How to Make Money with Cryptocurrency – 5 Best Ways

The exciting world of crypto offers money-making opportunities for all those that know where to look. While the industry as a whole is still very volatile, new investors are already taking notice of this trend, and start learning how to make money with cryptocurrency.

We have previously talked in detail about the passive income opportunities, as well as the ability to earn coins in your free time. Today, however, the theme is different. In this article, we show you how to handle your cryptocurrency in order to increase its value.

How to make money with cryptocurrency in 2020 and beyond

The following methods will help you increase the value of your investment by using cryptocurrency as a vehicle to get there. Let’s get started.

Method #1 – HODL

HODL is an acronym that describes the process of buying and holding onto cryptocurrency for longer time periods. The term originated in 2013 after a BitcoinTalk member wrote a semi-coherent post that ended up going viral. In the post, the user described that, in bad market conditions, the best strategy is to hold onto your coins, even though the majority of the market sells as a reaction to fear.

How does this strategy help you earn money?

When looking at Bitcoin, Ethereum, and other popular currencies we can observe a long-term tendency for price appreciation. Even though the market goes through bullish and bearish cycles, the price of these cryptocurrencies ends up higher than its previous peaks when looking at historic tendencies. 

You might have used a Bitcoin return calculator to estimate how much your Bitcoin would be worth, had you invested earlier. In most cases (unless you invested in late 2017) you’d probably be up significantly. This is the essence of HODL. By buying and storing cryptocurrency for longer timeframes, you bet on the fundamentals of a cryptocurrency and the growth of the crypto industry as a whole.

Is it difficult to HODL?

When looking at the process from an external perspective, HODLing is extremely easy. You simply, buy coins, store them in your wallet, and forget about them for a year or two – right?

Well, those that actually HODL may tell you a completely different story. Due to the volatility of the market, investors go through a roller coaster of emotions, which can change by the hour. While you may get ecstatic when seeing a large price appreciation on one day, you may feel extremely stressed when a large drop occurs.

To make sure that you can go through this process without feeling overwhelmed, it is important to set and stick to a price target. Once you adopt a goal-oriented mind, it will be easier to navigate through the emotional ups and downs.

For who is this strategy best for?

• Investors that bet on the long-term success of reliable projects (Bitcoin, Ethereum, BNB, etc.)
• Investors with low or no trading experience.
• Those that wish to not observe the markets on a daily basis

Method #2 – Swing Trading

There are many different types of cryptocurrency trading. However, the one that is by far the most popular and closest to instant gratification is swing trading. In short, it refers to a trading method in which a user observes candle charts and uses price indicators, to determine the best time to buy and sell cryptocurrency.

Swing trading can involve dozens, if not hundreds of entries and exits (trades) per day, and requires a lot of attention to be done effectively. Even with the introduction of stop-loss mechanisms and open orders, it is not a process that should be performed on autopilot.

How does this strategy help you make money?

Swing trading bets on local highs and lows, meaning that you try to buy at a low price and sell at a high price in the short term. For example:

• A trader may see that a bullish chart pattern starts to emerge on the BTC/USDT chart. 
• At that point, he will buy BTC using USDT and wait for positive price action. 
• As soon as a target percentage of price appreciation has been reached, the trader will sell his position back into USDT with profit.

In recent times, many trading platforms introduce the ability to trade with leverage. In short, this method of swing trading allows traders to make more profit from smaller price movements. It is, however, much riskier to perform with success. To learn more about this method click here.

Is swing trading difficult?

Swing trading is not only difficult to learn but also very risky to perform, especially in bull markets. In most cases, when trading in positive market conditions, you will end up with less profit compared to simply HODLing your coins.

That being said, when market conditions are relatively stable or towards the bearish side, swing trading can help you increase your cryptocurrency positions, and thus the amount of money in your portfolio.

To learn how to get started with trading consider reading our guide to cryptocurrency trading and our post on reading crypto charts. For advanced techniques, make sure your check our Crypto Cred’s Medium channel as well.

Note: In case you wish to expand your skills, make sure to also check futures trading, a method which is steadily increasing in popularity.

Who is this strategy best for?

• Emotionally intelligent individuals and strong decision-makers.
• Investors that want to earn money in all market conditions, with high time preference.
• People that can only invest a small amount of money and are looking for ways to increase the size of their position.

Method #3 – IEOs

Initial Exchange Offerings (IEOs) became popular in 2018, shortly after the ICO bubble busted due to lack of regulatory oversight. The new, more promising fundraise model was welcomed by the public as a better way to purchase new coins.

The first exchange to implement IEOs was Binance, and the model has since been copied by many popular trading platforms. Public interest for IEOs is so high that people have to participate in a lottery in order to qualify as buyers.

