How to Invest In Bitcoin

Everyone wants to earn money, and the most lucrative way to do that is with Bitcoin and other cryptocurrencies. Though some claim that they’ve made millions by trading, many of the strategies and options can cause you to lose your money. 

It’s important to focus on the results that others have seen, but this review went above and beyond. Instead of just reading testimonials, we spent our own money to test out these various strategies. That way, you know what’s going to work and how to do it correctly.

What Is Bitcoin?

Bitcoin is the oldest crypto in the world. No one knows who actually created it, but it was invented in 2008. Most people refer to the ‘creator’ as Satoshi Nakamoto, but this is a collective name for a group of people.

There are many “Bitcoins” out there, and each one is a computer file. This gets stored inside a digital wallet app on your computer or smart device. It’s possible to send a part of or whole Bitcoin to the digital wallet or other people.

The good news is that every transaction is recorded in the blockchain. This is a public list or record showing each of the transactions. Ultimately, people claim that Bitcoin is safer than real money because it can be used anonymously, and it isn’t regulated by banks or the government.

How to Buy Bitcoin and Where

Unless you’ve got many resources, buying crypto, and especially Bitcoin, directly is the best way to get value from the purchase. While there are many places to do this, Coinbase is often the best option.

There are other top crypto exchanges, including Kraken and Bittrex. Both of those allow you to directly buy/sell this popular cryptocurrency.

• Coinbase
• Kraken 
• Bittrex 

We must say right now that the information listed here isn’t financial advice. If you want to hire a financial advisor, they can help you figure out how to buy Bitcoin and where to go to do it. 

When you use a crypto exchange to sell and buy Bitcoin, those platforms explain how to use them efficiently. However, it’s up to you to have the right strategies in place. Let’s get started!

What Are The Main Ways to Try to Make Money From Bitcoin?

There are two primary ways to try to make money money from Bitcoin. They include:

Quantity

Quantity refers to maximizing how much Bitcoin you end with when you’re finished. Most people choose a specific date from the time they start using Bitcoin until they want to have a particular amount. 

For example, if you want to mine Bitcoin for 12 months, you might spend $8,000 on the miner. In that year, it mines $20,000 worth of Bitcoin. You have to subtract the initial investment, so you net $12,000. In essence, that’s 1.5 times the initial investment you made. In a sense, you spend one Bitcoin ($8,000) to have $12,000 in one year.

Value

Another top way to try to make money with Bitcoin is through the value.

About a year ago, Bitcoin was up to $18,000, and now it’s sitting at $11,000. That’s an overall decline, but it doesn’t mean that you can’t still see a piece of the pie. Ultimately, it depends on what you invest in and the overall value.

For most of the strategies we talk about below, we assume that the crypto’s value doesn’t change. Overall, it does fluctuate, but it makes the calculations we make easier without taking away value to our readers of the guide. 

In a sense, how much you earn gets based off of how much Bitcoin you’ve got initially.

How to Invest in Bitcoin

There are many ways to invest in Bitcoin. Most people prefer to buy Bitcoin directly, but there’s also cloud mining, regular mining, technical analysis (day trading), index funds, buy and hold, ICOs, and trading CFDs. We’re going to talk about all of that, so bear with us!

Buying Bitcoin Directly

In a sense, buying Bitcoin directly is the safest and easiest way to secure the most value for the price. Unfortunately, there are so many ways to generate money, but they cost you money and force you to lose it.

For now, we’re going to talk about your safest bet here. When we say “safe,” we want you to understand that Bitcoin is highly volatile. That means you could lose the entire investment. There are no guarantees with trading, mining, and buying Bitcoin.

Cryptocurrency is highly risky if you’re hoping to generate returns. Even though we all feel that crypto, Bitcoin included, is a definite future and is going to be around forever, it’s still an investment and requires strategy. 

Everyone saw the risk back in 2017 when it dropped significantly in value. Logic doesn’t always hold true where the masses are concerned. Everybody was buying more and more cryptocurrency (with Bitcoin at the forefront) because it was increasing in value. Still, that was the worst time to actually buy it. Then, a few larger companies sold their shares of Bitcoin, and the value dropped significantly. This caused everyone to lose their wealth who had already invested.

