For a number of years the cryptocurrency market has been in a downtrend since the last crypto bull run that occurred in 2017 and finished with the price of Bitcoin reaching almost $20,000 in that year, however after a long wait crypto investors and traders are now rejoicing in the obvious formation of a new crypto bull run in 2021 with the price of oil cryptocurrencies seeing huge gains over the past six months also.
Bitcoin and Ethereum in particular are two of the most invested in cryptocurrencies in the market and largely lead the rest of the market with the price action being that they are central to so much of the rest of the cryptocurrency market , how it functions, and the other platforms that are built upon them or that directly use them in some way.
While there is a lot of material online about getting started with investing in cryptocurrencies and even guides to getting started with investing in Bitcoin and Ethereum specifically, there has been much less information created about the specific way to invest in Bitcoin and the cerium in this year's bull run in a successful way and in the most optimal way possible.
Because of that, we have created this guide to look specifically at investing in Bitcoin and Ethereum in 2021, starting with a look at the basics of what Bitcoin and Ethereum actually are, for moving on to look at why Bitcoin and Ethereum are the largest cryptocurrencies even to this day, breaking down simple ways to invest in Bitcoin and Ethereum, and then finishing off with a look at a few of the best places to invest in Bitcoin and Ethereum, and some advanced Bitcoin and Ethereum investment strategies.
Bitcoin Basics
What is Bitcoin?
Bitcoin Bitcoin was the first cryptocurrency to exist when released over ten years ago, shortly after its release to the public in 2009 many others began to launch coins of their own now known as altcoins and today due to Bitcoin thousands of them exist, Bitcoin is the gold-standard of crypto and used by millions every day.
Bitcoin was announced in 2008 and released a year later by an anonymous group or person that went by the name Satoshi Nakamoto and was purposed to give people the ability to transact without needing help from banks and central authorities, now it is the most-valued crypto used by investors small or big.
This decentralized cryptocurrency operates outside the control of banking and federal authorities and is similar to fiat currency in that it can be exchanged for products or services from the millions of vendors that now accept it, it is popular with investors too as it is easier to buy and manage than physical assets.
Bitcoin tokens are stored on blockchain and accessed using a crypto wallet from which coins are sent or received by the support of individual miners from around the world that process and add payments to a public ledger, its value has soared over time and is expected to rise as institutions move liquidity into it.
How is Bitcoin Useful to People?
Bitcoin is known for its portability and resistance to inflation but also the ease-of-transfer process it has made possible for its holders, conventionally speaking, people would use bank-assisted transfers to send wealth from one person to another but now such actions are made possible and cheaper thanks to BTC.
Bitcoin is useful in that it gives people the ability to diversify their portfolio with an asset not subjected to fiat-induced inflation but also the ability to transact with others directly at lower fees, considering it is not controlled by banks but rather by those that hold it and process transactions, fees are much lower.
Transactional fees for sending BTC slightly rose over time though compared to the rates tied to banking institutions it is still a more economical and swifter approach to transferring wealth to another person, and given new regulatory requirements complied by exchanges, it is safer than ever before to transact.
Bitcoin operates on peer-to-peer technology permitting holders to transfer amongst each other with no need for outside third-party providers as independent miners that process transactions take the place of banks that once controlled citizen lives, Bitcoin resolves this by returning the power of wealth to people.
How Does Bitcoin Work?
Bitcoin is a finite-supply coin with a limited number of coins in circulation in order to prevent the coins from becoming devalued over time, unlike gold or silver, which can be founded/mined and added to the Federal Reserve supply at any time, there will never be more Bitcoin circulating than there is right now.
When first released there were twenty-one million coins added to circulation and now only eighteen million are circulating due to the number of coins that have been lost over time due to lost wallets or stolen coins and because of its limited supply, it has continued to soar nearly week over week for years.
Bitcoin differs from fiat currencies in that it is not backed by physical commodities like gold or silver and has no intrinsic value but its global support of retail traders and professional investors have driven BTC valuations to fresh new highs which largely in part has to do with how this crypto works and operates.
Bitcoin can be purchased from a crypto exchange like Coinbase or Kraken which not only operates as an exchange but a wallet provider too, once bought and added to wallets it can then be sent to an external address either on or off the exchange, these transactions swiftly commence and at very low fees as well.
Ethereum Basics
What is Ethereum?
Ethereum is an open-source blockchain and decentralized crypto with smart-contract functionality and is a community-driven technology used by millions of apps and platforms across the net, it is referred to by most as the ‘programmable blockchain’ and since released in 2015 became the second-largest crypto.
