Bitcoin Profit Secrets 16

Using Bitcoin As An Investment
Strategy
Bitcoin is a relatively new form of currency which is just starting to gain
traction and worldwide acceptance. With the recent exponential growth in
the value of Bitcoin, many people are investing in this digital currency to
hopefully reap huge profits in the future.
In this guide, we will cover the basics of using bitcoin as an investment
strategy. Note that we are referring to long-term investment here which is
not the same as trading bitcoin for short-term profits.
Investing in the highly volatile cryptocurrency market may not seem like
such a good idea for some people. Ideally, you’d have nerves of steel, the
discipline and focus to ignore short-term gains, as well as the patience to
hold your investment until the right time comes.
If you’re really determined to own a small share of the crypto-market, then
you should at least know the most suitable methods so you can make the
most of your investment.
Bitcoin Investment Methods
Dollar Cost Averaging Method
This strategy is best for beginners to the investing world because you don’t
need to worry about entering the market at the right time.
You don’t have to stress yourself waiting for the price of bitcoin to go down;
rather, you just buy at regular time intervals to spread the risk and
hold/store your bitcoins in a cold, secure wallet (like a paper wallet or
hardware wallet).
For example, if you have an extra $100 to spare every week, you can buy
bitcoins every week. Some weeks your $100 may buy you more bitcoin,
and some weeks the same amount will buy you less.
This method gives you peace of mind because you don’t need to worry
about the dips in bitcoin price.
You just have to be disciplined enough to follow your regular schedule and
buy when you need to buy without looking at the bitcoin price charts. You
don’t wait for the price to go down just because you see a downward trend
on the charts, you just go right out and buy your bitcoins.
With the dollar cost averaging method, your profits will also average out
when you decide to sell your bitcoins. It might not come anywhere close to
profits if you invested using the lump sum method, but if you sell at the right
time (when the price is high), you’ll still make a healthy profit from your
investment.
Lump Sum Investing Method
The lump sum method is a much riskier method of investing bitcoins
because you will be buying your bitcoins at a single price point.
If you have $100,000 to invest, you will, of course, want to buy the most
number of bitcoins, so you wait for the price to go down. To maximize your
investment, you will be compelled to wait for the possible lowest price before
buying your bitcoins.
This method means you will have to ‘time’ the market, so you buy at just
the right time. Of course, this is easier said than done with a volatile
commodity like bitcoin. The price varies so much it’s extremely difficult to
predict when the next price dip is so you can buy at that price.
Trying to time the market can cause a lot of headache and stress to an
inexperienced investor. It just brings too many ‘what ifs’ to mind, such as:
‘What if I just wait a few more hours, the price may go down, and I’d be
able to buy more bitcoins then.’ Or ‘What if the price never goes down to
the price I want to buy bitcoins at, I’ll never be able to buy bitcoins.’
When it comes to selling off your lump sum investment in the future, you
may find it hard to sell as well because you’ll be waiting to sell at the right
time so you can make the most profit.
You’ll try to predict the highest price point, and you’ll berate yourself if you
sold too soon and lose out on the possibility of much greater profit.
The good thing with lump sum investment method though is if you manage
to buy at the lowest possible price and sell at the highest possible price,
then you’ll make a much bigger profit than if you invested bitcoins using the
dollar cost averaging method.
Crypto Hedge Fund Investing Method
If you don’t want to trouble yourself with learning the basics of investing
using either the dollar cost averaging method or the lump sum method, you
might be better off investing your money in a cryptocurrency hedge fund.
However, this option is best suited for people who can afford to pay their
hefty management and performance fees.
The management fee is paid upfront; some funds require a 2%
management fee so if you’re investing $100,000, $2,000 of that is going to
the management fee which means only $98,000 will be invested in
cryptocurrency.
Also, your hedge fund manager will get a percentage of your profits. Some
managers require a 20% performance fee so if you profit $50,000 from your
investment, $10,000 of that is going to be paid as an incentive fee.
The hedge fund method may not suit everyone, but if you look beyond the
fees, you’re at least looking at a hands-off approach to investing which
could prove to be very profitable for both you and your hedge fund
manager.
Strategies To Succeed In Bitcoin Investing
Investing in bitcoin is similar to investing in stocks. Both are high risk and
high reward investments which, undoubtedly, is not for everyone.
Bitcoin is even more volatile than stocks so if you want to invest in this
cryptocurrency or any other crypto for that matter, you need to know the
following strategies to succeed.
Have A Solid Plan In Place
Don’t invest blindly and don’t invest just because everyone you know has
bought bitcoins. When investing, you need to have a good, solid plan in
place where you draw your entry point and your exit point.