If you look back through history (and you should), it tells you the same things happen all the time. The Great Depression was the first big one, but then there was the dot-com situation and the global financial crisis back in 2008.

Ultimately, humans just aren’t good at predicting the future. 

While we aren’t trying to scare you away from investing in Bitcoin (far from it!), we do want you to know how to invest wisely. Ultimately, only use the money that you can spare so that you can play around with Bitcoin. It’s a fun way to do it, and you’re not going to lose your life savings or retirement fund doing it.

You don’t have to have all the information out there to be a good investor. However, you do need to know the game and be prepared for losses. Sometimes you win, but that’s not going to happen all the time. Don’t expect to be the next Bitcoin Billionaire, and you should do all right.

When you buy Bitcoin directly, you can make sure you get that full amount. However, be aware that some cryptocurrencies don’t allow you to buy them directly with a fiat currency (USD). You’ve got to buy the Bitcoin and then exchange it for your preferred currency.

Here are the many places to buy Bitcoin directly and exchange it:

Coinbase

Coinbase is an American exchange platform for various cryptocurrencies. It operates on a remote-first model and doesn’t have an official headquarters. Ultimately, Fred Ehrsam and Brian Armstrong founded it in 2012, and it’s the largest exchange for crypto within the US.

The platform claims that you can earn without learning about crypto, making it great for beginners.

Bittrex

Bittrex is another crypto exchange and US blockchain platform. Ultimately, it boasts of high-security measures and real-time trading. It’s another large crypto exchange and competes with Poloniex and Binance. 

You’re going to find that it offers various altcoins and trading pairs. Plus, it’s quite easy to use, so it’s suitable for beginners and seasoned traders.

Bill Shihara and two others founded Bittrex in 2013. They all worked as Microsoft security experts before they opened this exchange. Though it’s based in the United States, it isn’t regulated by the securities laws.

Kraken

Kraken is another US-based crypto exchange, but it’s also a bank. This platform provides crypto-to-fiat money trading and price information for Bloomberg Terminal.

It’s based out of San Francisco, California, and the owner is Payward, Inc. It was founded by Jesse Powell in 2011. Ultimately, it was to be the replacement for Mt. Gox, which permanently closed in 2014. 

Though Kraken started with just euro trades, Litecoin, and Bitcoin, it now offers 200 pairs and margin trading. 

How to Trade Bitcoin

If you go online and type in “how to trade Bitcoin,” you end up with tons of auto-trading software, brokerages, and crypto exchanges. There are countless ways to trade Bitcoin, and you want to know how to try to make money with Bitcoin.

Though we recommend that you buy it directly from an exchange, here are some other ways to try to make money with Bitcoin:

Day Trading and Technical Analysis

Technical analysis and day trading are both used interchangeably, and there’s a lot of confusion about it. Many people are getting into it, and it can be a useful way to try to earn money with Bitcoin.

Essentially, you’re looking at micro sections of specific charts and attempting to trade based on what Bitcoin did in the past. You’re predicting what’s going to happen in the future. The tiny fluctuations are shown, and you glance at the graph and wonder what to do now. Is it time to buy more or sell what you have?

Ultimately, there are two flaws with this situation. 

For one, it assumes that you’re rational, and as a human, you aren’t. You use emotions to tell you what to do, even if you don’t realize it.

We saw the Bitcoin crash of 2017, and that’s the perfect example. If all those people were rational, they might not have panicked when the price went down to $500. They could have held their ground because it couldn’t have dropped more.

However, most people think to themselves, “What is going to happen if I don’t sell, but everyone else does? I’m screwed, so I’m going to sell everything now.” Then, you see a huge crash that wipes out over half the value of Bitcoin.

Most people think that when they see two peaks in a row the price is going to go down. However, you can’t assume that. Sometimes it does, but sometimes it doesn’t.

Even those who have studied investment and financial analysis for many years are going to find that they can’t predict the markets. 