How does this strategy help you make money?

IEOs are nearly always extremely profitable, no matter which platform they are hosted on. If you manage to allocate a small amount of funds on new cryptocurrencies, you could see a large value appreciation in a very short amount of time (usually hours).

Coin offerings are sporadic, which means they are not sustainable. In turn, one could say that buying into IEOs is not a strategy but simply a matter of luck. While you may not be able to participate in all IEOs, it is a good tactic to keep in your arsenal in case you manage to get lucky.

Is IEO participation difficult?

When it comes to the learning curve that is required in order to understand how to participate in the process, then IEOs are pretty easy to understand. However, when it comes to successfully buying into an IEO, you have about a 5%-10% chance to be in the pool of participants that get lucky.

We recommend that you keep track of all ongoing and upcoming IEOs and try to participate in the ones that seem the most promising to you (you will need to DYOR).

Note: IEOs are usually more profitable in positive market cycles (bull markets)

Who is this strategy best for?

• Everyone that qualifies for participation. For example, if you have a large number of BNB in your Binance exchange wallet, you may win a lucky lottery ticket, which will allow you to participate in the IEO.
• Investors that are looking for low-risk investment opportunities, even if these occur on a sporadic basis.

Method #4 – Staking

When looking at how to make money with cryptocurrency, one of the first methods you will come across is staking. In short, staking refers to a process in which an investor simply holds or temporarily locks his coins in order to earn some form of passive income.  

Staking has become a lot more “colorful” in 2020, with several options being introduced in the crypto markets.

• Flexible staking – Unlock your coins any time but receive less interest.
• Locked staking – Not possible to unlock your coins but receive more interest.
• DeFi staking – Lock your coins in a smart contract and earn the highest amount of interest.

How does this strategy help you make money?

The process can be described as an extremely profitable savings account that offers high interest in the coin you choose to place in a storage location for a longer period of time.

• Users can stake their coins for short or long periods of time and earn interest up to 25% per year. 
• This amount can increase up to 60%+ for users that choose to participate in Yield Farming, which is also becoming available on centralized exchanges.

Is staking difficult?

Staking used to be rather complex for new users but has since become a one-click process, thanks to the continuous efforts of the trading platforms to make financial products easier to use. 

No matter which platform you choose to stake your funds on, you will always receive assistance from a qualified support team and a large library of resources to help you learn more.

Note: Not all staking rewards come from storing your funds on exchange platforms. Some wallets will automatically receive a monthly staking distribution by simply holding specific coins (e.g. NEO distributes GAS). For these coins, all you need to do is HODL.

Who is this strategy best for?

• Investors planning to HODL and not trade for a while
• Investors that prefer low-risk, low-reward opportunities.

Method #5 – Earn from your referrals 

Instead of looking at how to make money through buying and selling cryptocurrency, you can also think outside the box. One of the best ways to earn a relatively steady amount of money on a monthly basis is by building a list of referrals (affiliate marketing).

In short, the goal here is to help many users sign up by using your unique referral code. Here are some creative ways to help you achieve this:

• Establish your authority through Social Media platforms (groups, channels, pages, etc.)
• Host meetups to help people learn how to make money with cryptocurrency.
• Introduce your friends and family to cryptocurrencies and help them sign up by using your referral code.

How does this strategy help you make money?

When a user signs up using your referral code, you will earn a small part of the commission they pay when trading. While the amount is very small (often less than 1/1000th of the trade), it can quickly compound if multiple trades are made by a large number of people on a daily basis.

Referral income is neither the most profitable nor the easiest path when looking at how to make money with cryptocurrency. However, it does offer some additional income that can supplement your money-making efforts.

How difficult is it to build a list of credible referrals?

In short, very hard. There are thousands of people that are trying to bank on referrals. While there are still opportunities out there, you would need to do lots of research and try to build your reputation in a smaller sub-niche.

For example, some people may dislike storing their funds on an exchange. In this case, you can benefit from our affiliate program, and send them over to Paybis.

Who is this strategy for?

• Influencers or people with engaging social media groups
• SEO specialists with an interest in cryptocurrency
• Investors who are willing to educate their social circle on cryptocurrencies.

Wrapping up

You should now have a better idea on how to make money with cryptocurrency. The options we shared above are becoming increasingly popular for both amateur and experienced investors. In short, here are the options we talked about:

• HODL
• Swing trading
• IEOs
• Staking
• Earn from referrals

Now that you know how to how to make money with Bitcoin and other cryptocurrencies, you might want to look into up and coming coins. So make sure you check our favorite new coins of 2020 and invest responsibly.

Written by

Dimitris Tsapis

Dimitris writes content related to the Blockchain and cryptocurrencies but also on topics related to digital marketing.