Eth and its explosive growth is largely contributed to its developmental capabilities as developers are able to expand on its technology to bring products/services as well as features that Bitcoin is not able to provide, its popularity is marked by its market cap reaching $100 million this year for the first time ever.
This open-source software platform lets users launch apps or cryptos of their own using Ether which is the network’s native currency, it can be sent to or from wallets on its blockchain at fast speeds and for minimal costs, and being a decentralized currency supported by miners, is not controlled by one person.
ETH has rivaled BTC in terms of uses and features as while it used blockchain technology to facilitate transactions it leverages the power of blockchain to do much more, BTC is limited by its ability to be earned and distributed whereas Ethereum allows developers to build and launch web applications.
How is Ethereum Different from Bitcoin?
Bitcoin is most easily described as a digital dollar without the formal regulations tied to traditional fiat currencies as it is not tied to banks or federally-regulated authorities, this is what makes its concept so disruptive, it is not a company or technology but simply personal funds of holders held in digital form.
ETH is a crypto like Bitcoin and is one that many believe will outpace Bitcoin as the dominant of all coins in the market and what makes it unique to BTC is its technology, the value of ETH is referred to as Ether and like Bitcoin is traded by consumers and investors or used to buy into Initial Coin Offerings, or ICOs.
The main difference between ETH and BTC is that Bitcoin is nothing more than digital currency whereas ETH is a software-based ledger used by people and developers to build programs, both Ethereum and Bitcoin operate on blockchain technology though the developmental uses of ETH are much more robust.
ETH is great for innovation and has strong support from The Enterprise Ethereum Alliance which is a group of Fortune 500 firms that collaborate in their building of applications on Ethereum's blockchain, this 'smart contract' technology allows companies to automate even the most complex of processes.
What are Smart Contracts?
Smart contracts is the term used to describe computer code that automatically processes operations or agreements on blockchain-based platforms and it can either be the sole manifestation of agreements between parties or may complement conventional text-based contracts that resolve certain provisions.
Smart contract coding is emulated and distributed across many nodes on the blockchain and as such can benefit from increased immutability and permanence though added security is a vantage point of it as well, if involved parties indicate parameters are met by transacting, the code will then start to execute.
Smart contracts are computer programs or transactional protocols designed to execute operations automatically in accordance with the terms of a contract or agreement, its objectives are to reduce the need of trusted intermediaries and arbitrations while reducing accidental and malicious actions.
Smart contracts are potentially the most useful of all blockchain tools as they enable users to transfer everything from crypto to fiat currencies to even physical goods around the world, these self-executing contracts remove administrative overhead and allow businesses to automate applications with ease.
Why are Bitcoin and Ethereum the Largest Cryptos?
Trust and Brand
Bitcoin and Ethereum are no doubt the most talked-about cryptos today and given their five to over ten years in the market have amassed an ever-growing network of support from retail traders and seasoned investors as well as institutional firms that in recent years have poured billion of liquidity into the space.
Bitcoin for the first time since launching in 2009 reached a trillion-dollar market cap in 2021, Ethereum, the second-largest crypto by market cap, reached its all-time market cap size of over $200 billion, and its growth, in addition to Bitcoin’s, is only expected to increase as their supplies swell and demand grows.
Bitcoin and Ethereum are decentralized currencies and with Bitcoin being the first-ever made attracted early audiences of enthused buyers that over time became more receptive to the idea of a decentralized financial economy, by the time Ethereum released, which brought new features, it spread like wildfire.
These two coins are the largest as they are trusted and branded as being secure which indeed they are but given that Bitcoin is viewed as a valued asset resistant to inflation and Ethereum a developer-dream coin they have both become the most valued of all coins with backing and support far surpassing others.
Early Mover Advantage
Bitcoin and Ethereum launched in 2009 and 2015, respectively, and since have soared in value so much that even those that once negated its potential as a valued asset are now investing into it, when these coins first launched they were pennies to the dollar of current values and amassed wealth for millions.
Bitcoin was the first crypto to ever exist when incepted in 2009 and at the time was a new technology that to some was revolutionary and others a dream not grounded in reality, early adopters that bought Bitcoin or Ethereum greatly benefited from the large movements these coins saw in the years to come.
