As soon as some serious and significant incidents occur in the world of cryptocurrencies, an influx of newcomers begins. Well, this is logical.
For example, throughout most of 2020, the global economy was clearly not experiencing its best times, which was highlighted by the constant stream of depressing news in the media. Illnesses, unemployment, border closures, lockdowns and periods of strict isolation. The world froze in anticipation of good news.
And … there is still good news! Bitcoin, the most famous cryptocurrency in the world, has shown signs of almost continuous growth for all the year since March 2020. In just 9 or 10 months, the price of the main cryptocurrency in the world has grown by $23,000 per coin! At the moment, the asset has practically broken the $28,000 mark for 1BTC and, apparently, is not going to stop there.
Now, not only the media about cryptocurrencies are trumpeting about the achievement of heights by Bitcoin, but all financial media are happy to pick up this idea.
What is the secret of cryptocurrencies’ popularity?
Again, back to the question of the crisis caused by COVID-19:
2020 was a difficult year for the economy, but at the same time gave a powerful impetus to the digitalization of all kinds of services. Including the area of payments.
While the holders of USD, EUR and other well-known fiat currencies suffered from the rise in prices for ordinary everyday things all over the world. BTC holders had their way to drive value from cryptocurrency appreciation.
How can you earn with cryptocurrencies “doing practically nothing”?
This is literally how it works, the main thing that the owner of BTC needs to do is not to rush, but to sell his asset at the right time at the most favorable price.
Generally, there are two main ways of working with cryptocurrencies:
— buy crypto and wait for the price to rise to the point when the profit will be significant and then sell the asset
— buy an asset, actively monitor even the slightest price changes for the buy/sell operations between platform users to make a profit.
The first method is called Buy&HODL (buy and hold) strategies. The second is active trading.
Which trading method to choose — that depends only on you. Cryptocurrency trading is not about mindless decisions. The secret to successful trading is a carefully studied chart, market situation, understanding of how different types of trading orders work and for which situation which order is suitable. A balanced choice regarding filling the cryptocurrency portfolio, and not mindlessly buying up all the existing cryptocurrencies.
To understand the principle of crypto trading, let’s imagine a certain e situation:
Let’s say three friends bought 0.5 BTC each when the price of 1 Bitcoin was 5,000 USD. Therefore, the purchase of 0.5 BTC cost each of them 2500 USD. The initial conditions are completely equal.
But, after the investment, each of the friends took different actions:
—The first friend wanted to make a profit as quickly as possible. After holding the coin for a while, he waited for the rate to rise to $6500 for 1 BTC, and sold all his bitcoins. Thus, he received a net profit of 750 USD in a fairly short time.
—The second friend decided to take the higher bar and to expect a further increase in the rate to earn more than his friend. He waited for a mark of $14,000 for 1BTC. Then he saw the price rate went down. He was afraid that he would lose all his profits, and sold his Bitcoin coins at a cost of 13,500 USD for 1 BTC. Thus, he received $4250 in net profit for about half a year. But, the rate went up again, And the guy had remorse about his hasty decision.
—The third friend decided to go long term and has not sold his BTC coins until now. Consequently, having made a sell operation now, he could have received almost 11,000 USD profit in less than a year. But, he decided to go to the very end.
Eventually everyone earned in this situation but on a different scale. Hence, you need to make only informed decisions when trading crypto.
Own Bitcoin, hold it till the price growth and sell bitcoin for cash to get the profit. That’s the main point of trading.
Let’s summarize. What do you need to start working with cryptocurrencies?
Everything is much simpler than it might seem at the first glance.
— The first thing you need is to decide which cryptocurrency exchange you will entrust your money.
The criteria that are worth paying attention to are the availability of fiat money, a high level of protection of personal data and user funds, high liquidity for closing both large and small market orders.
— The next thing is to create an account on the selected exchange and go through verification. Different exchanges have different requirements, but according to 5AMLD, all users of cryptocurrency platforms must be verified.
–— Explore possible payment methods and top up your balance.
There are often several ways:
— Make a fiat deposit, and then buy cryptocurrency for it
—Buy cryptocurrency directly from the card (but not all services support this function)
— Make a cryptocurrency deposit if you already have cryptocurrencies somewhere else
Then choose your trading strategy and to start doing the first steps!
The hardest thing is to start, all the others including the skills will come with learning and practice.