The second flaw with this is that you forget that the person with more information often wins. That person is rarely going to be you.

There are many major financial parties and investment banks out there interested in cryptocurrency. They’ve got much more information and know how to get it than you do. Plus, they may even have information that isn’t available to the public.

Though the financial market is regulated heavily, the cryptocurrency market is a gray area. There has been a lot of speculation about insider information and large sell-offs. It’s essential for you to acknowledge that you’re a small player in the market. 

While we aren’t saying that day trading isn’t an option, it’s probably more suited for experienced traders. When you’re beginning your Bitcoin journey, you should probably steer clear of technical analysis. Learn about the markets and how to trade or buy Bitcoin first. Then, you can dabble in analysis and those tiny spikes and jumps in the graphs. 

Ultimately, most people find that day trading works well for share trading but not for crypto. Though we want you to make that decision for yourself, be very careful.

Studies have actually been done where they compare monkeys picking random stocks to investment banks that do technical trading. The monkeys won, even though those investment banks had the best minds within the industry and spent millions of dollars a year to research the market.

If you think about it, that investment bank didn’t do so well, so how can you expect to fare better? We believe it’s best to invest in an index fund, which we discuss later. 

Other People Do It and Succeed

You’ve probably seen tweets and other social media posts where people have used day trading and made tons of money. We aren’t saying they didn’t, but the internet is full of fallacies. 

Those who succeed are going to share that, and the ones who lose are going to be embarrassed and hide it. Ultimately, that’s why gambling and the lottery are still around. Everyone believes that they can beat the system or the odds, even though they are specifically designed to make most people lose more than they gain.

You hear about those five people who won and ignore the fact that the cryptocurrency market is valued right now at $319 billion. If you think about it, there are millions of players out there. For each person who succeeds using technical analysis, there could be more than 10 who fail.

We also have to warn you of all the scams out there. There was one in particular where a man sent out an email claiming that he could guess the market moves for the next three jumps. If he did, you should join his online course.

However, he actually emailed 5,000 of those 10,000 people and said he thought the market was going up while emailing the other half and telling them that he thought it was going down.

Regardless of what happened, he just stopped emailing the half where he was wrong. Then, he repeated that with 2,500 and 1,250. From there, that last round of emails had people clamoring to sign up for the course because they thought he had a 100 percent guess rate.

We know some people use technical analysis and make it work for them, but for most people, it’s highly risky.

Bitcoin CFDs

Those who want to try their hand at Bitcoin CFDs may not fare better. Contract for Difference trading (CFD), is a method where people can invest and trade an asset by engaging in a contract between a broker and themselves instead of opening their position directly on the market. 

The trader and broker both agree to replicate the market conditions and settle the differences between themselves once the position closes. There are various advantages of CFD trading that can’t happen with traditional trading. These include short sell options for assets, leveraged trading, and access to overseas markets.

How Does It Work?

Typically, the working mechanics for CFDs follow these logic features:

1. Traders choose an asset, which is offered by the broker. It can be stocks, indices, regular currencies, or cryptocurrencies. 
2. Traders open their position and set various parameters, such as leverage, short/long positions, invested amount, and others.
3. Both the trader and broker engage in a contract. They agree on what the opening price is going to be for that position and whether there are other fees involved. 
4. The position gets opened and remains so until the trader chooses to close it. Alternatively, an automatic command can be used, such as a Take Profit or Stop Loss point. Also, the contract could set to expire at a specific time or date.
5. If the position closes with a profit, the broker must pay the trader. However, if there is a loss, the trader is charged for the difference.

While it seems simple, there can be confusion between CFDs and ETFs.

What Is the Difference between an ETF and CFD?

Though there are similarities between the two, they are different. Both of them are derivatives, but an ETF is a fund aggregating various financial assets into a tradable instrument. Meanwhile, a CFD is a contract focused on price change for a particular asset. In both cases, you don’t purchase the asset.

However, ETFs are composed by financial institutions and follow a specific market strategy to hedge risk, and the CFD is offered by the broker to give access to private users.

