s all dependent on a hunch unless you’re an active trader who wants to monitor it day in and day out. That’s exactly what I was up to.
I understand that in the long run, that is a formula for disaster. So, certainly, I’ve had a few lovely victories.
But I’m going to get burned someday.
3. Cryptocurrency Bots
The following is something I would never have predicted I would say in a million years: I use bots to trade cryptocurrency.
That is until I received a text from a friend sharing with me a crypto bot technique that he had been testing after being introduced to it by someone else. If you know my friend, you’ll realize that this is entirely out of his element.
So I realized I had to investigate further because he was eager to test things out while also making a profit. I signed up for the training and after an hour of consuming all of the information, I was more than eager to participate.
I wasn’t completely sold, but I was intrigued enough to start developing my own crypto bots.
I’m not a programmer, and I’m certainly not a day trader, so the only way I could accomplish this was if there was a software program that made it simple. There are thank heavens, but more on that in a moment. Let me first clarify what this is all about.
Cryptocurrency Grid Trading
Grid trading is a trading strategy that involves placing a series of buy and sell orders at predetermined intervals around a predetermined price. Let’s say Bitcoin is currently trading at $55,000, and you can see how the price fluctuates between $55,000, 57, and 53.
You’re placing numerous distinct limit orders when you set up this bot on this grid trading platform.
When the price rises, you buy a little percentage, depending on how much you have invested; for example, if you invested $25 to $50, you would sell as the price rose and buy as it fell. If there is a profit when it rises again, you would sell and lock in that profit.