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Best Strategies to Invest in Cryptocurrencies?

Cryptocurrency


Everyone is in search of the next big asset that can give good profit and make them rich. Crypto is one such buzzword we keep listening to. People feel investing in crypto will make them rich overnight but that is not the case. Crypto is a great way to balance our investment portfolio. Bitcoin and other cryptocurrencies are speculative assets that carry unique risks that investors must account for. Currently, the crypto markets are down but they are the only assets in the last few years that have been great performers and given us high returns.

Let’s look into the strategies we can use to invest & manage your cryptocurrencies:

1. HODL

After a post in a crypto forum in 2013 featured a typo in the word “hold” when discussing a “buy and hold” long-term investment strategy, “hodl” became slang in the crypto world. It’s about holding no matter what is happening in the current market and enjoying the long-term gains. It’s one of the strategies to build your portfolio but not the smartest one.

2. Afford to Loose

You should invest an amount in the crypto market that you can afford to lose. Determining risk tolerance in the crypto market comes down to how much you earn and your current risk profile. A beginner should invest 5 to 10% of their income whereas an expert can invest 20–25%.

3. Borrowing and Lending

Just like banks you need to give collateral to lend and borrow assets. You don’t need a credit score to avail yourself of the loans. Instead of the bank here we have a smart contract that acts as an intermediary which also contains liquidity pools. Lenders who supply tokens in a liquidity pool usually hope to gain a profit via interest. Loans are usually “over-collateralized”, which means borrowers provide a guarantee in the form of crypto worth more than the actual loan.

4. Staking and Yield Farming

Instead of keeping your crypto idle, use it to earn more crypto. Stalking is one such strategy where you can put crypto to work where in they help to validate transactions and other tasks too. Most DeFi projects offer staking rewards in the form of governance tokens which can either be kept as voting power or traded. Yield farming is lending + borrowing + staking to maximize profits through interest earned and staking rewards.

5. DeFi Index Funds

Similar to mutual or index funds, DeFi funds are the basket of crypto tokens where in you can pick a fund based on your research and just start an automatic investment plan where you can invest small sums of money every month into crypto. Eg: the metaVerse Index, lets investors bet on the future of NFTs as it contains the biggest NFT protocols in DeFi.

Remember before investing do your research and don't believe any telegram channels or random groups where they give free crypto advice, They are mostly scams and you make loose money instead of making money.

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