When it comes to cryptocurrency, CFD trading has been seen as a great alternative. Prices tend to move fast, so traders pay more attention. Though you can buy the digital currency directly – and we recommend that – there are some disadvantages.

It takes more time to process when buying a cryptocurrency than the instant fills for a Forex trade. Plus, they’re unregulated, so digital wallets could be compromised. Those concerns are sidestepped with Bitcoin CFD trading. Using CFDs allow for faster transaction times, which is great in a volatile market. Plus, many brokers are regulated and authorized within the country to protect the investment a little more.

Ways to Trade Through a Broker

There are two specific ways to use a broker for trading CFDs. These include:

Trading software

Auto-trading software is a highly sophisticated trading platform that uses at least one algorithm to monitor the Bitcoin market. It reads the past conditions and helps you pick the right position for that moment.

In a sense, it does the heavy lifting for you to analyze the past to predict the future. Earlier, we said that humans can’t do that well. Ultimately, this is a safety net because the computer doesn’t use emotions to pick positions or cut losses.

Automated trading uses a specific program to execute your preset rules for exiting and entering trades. You have the final say as to what those rules are. Typically, you want to do your own technical analysis to set the positions and have many trading strategies available to you. Once you’re satisfied, you let the auto-trader go to work.

These auto-trading robots require the use of online (robot) brokers. The platform and creator of the auto trader aren’t allowed to take the money to fund the account. Ultimately, the broker does that, so you’re working with a middleman. 

It’s safer to do it this way because the money is held by someone else. When you agree on a specific position, you’ve entered into a contract. The broker must go by what you say, but you also have to pay out if you lose.

Though it’s risky, there is a risk for any investment, whether it’s a stock or cryptocurrency.

There are many auto-trading software options on the market. However, Bitcoin Up is a great choice. It’s easy to create an account and signup to use it. From there, you add money to the account directly from that website. 

The online broker takes that money while putting that amount in your Bitcoin Up account. That way, you can set your parameters and start trading immediately. You can use manual mode, which lets you be in charge of everything. Otherwise, set those rules for the bot to follow and choose auto-trade. From there, everything is done for you through Bitcoin Up and to the broker.

Through a Broker

You can also trade Bitcoin through a broker who isn’t affiliated with auto-trading software. Typically, the crypto broker offers derivative products to traders, where you can enter a contract to speculate on the digital currency’s price. It’s similar to the auto-trading software, but you’re dealing directly with a broker and must figure out the ins and outs of the market yourself. There’s no software or algorithm to help you here.

People aren’t required to use a broker to trade cryptocurrency. However, there are some advantages of doing this:

• You’re still using CFDs.
• It’s easy to set up, and you don’t have to be tech-savvy to do it. 
• There’s leverage trading. This gives you access to higher leverage opportunities than you could find directly. Trade more capital than what you really have.
• Usually, there’s better regulation because the CFD brokers are regulated by the FCA or CySec, as well as others. You’re ultimately more protected from fraud, outright theft, and bad practices. If the broker goes bankrupt, traders could receive compensation through the regulatory agency.
• Typically, it’s faster to trade because you’re not buying or selling digital assets with CFDs. The transactions are executed in mere seconds on the platform. Therefore, you’ve got flexibility and can react more quickly to the market movements.

We also have to discuss the downsides of using a cryptocurrency CFD broker.

• You see the price as a spread, representing the difference between the sell and buy price. Ultimately, you have to pay it, regardless of the trade’s outcome, so you could see losses initially.
• There are often fees associated with the broker because they’re holding the position for a day or so. These are based on percentages and could be high for cryptocurrencies like Bitcoin because they are highly volatile.
• It’s important to trust the broker you’re working with. CFDs require significant trust because you’ve got to know that the price on the platform is current with the general market movements, and they’re sourced from an exchange. There are scam brokers out there who could manipulate the prices and cause unnecessary and significant losses for you.

