How To Make Money From Cryptocurrencies – Part 2 (Investing In Established Cryptos)
In the first part of this topic, we talked about how to make money from cyptocurrency by investing in ICOs. If you are yet to read that post, go here to read now.
If you have gone through the part one, then I am sure, you already have an idea about what crypto currencies are and how they operate.
In a very brief sentence, Crypto currencies are actually digital/internet money. And unlike the normal currencies (Dollars, Naira, etc), they can be held by anybody, in any country and spent anywhere they are acceptable online.
The biggest idea about these cryptocurrencies is to make it money a lot easier to keep and use at any time… Just imagine having those useless papers (and coins) out of the way and you can start spending money like you chat on Facebook? That’s the exact idea we are buying into. And it made a lot of sense.
One major advantage of cryptocurrencies is that they have a kind of immunity to inflation. This is true since they are been held by people all over the world, so what is happening in a particular country will have little to no effect on it.
Just as an illustration: In November 2016, 1 Bitcoin (BTC) was flying around for $700+. That same time, $1 is being sold for N500+ (Naira). Today, 1 BTC = $8,200 and $1 = N360.
Just BTC price has moved independently of these 2 countries’ currencies, it has done the same with other countries’ currencies.
Just as BTC, Ethereum has been making wave too. From $10 in November, 2016, 1 ETH is currently sitting at $400 as at today.
So, how do we actually make money from these coins?
Unlike buying into ICOs which happens to be cryptocurrencies which are yet to be available to the public to trade with and exchange, here we will be going for cryptos that are already listed on CoinMarketCap and at least on one exchange platform.
This is less risker compared to the ICOs which may eventually be complete scam.
There are actually a few ways you can make money from these established coins and I will be going through a few of them in the next few lines
How To Make Money From Established Coins
1. Buy and Keep
The easiest way to make money from these established coins is to actually just buy them and keep with the hope that they will continue to grow over the months and years. This is not just the easiest way; it might also be the safest.
Just imagine if you had kept just 2 BTC with you between November 2016 and now (November 2017). Your $1,400 turned into $16,000 just like that, with absolutely ZERO effort from you. This sounds crazy and it really is. But the shit is REAL!!!
And what if it was Ethereum? 50 ETH was just $500 in November 2016. Today, same 50 ETH is equal to $20,000. Oh My God!!!
Right now, forecast is saying BTC will go up to at least $10,000 before the end of December 2017. This projection is looking likely because it has already been circulating around since early 2017 and the price movement has been making it look like something that might still happen.
So, it will just be a matter of how many of these coins you have in your portfolio has their prices go up and down.
Permit me to point out that these 2 are not the only coins, in fact, there are other coins out there that are making people good fortune and have a long term plan. Some of them includes; Litecoin, Dash, Lisk, NEO, Monero and a host of others. You can find their list on CoinMarketCap.
If you are looking for coins to invest in for a long term plan, you need to consider the demand and circulating supply as well as the number of years it has existed for. Also try to see the potential over the number of months of years you plan on staying in it. There are some other things to consider but I will leave them for the next method.
By the way, the 2 safest and reliable coins to invest in will be BTC and ETH. If you have enough to invest in these 2, just do it. BTC especially will continue to be on the rise for the next years to come.
2. Buy When Price is Low and Sell When Price is High
Yeah, just like in Forex. The target here is to buy a coin when the price is Low and then go ahead to resell when the price is higher.
This is involves a lot of technicalities and it is very complicated to know which coin will rise in the next few hours or day and which one will not.
First thing you need to understand is that just like USD is the main currency in the Forex market, BTC is the major currency in the crypto market. Every other currency is referred to as ALT coin.
In most exchange sites, you will have to always convert your coin from an ALT coin (Ethereum for example) to BTC before buying another ALT coin (let’s say Lisk). But some allow the exchange from a few major ALT coins to the smaller ones.
The major scope that people use is to buy into a coin after a major bearish (downward) movement in the price of a coin hoping that it will turn around for a bullish movement soon. And then cash out after the turn around. Sound simple right? I’ve gained and lost money this way.
Anyway, here are the major things to look out for when trying to by a coin… These apply to whether you are buying it to keep or to flip for quicker profit.
The Project: Now, every coin has a reason for their establishment. You need to find out what the coin is being used for because this is what will determine the interest of people in it.
