Cryptocurrencies are already a real exchange-traded instrument for making a profit. Even the absence of real content does not prevent them from earning money for their owners. Observing the intraday price fluctuations of 15-20% even of the market leaders in terms of value and capitalization, a question arises. How to proceed: just buy coins and wait for the value to rise? Or start trading yourself and profit from both the growth and the fall in prices?
Important: All the information and trademarks mentioned in the article are only of a recommendation nature and are not advertising, trade, or investment advice. You make all the decisions yourself!
Let's start with the terms. So:
Everything is quite simple. Through an exchange office or a crypto exchange, the necessary amount of cryptocurrency is bought for "real" (fiat) money, and then when the price increases, some of them are sold and we get passive income. For medium- (from 6 months to a year) and long-term (more than a year) investments, you can use a strategy to increase the volume of coins by selling some of them at a low price, and buying during periods of decline. Which are regularly even in the TOP-10.
You can also use the stacking service when coins are transferred to external storage at a guaranteed (usually annual) percentage. The scheme works similarly to bank deposits, it is recommended to invest in major exchanges such as Binance or Kraken.
In addition to rising prices, you can invest in cryptocurrencies, where you can earn income from confirming transactions on the network. Look for PoS and LPoS coins. In them, the owner of the coins can organize his confirmation node (node) and receive a reward for signing transactions on the network. The scheme is simple: the larger the wallet balance, the more confirmations, and passive income.
Important: all organizations working with cryptocurrencies, both investment and trading, are not tax agents. Clients decide all issues with the legal regulation of digital money and tax authorities themselves.
If you want more than 4-6% percent per year from staking, you need to move on to trading. Here you can make money with any price movement, the main thing is to open a deal in the right direction. Large market makers and investors trade Bitcoin on the CME Chicago Exchange, where the volume of transactions is not available to most medium and small investors even with leverage. Crypto exchanges and Forex brokers remain.
Crypto exchanges were the first trading platforms where it was possible to conclude transactions for the purchase/sale of digital money. According to the number of assets presented, they remain the leaders, it is there that new coins appear, most of which are speculative, disappearing as quickly as they appear, or having a low cost and small sales volume. If you plan to trade small AltCoin exchanges, the only option is.
Important: reliable exchanges require full verification of the client, so anonymity, which was one of the goals of cryptocurrencies, is no longer there. But the guarantee of a refund is higher than on sites where it is enough just to open a wallet.
Forex brokers can be more attractive options for trading cryptocurrencies, especially if you do not have large funds or you want to trade currency pairs at the same time:
Important: any type of trading is a risky activity without a guarantee of profit. Brokers and exchanges do not bear any responsibility for the losses of customers.
The choice of a broker or exchange with the subsequent opening of an account will not be considered in detail, this is a topic for a separate article. Here we list only the personal characteristics and knowledge that you need to get before opening your first trade:
Summarize. Both options make it possible to make a profit; each one decides for him which one to choose. Buying based on passive income from the growth in the price of the cryptocurrency has one significant drawback - you need to choose the right asset with a good growth prospect. It is optimal to buy the market leaders: Bitcoin or Ethereum futures for which were announced to be listed on stock exchanges in early 2022. As the current year has shown, there are drops in prices, but then return to their original levels. The main thing is to "catch" the moment of the rollback and buy at a bargain price.
When there is no big budget for buying leaders, this is a situation for most medium and small investors who have to look for promising currencies from the" second list" of AltCoin. The risk of loss is higher, as is the intraday volatility. At a low cost of the moment, you can get a good profit only by trading. You can trade yourself or transfer funds to an external trader for management. But, it is better (if you have the ability) to work on the exchange yourself.
You can also follow one of the basic rules of hedge funds to divide investments into "passive" and "active". The first should be at least 50-60% of the total, and then even if there are losses in trading, some or even all of them can be covered by proper investment.
There is an article in russian, you can read.