Choosing the Right Broker

It’s important to know what to look for in a broker. Here are some of the top things to watch out for:

Regulations

The first thing anyone should do when choosing a broker is to see if they’re regulated and by which agency. When you deal with a regulated broker, you’ve got assurance that they have met the standards imposed by that body. These can include:

• Adequate capitalization
• Maintaining segregated accounts to protect funds
• Fund protection in case of insolvency
• Ensures the broker is upholding those standards

Each country has its own financial regulatory agencies, which can include:

• ASIC (Australia)
• MIFID and other local regulators (Eurozone)
• SEBI (India)
• FINMA (Switzerland)
• JSDA and FSA (Japan)
• CFTC or SEC or CySec (USA)
• FCA (UK)

Trading Software and Platform

The trading platform is the market gateway for you. It should be reliable and easy to maneuver. Most brokers offer different platforms, and they could be provided by a third-party solution. Some brokers, though, have created a proprietary trading platform to make them different from others in the industry. These are often the best options because they’re designed specifically for that client base.

Regardless, the broker must provide a range of platforms. That’s because some traders like to use their laptops or computers, while others want to do it all from their smart device.

Typically, most brokers use the MetaTrader 4 platform. It’s a strong system, so consider that when applying with brokers.

Additional Features

Every broker isn’t going to offer these extra features. However, they can be highly beneficial:

• Comprehensive charts
• Various technical indicators
• Risk management tools (stop-loss orders and trailing stops)
• One-click trading from the platform

Most brokers offer a demo account. This is where you get ‘fake’ money and a ‘fake’ spread to try out. That way, you can test processes and strategies before you use real money.

Spreads and Commissions

This market isn’t like traditional financial markets. It operates significantly on spreads instead of commissions. That’s why many brokers advertise as being commission-free.

How Do Brokers Make Their Money?

They earn their money by charging for the spread. This is the difference between the selling and buying price. For example, if the bid/ask price for EUR/USD pairs is 1.0875/1.0878, the spread is three pips.

There are generally three cost structures from a broker:

• Fixed – The spread doesn’t change, and you know the amount before trading.
• Floating – This spread is variable, so it always moves, depending on market volatility.
• Commission-Fee – This is the percentage of the broker’s spread. Be aware of this amount payable before trading.

Those who want more certainty should go for fixed spreads. If you prefer to pay a smaller amount, floating spreads may be the right choice.

Top Broker Selections

While there are countless brokers out there, it’s best to go with one that’s established. Here are our top three choices:

eToro

eToro is a brokerage company in Israel that focuses on offering copy and financial trading services. It has registered offices in the UK, USA, Israel, and Australia. In general, it describes itself as being an accessible trading platform incorporating social elements into investing. Right now, it has about 4.5 million active users and only went live in 2006.

You’re going to find that it’s easy to sign up for eToro. There’s no lengthy paperwork or process here. Just choose a username and enter your details. Complete your profile to help protect your account. Plus, it uses the information you provide to tailor the platform for your needs. 

Deposit your funds of at least $200. Then, familiarize yourself with its platform. There are:

• Watchlist – Organize the markets and people you’re interested in investing/copying. Create multiple lists if necessary.
• Portfolio – This is the center of the investment journey. Here, you view open trades and monitor performance.
• News Feed – It’s similar to what you see on Facebook, where you can get information about the traders you choose to follow.
• Trade Markets – Here is where you research the markets available to you.
• Copy People – This is the heart of the community. You can search for other traders and then copy the strategies they use. There are plenty of filters to narrow your results.

TD Ameritrade

TD Ameritrade is a top online broker. Whether you’re experienced or not, it can appeal to you because of the easy UI and advanced options for investing.

The platform has many benefits that you might see from a full-service broker. Plus, it’s great for those who want live market feeds and a reliable platform.

There are plenty of great features and accounts here. Plus, you get education resources, diverse platforms, and professional consultants. This is a full-service brokerage, so you can find many investment opportunities, such as:

• Individual accounts
• Traditional IRA
• Rollover IRA
• Roth IRA
• Joint Tenants
• Trust
• UTMA/UGMA

There are two primary trading platforms, such as:

• Web Platform – This is the classic option. Perform fundamental actions here, such as trading bonds, stocks, ETFs, options, and mutual funds.
• Thinkorswim Platform – With this option, you can go to the next level. It offers trading in forex, futures, and commodities along with the web version’s tradable securities. It’s open 24/5. You also get access to various technical analysis studies, advanced market analytics, and charting tools.