Bitcoin has one of the most volatile yet lucrative trading histories with its first rise in value from $0.0008 to $0.08 taking place in 2010, it since underwent many rallies and crashes since then, these fluctuations reflect investor enthusiasm for the coin that was meant to circumvent traditional banking systems/fees.
Ethereum launched six years after BTC and was purposed to be more versatile in use as it is a blockchain software enabling people to build applications on it, which in comparison to Bitcoin whose sole purpose is to allow transactions to occur has greater potential according to popular opinion, these ever-growing cryptos and the values they hold have brought staggering gains to both early and late adopters of them.
Integration into Mainstream Finance
There is no doubting that 2020 will be remembered as the year of pandemic-reckoned economies and record-high unemployment rates though it is the year that will also be remembered for the institutional push into cryptocurrencies which began in 2019 and accelerated even more as the new year progressed.
One of the greatest contributors to the value cryptos has is its usability and potential to be adopted into mainstream financial products and services and given that decentralized services from car insurance to even health-coverage policies now exist it is safe to say it has embedded itself into mainstream services.
There is no debate on whether or not Bitcoin brought the onset of decentralized finance to mainstream transactional sectors though Ethereum let the technology blossom to full potential, integrated into most of the services we already engage with there is nearly no sector in which cryptocurrencies not reached.
Crypto was once the domain of outsiders though is moving closer towards mainstream adoption as large companies and governments begin to restructure the financial-system pillars to lay the groundwork for their response to the ever-growing crypto boom, and as they do, cryptos will become widespread or an entirely entrusted real-world currency altogether, it is speculative but agreed by most to be possible.
Simple Ways to Invest in Bitcoin and Ethereum
Buy and Hold (HODL)
Investing and trading may be confused as the same though there are distinguishing differences between them as each require traders to have various mindsets and approaches to be profitable, the principles of each concept are imperative to investor knowledge as each is investor-ideal based on portfolio goals.
The term HODL is purposefully misspelled in place of the term HOLD and popularized among traders in crypto communities ever since a forum member used the word when sharing their strategy of holding onto assets through dips, HODLing or holding are each in the same and refers to someone not selling.
Investing in crypto-assets are for those with long-term positions that are made based on fundamentals or trends with the goal of lodging positions at prices lower than what future values are projected to be, due to the long-term position they take, they do no sell when dips occur and instead choose to HODL.
The HODL concept is premised on the long-term position where investors hold cryptos during dips just as they do during upswings with the belief that real profits are to be had over the long haul, if prices do begin to dip, some may hedge against their position or add to it over time but never fully liquidate them.
Dollar Cost Averaging
Dollar-cost averaging is the strategy of incrementally investing a total sum of money over time and not all at once, the purpose and goal of this strategy is to leverage sporadic-falling markets for lower entry points while reducing the amount of risk invested capital assumes at any given time to mitigate losses.
DCA helps investors to avoid the negative effects assumed by an investment during phases of short-term market volatility and if prices begin to fall the investor will begin to dollar-cost average the asset and in doing so can profit once prices begin to rise again, it is a good way to save time and to get the best price.
When using DCA, the trader first decides the amount of money they will invest along with the asset they wish to purchase, which in this case is crypto, once the sum and coin are known, they then invest a small portion of the lump sum in equal installments over a specified length of time as prices fall and decline.
Committing to dollar-cost-averaging means the investor will inject cash into their holdings at times when the value of the coin is dropping which is likely to occur during market sell-offs where huge volumes of the coin are sold within twenty-four hours, this strategy is a good way to reduce the cost-per-coin price paid by investors as you only invest small amounts at a time and only when prices are quickly declining.
Fundamental Analysis
Cryptocurrencies hold no intrinsic value and are not backed by physical assets like gold or silver and as such have been the subjects of extreme volatility ever since the first crypto (Bitcoin) was released over ten years ago, while these assets are in a league of their own they share common trading fundamentals.
Investments into any asset should be done with caution and strategy and only funds that can be lost or afforded to risk should be used as even the keenest of seasoned investors are prone to taking losses from investments and accumulatively there have been billions of dollars lost by investors in the space.
There is no denying the great potential most coins have and especially ones like Bitcoin and Ethereum that have proven their worth in terms of value and uses to become the real-world currencies they now are, but as with all cryptos, fundamentals are imperative to profits and is why strategies should be used.
Crypto investors and especially those that are new should never invest funds they cannot afford to lose and when trading should always review the fee structures of the exchange they are trading on as they can quickly consume profits, speculate prices with insight and stay involved in crypto communities to sharpen your crypto-trading skills and to learn advanced fundamentals and tips to becoming profitable.
