Updated: Nov 14, 2022
As part of my portfolio, I also like to invest in speculative investments such as Crypto. There is a huge range of Crypto investors out there, with some being super skeptical and some going all in. For me, I've invested around 15% of my portfolio into Crypto.
I see Crypto as being in the early stages, with regulations still trying to adapt to this evolving technology and how it would fit in with our economy. Bitcoin, the Gold Standard for Crypto, has seen a fair share of extreme volatility the past few years, where people have had made a lot of money but also more people had lost a lot of money.
However, Crypto has evolved and changed to have a market cap of $2.7 Trillion - that is Trillion with a capital T. Not to mention, Crypto has now become a lot easier to invest in, with Crypto exchanges popping up left and right. The number of people investing in Crypto is now 1 out of 10, and it's not difficult to dispute that Crypto is not here to stay. The Pandemic possibly had a significant impact on the Crypto market, with developments in technology accelerating and the new normal relying a lot more on online presence and transactions.
With all that was said, I don't see Crypto going anywhere. I personally foresee Crypto evolving to become a new way of conducting transactions in the future and that there is huge potential for this blockchain technology. I don't know how or when, but I've positioned myself for long-term investing and the mindset that even if I lose my investments in Crypto, I will be ok. Though, I'm hopeful that my long-term predictions of Crypto are going to be positive and it's a chance to invest in a technology that is disrupting the financial industry and how we see money.
Without further ado, let me share how I am investing in Crypto and how I plan to make passive income while at it.
1. HODL and DCA
Perhaps the most common way people are investing in Crypto is the buy and hold strategy. The hope here is that the investment will appreciate in value that we will realize capital gains.
Bitcoin alone made appreciating 300%+ and Ethereum appreciating 1000%+ in the past year. The S&P 500 and Dow Jones hardly show up on the following graph in comparison. That's not to say Crypto will continue outpacing Index Funds by a long shot, as we all know there were times when Bitcoin had crashed before, and who is to say that won't happen again? With Bitcoin and Ethereum, we have less than a decade worth of historical data vs. S&P 500 which we have 100+ years.
While there was much uncertainly about the Crypto space prior to 2020, times are different now. The world has gone through a once-in-a-lifetime Pandemic and many people see Crypto as a viable investment with the direction technology is becoming even more integrated in our daily lives.
While I believe in Crypto, I'm not going to put all my eggs in one basket. I've allocated a fair bit of my portfolio of 15% to 10+ Cryptos, includ Bitcoin, Ethereum, and other large market cap Altcoins. I've managed to invest a large chunk during the dip, but now I'm dollar-cost averaging (DCA), using NDAX's "reoccurring purchases" function. It's a nifty tool where I can set how much of which Crypto I want to purchase on which day, either weekly, monthly, etc.
If you are in Canada and want the ease of CAD deposits when buying Crypto, I personally like to use NDAX. Get $10 if you sign up using my link here.
2. Earning Interest
Instead of having my Crypto idly sit in my wallet, another way to earn money passively is to loan out your Crypto and earn interest. I personally like to use NEXO, as it provides one of the highest interest rates of up to 12% on 24 different types of Crypto, including Fiat currency! Though honestly speaking, you do need to jump through some loopholes to get that 12%, so on average, you can earn 4 to 5%. The best part is that your interest gets paid DAILY and gets compounded DAILY.
What I like to do is first purchase crypto in my NDAX account with CAD until I reach a certain amount, and then transfer the Crypto to my NEXO account since transfer/withdrawal fees can be hefty depending on the Crypto. I currently have 3 different types of Crypt earning 5% interest on a monthly fixed term. Use my link here and deposit $100 for $25 in BITCOIN (valid until December 31st, afterward it's $10 in BITCOIN).
3. Bots Trading
There is another way of trading without you actually trading, and that is letting bots do the work. To be honest, I'm also relatively new to this and trying to figure out what works best for me. Two platforms that I've tried out are on KuCoin (free with account) and BitsGap (monthly fee after trial period). Basically, how it works is that there is an algorithm that sells high and buys low multiple times a day so that you can lock in realized gains/losses. It's not a perfect set up where you make money all the time, especially if there is a large drop in the price of Crypto - however, it can lessen your losses if Crypto drops in value drastically.
I'm still testing what works best for me and will keep you updated on my progress!
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