With TD Ameritrade, there are more than 300 commission-free ETFs. Plus, there are 4,000 mutual funds that don’t charge fees. If you want to invest in these things, you can do so here without paying commissions.

Interactive Brokers

Interactive Brokers is another top choice because it offers many tools for sophisticated investors who want to track global trends. The company makes it a point to connect to all electronic exchanges globally. That way, you can trade options, futures, and equities from around the world.

This broker is great for active traders and investors throughout the world. Plus, it is always adding new products and has tons of educational resources. It’s often less intimidating for new investors. 

There are plenty of features to like about Interactive Brokers, such as:

• Stock Screener – This market scanner helps you scan many criteria for global options and equities. Use predefined ones or set up a custom scan. 
• ETF Screener – Here, you can choose ETFs as your primary asset. Then, the scanner checks all of them to help you find low-cost and more liquid choices.
• Options Screener – This lets you look for spreads that meet your needs. Compare five at once, handle profitability analysis, and order directly from this screen.
• Mutual Fund Screener – You can see over 170 variables, and it just rolled out at the end of 2020.
• Tools and Calculators – There are various calculators on the platform to help you determine order quantity, interest, and margins.

What Is Bitcoin Mining and How Does It Work?

Bitcoin mining is buying and hosting a miner. In a sense, you’re mining your own cryptocurrency. However, it’s a little confusing, and it doesn’t make a lot of sense when you first start out.

Therefore, it’s shocking how many people are mining Bitcoin. Let’s do the math to figure it out.

You want this new Pandaminer B3 Pro. It’s a very efficient miner for Ethereum. When you look at the calculator, you see two stats that you need to know: Power consumption and hash rate.

The hash rate is the speed at which the miner mines. Power consumption is how much power this miner uses. You’ve got to know how much you normally pay in KWh. For example, let’s say it is $0.18.

If the hash rate is 220MH/s and the power consumption is 1250W + 10 percent (for Ethereum), you can plug the numbers into a calculator to find that you generate $504 in profit every year. However, the machine itself costs you money, so at the rate of what it is currently, you could wait two years before seeing a profit.

However, that’s also not the case. These charts and websites promise great returns, but they don’t explain that it’s hard to mine as you continuously mine more of your preferred crypto.

In May 2017, that difficulty was 349. Today, it’s about 2,075. Therefore, it’s about seven times harder to mine as it was a few short years ago when the miner was purchased. With those updated numbers, you’re going to lose profits.

With all that said, the question you’re asking is: “How do people mine crypto?!” To do it effectively, you need:

• To have very cheap power (such as in China where the cost per KWh is about $0.03.
• To create your own miner so that it’s profitable from the get-go. Bitmain builds miners and lets you mine with it for free.
• To create a mining pool because then you control it and earn from it without a fee. Bitmain also offers this.
• To buy in bulk quantities so that it makes sense to mine Bitcoin. However, you may still buy something that costs more than what it earns.

If you want to earn money and buy your own equipment and mine the currency, you’re effectively paying one Bitcoin to get back half of it. 

Those who are really invested can find small cryptocurrencies to mine because it’s so new, and there are less difficulty and competition. 

We recommend that you try something like HoneyMiner because you can use your computer’s memory instead of extra energy. Though you probably aren’t going to make a ton of money, it can be fun and bring profits if you start small.

Cloud Mining

If you want it to get interesting real fast, cloud mining is where it’s at. To buy a miner and mine it yourself is less effective. However, cloud mining is when a company already has miners set up in various locations with cheap power. You rent them for a specific time frame (usually a year).

There are many considerations here, but there are two primary companies (giants within the rental industry):

Genesis Mining

Genesis Mining charges a ton of fees to make sure it gets its money. It’s not there to help others; it’s there to make money.

When you sign up, you have to pay for one to two years of using the miner upfront. That means you only have that year or two to earn money off of what you paid. Typically, buying the miner directly is about half of what you might pay to the company.