Your plan will need to be in accordance with the investment method you’ll
choose to follow. So if you choose the dollar cost averaging method, you
need to have a solid plan like how much and how often you’ll be buying
bitcoins.
For lump sum investing, you need to know in advance at what price you’ll
be buying your bitcoins and buy at that price (don’t wait for it to go any
lower). For hedge fund investing, you need to consider the fees you need
to pay and know the best time to invest.
Be Prepared For Volatility
This is the number one strategy you need to master. Everyone knows that
bitcoin is a highly volatile investment with prices going up and down by
hundreds of dollars in mere minutes. You might think to yourself you
already know it’s going to be volatile because you’ve seen the charts and
the graphs and you’ve practiced in a demo bitcoin exchange account.
You can handle the risk, you tell yourself. But when you’ve got thousands
of real dollars on the line, it’s a very different scenario. Especially if you’ve
worked hard to get those dollars! You might have worked for it for months
or years, and there’s a very real chance you could lose it all in just a few
minutes.
The best thing you can do is to not bother with the dips at all. Just do
something that will help you relax and keep your mind off bitcoins because
if you don’t, you can literally go crazy. Bitcoin investing is like a roller
coaster ride; you just need to hold on really, really tight until you get to the
end of the ride!
Keep Calm And Don’t Panic
Saying this to panicked investors is very easy, but when you’re the
panicked one, it’s a different feeling altogether. The thought of thousands of
dollars down the drain is enough to send anyone to a mental breakdown
which would, of course, lead to irrational decisions.
If you don’t think clearly, you might think of cutting your losses right there
and then without thinking of what’s going to happen in the long term. If you
played your cards right, your bitcoins would be worth so much more than
when you paid for it. But you’re never going to experience that if you panic
and sell early.
Keep Perspective
Investing in bitcoin is a long-term financial activity. It’s different from day-to￾day trading which involves a lot more technical analysis so a trader can
make a nice profit. When investing in bitcoin, you have zoom out of the
bitcoin price charts and look at the overall picture. Don’t bother looking at
the daily, weekly or monthly charts because it’s going to bring you nothing
but stress.
Look at how far bitcoin rates have come. From literally a few cents when it
first started to thousands of dollars now. And experts are saying this
upward trend will continue for many more years to come so if you ride out
the highs and lows of bitcoin, you’ll end up with a very nice investment
portfolio in a few years.
Don’t Spend What You Can’t Lose
This is probably the most important advice you need to take note of. You
already know investing in highly volatile cryptocurrencies can either make
you insanely rich or bankrupt. But it doesn’t have to be these two extremes.
You don’t have to invest your entire fortune or your entire life savings in
bitcoin or any other cryptocurrency!
The most prudent thing you can do is to only invest what you can afford to
lose. This means not spending any money that you cannot afford to lose.
Whether you choose to invest using the dollar cost averaging method, lump
sum investing method, or maybe even investing in a crypto hedge fund,
don’t use money that needs to be used somewhere else.
If you’ve got money set aside for your retirement, a health fund, an
emergency fund, or maybe even your kids’ college money, don’t even think
about touching these funds. So many families have fallen apart because of
wrong financial decisions and spent such important funds on risky
investments.
If you’ve done something similar in the past and was able to get away with
it, that is, you’ve made some profits, then don’t get cocky and think you can
do the same with cryptocurrency. It’s a different animal, so to speak. It’s the
Wild West of investments right now, and you don’t want to lose your hard￾earned money.
Patience And Discipline Are Keys To Success
Bitcoin investing is a long-term game. You need to be patient when the
bitcoin price goes down, and your investment along with it. If you’ve looked
at bitcoin trends, you’ll see it’s been in an upward trend since its inception
in 2009, so you just need to ride out the troughs until you get to the right
crest where you’ll be happy to sell your bitcoins.
In the world of Bitcoin investing, there’ll be many troughs and crests. You
just need the discipline to hold on to your investments and not get scared
when prices get too low. Likewise, don’t get too excited when the price
goes up. A solid plan, patience, and discipline will lead you to bitcoin
investing success.
Hindsight Is Always 20/20
Don’t berate yourself if you bought at a price much higher than the current
bitcoin price. And there’s no point getting angry at yourself if you sold your
bitcoins too early when the price goes up after you sold.
No one can predict the future. So the best thing for you to do is just aim to
make a tidy profit and not think about the ‘what ifs’ because that’s really not
going to help you at all.
As they say, hindsight is always 20/20. To put things into perspective, if
everyone can see the future, we would all have invested in bitcoins when it
was first introduced by Bitcoin founder, Satoshi Nakamoto.