The Demand: If this is a coin that people are really interested in, then it should have a good demand. You can use CoinMarketCap in verifying the demand of a coin. Unfortunately, you can only verify for the past 24 hours. But you can watch for a few days before making your final decision on a particular coin. The rule here is that the higher the demand for the coin, the higher the price will likely get.
The Total Circulating Supply: How many of these coins are currently circulating in the market? If there are too many of them available, then such coin will struggle. This is a typical case of RIPPLE. Over 38 Billion Supply. No wonder it is still struggling to hit $1 since 2012.
Exchange Platforms: If the coin is listed on major exchange sites, then it is surely going to be attracting some interests.
Acceptance as Payment Method on a Popular Website: If the coin becomes available as a means to make purchase somewhere online, then it might just increase its potential growth.
News: This is the best tool to use in trading these currencies on a short and even longer term. Positive news like listing on a major exchange platform, support from a government agency, partnership with a big organization, and so on will increase the demand and surely bring about a bullish price movement. Meanwhile, negative news like ban by the government, security issues and so on will cause a major dump by the holders of the coin thereby lead to a bearish price movement.
BONUS:- 3. Buy into Newly Launched Coins
If you find an ICO project with a good stuff but failed to buy into it during the ICO before of the fear of losing your money or maybe you just didn’t buy enough, you can buy once CoinMarketCap confirms it. CoinMarketCap only list coins that are available on at least one exchange platform or more.
There is a strategy I learned from a friend as regards new coin. It is like a kind of common pattern with the new coins. The price will normally soar high in the first 2 weeks and then it will fall like a lot and then start picking up back. So there are 2 best times to buy them. 1 is immediately after the listing on an exchange (if you are in for a quick profit, you need to dump quickly in the second week) and after the major fall in price (if it ever happens).
Where to Find Information About Cryptocurrencies
Now, there are many places where you can get information about these coins. These include blogs, Facebook groups and fanpages, YouTube channels, twitter and instagram. You can simply type “Crytocurrency” on these platforms to begin your search.
But I will give you a few places I go to:
1. CoinMarketCap: This is like the most important place to get information about cryptocurrencies. You wull be able to see the top coins, their prices, how much the current circulation supply is and also the volume of transactions in the past 24 hours. They even let you know the percentage gained or lost by the coin in the past 24 hours again.
I love to check the social page of the coin and even follow the coin’s official twitter handle. Like this:
I also followed CoinMarketCap on twitter for the latest updates.
2. CryptoCompare: This is my all-time favorite. What I love mostly about this place is the tiny little forum they have for every currency listed with them. If you click on this link, you will be taken to a list of currencies they are following. And if you click on any of the coin’s name you will be able to see something like this:
The main thing I use there is the forum. I just look at what others post. Most times, they post announcements/news too.
By the way, there is a lot you can get from Cryptocompare.
3. CryptoSomniac: There really isn’t anything special here except for the “Hot Stories Feed” column.
4. Cryptosomniac Facebook Group: Lovely Cryptos discussion group on facebook. I just joined myself and it is looking like a great place already
5. Income Scope Facebook Group: This is my personal free mentorship facebook group. You can Join here to get the latest coin(s) I am looking to invest in.
How To Buy Cryptocurrencies
Go to CoinMarketCap and search for the coin and click on its name. Now, click on market to find out the exchanges it is being listed on and then go ahead to the site and buy. Most of the time, you will need to deposit Bitcoin or Ethereum to be able to buy other ALTs. They will provide you with a Wallet to send the first deposit to.
You need to careful though because some people have complained bitterly about some of these exchange sites stealing their money and all that.
Personally, Poloniex and Bittrex are are the ones that pushed me into using 2FA because at first when I join, I kept getting email alerts that I logged into my accounts when I didn’t. But since I have been using the 2FA, I have not been having issues.
So, my advice is that you should use a strong password and integrate 2FA into your account.
Thanks for reading.
I hope this is detailed enough.
If you have any question(s), please use the comment box below
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P.S. There is one more part to go on this topic. If I get enough encouragement, I am going to pull the trigger on the post.
Disclaimer: I am not a financial adviser. I cannot be held responsible for any loss you incur as a result of any of the information on this post. So, I will advise you to invest wisely