It takes the money you give it to invest in growth. However, it can also use the stock market or put it in a bank.

Typically, Genesis Mining charges you a power and maintenance fee each day. Often, this is more than what it’s paying for maintenance and power for the miner.

Still, people use it because they get absolute results from it.

If you invest $8,000 into Genesis Mining and check your dashboard to see that the portfolio is up to $11,000 in a year, you’re happy.

What really happened, though, is that Bitcoin’s worth $16,000. You’ve got about 0.6875 Bitcoins and lost money. If you just bought the Bitcoin for $8,000, you could have the full amount.

Though you’re getting a profit, these are absolute returns and don’t take into account the additional Bitcoin mined instead of buying it directly. Ultimately, that’s why Genesis grows when the returns aren’t that great.

As the Bitcoin price surges, more people mine it, so it’s harder to do. Therefore, when the price goes up, people lose their money. 

Nicehash

If you want an alternative to most of the miner options out there, then Nicehash could be it. Though it’s challenging to figure out how to use the platform, you can get going pretty nicely when you do. 

You’re only losing a little when you rent the miner from here instead of thousands in fees each year.

Index Funds and HODL (Buy and Hold)

Many people find success and learn how to make money with Bitcoin through Buy and Hold and index funds. It’s hard to pick stocks, and it’s often easy to buy/sell at the wrong time. Therefore, many investors turn to dollar cost averaging and index funds.

Index Funds

An index fund is a mutual fund with a portfolio to match and track components within a specific financial market index, such as the S&P 500. It can offer broad market exposure with low operating expenses and turnover. 

Many times, these are the core holdings for various retirement accounts. Instead of investing in just Bitcoin, you’re investing with many companies to reduce risk.

Those who invest in the top 500 are going to see better profits, even if a few of them go down. However, how does that relate to cryptocurrency?

Typically, Bitcoin is doing well and should continue. However, it’s not guaranteed. Ultimately, you shouldn’t put every penny you have into cryptocurrencies. Diversify your portfolio and also invest in index funds and others.

There’s also Crypto20, which is the index fund for the top 20 crypto options in the world. That’s a good place to start because if a few fall, the others are going to carry you through challenging times.

Dollar Cost Averaging

With dollar cost averaging, you’re trying to take out some of the market’s volatility by buying small, consistent quantities instead of a huge purchase all at once.

That’s what people did in the Crypto Crash of 2017. They all bought huge Bitcoin quantities when it was over $15,000 and then lost money. The goal is to take irrationality and human emotions out of this equation.

When you invest smaller amounts consistently each week, you don’t lose a lot if there’s a big drop. That drop just means you’re going to buy more of the asset and get a huge discount.

Though it’s hard to think long-term with crypto, that’s exactly what you have to do. If you buy consistently for five to 10 years, you have the potential to see huge gains.

ICOs

2017 was the year of scams. An ICO is the initial coin offering. Basically, anyone with a plan can say this is what we’re doing, and we want to raise X amount of money. Buy coins at a discounted rate and be part of the early action.

Unfortunately, many of these ICOs are scams. The ideas might have been good, but they never took off. The company created the coin, mined it, launched the ICO, sold them all, and then left everyone to suffer.

There are legit ICOs out there, so make sure you research your options thoroughly. Always look for a whitepaper and read it completely. Look at the team who’s running the company and get background info on them. Read what others are saying (testimonials). If you believe what’s being said, go for it. Otherwise, steer clear. 

Ultimately, the ICO market has died down quite a bit because there haven’t been any new altcoins created. However, it is a huge part of the cryptocurrency market, and we wanted to mention it to you for that reason.

Conclusion

If you want to know how to try to make money with Bitcoin, the best thing you can do is buy it directly. Other tips include not using too much money in the market and making sure you can still cover bills and other responsibilities. Though it might be possible to make a full-time job out of crypto investing, we don’t recommend it unless you’ve got an excellent safety net.

Instead, it’s better to invest small amounts, try auto-trading software, use exchanges, and find reputable brokers.