Best Places to Invest in Bitcoin and Ethereum
PrimeXBT
PrimeXBT has seen the highest levels of growth in user adoption and trade volume since its launch in early 2018 out of all major cryptocurrency trading platforms in the market and has being an example of how to bring unique value to the cryptocurrency market and dominate as a result of that.
Over the course of only a few short years, PrimeXBT has gone from launching to managing up to $7 million of global trade each and every day, as well as beginning as a crypto only trading platform and rapidly expanding to include a number of the world's leading traditional assets as well such as stock indices, forex pairs, and commodities as well.
The driving force for the exponential growth and PrimeXBT over the past years has been the myriad of unique tools and services that the platform provides its users and the different forms of value that PrimeXBT's traders and investors have been able to gain, with one of the standout examples of this being the integration of PrimeXBT's Covesting module into the platform following the partnership with the world's largest crypto copy trading platform, Covesting.io, in 2020.
PrimeXBT also provides industry-leading leverage of up to 100X on cryptocurrencies and up to 500X on or traditional assets, with users being able to margin trade both Bitcoin and Ethereum with up to 100X leverage, and this providing the opportunity to be able to maximize the efficiency of trading these two assets in 2021.
As well as this PrimeXBT has built a strong reputation for being one of the safest and most secure crypto trading platforms on the market and has remained hacked free over the last few years as a result of the implementation of a range of bank-grade security measures such as cold storage of digital assets with multi-signature technology and hardware security modules with rating of FIPS PUB 140-2 Level 3 or higher.
Binance
Binance is one of the most popular crypto exchanges and despite launching only four years ago has already earned the trophy for at one point being the largest exchange by trade volume just one year after launching in 2018, their large coin selection and low fees have made them a crypto-trader favorite.
Supported and beloved by millions of monthly-active traders and positively reviewed in cryptocurrency forums across the net they hold true to their reputation with world-class support and ever-growing pool selections that have since grown to hundreds of tradable assets, they are also home to low trading fees.
Binance is a cryptocurrency exchange that is praised for the ease-of-investing process they offer as users can create an account and invest within minutes and can do so confidently knowing the platform is using bank-grade security protocols that not only provide safe trade environments but peace of mind to users.
Apart from their industry-leading support and competitively-low fees they are also known for their suite of trading tools and financial products that are geared for both new and seasoned investors alike, their advanced trading platform allows users to leverage even falling markets for profits and with trade fees as low as 0.1%, which are even lower when using Binance Coin, you can retain greater margins of profit.
Coinbase
Coinbase was founded in 2012 and as a registered and licensed crypto exchange is one of the most-used of any other competing platform, this exchange is praised by users as having an incredibly easy investing process with supported funding sources including credit/debit cards and bank wires or even cryptos too.
As an exchange supporting over thirty million users it has high market liquidity across trading pairs and is what gives their users the ability to liquidate holdings in a matter of seconds, market liquidity is a big deal as it signals the health of an exchange, the greater liquidity becomes the easier sells are to make.
Coinbase has become a mainstream exchange in the United States and around the world in one of the hundreds of countries they support users from, operating as a wallet provider too, users enjoy seamless trading experiences and easy asset management at one place without needing another service provider.
This trading platform is known for being a beginner-friendly exchange while also catering to seasoned investors on their advanced platform known as Coinbase Pro, from trading to advanced trading tools to even institutional custodial accounts, they are a great exchange fitting for those of all experience levels.
Advanced Bitcoin and Ethereum Investment Strategies
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AI-Driven Crypto Investing
Investors in the millions entered the crypto space for the first time these past few years and most during 2017 when the ICO-crypto boom began to gain traction, although, despite the rapid surge in popularity surrounding the technology, conventional trading has subsided for many in favor of AI-driven trading.
Thousands of new cryptos presented themselves through initial coin offerings the past few years though the rise in coins popularity has not come without hurdles for new traders with a vague understanding of how crypto works as an investment vehicle and is why many have turned to AI technology to make buys.
Interoperability and automation is possible using AI-driven trading software as these prediction/analytic tools help investors make informed trading decisions based on data and not pure speculation, this is important as inexperienced traders account for a large majority of those trading within the crypto space.
As pronounced by tech innovators as the mind of the future, artificial intelligence has weaved its way into crypto with hundreds of AI-powered crypto-trading software such as Bitonyx and TokenTax now available to retail traders, such solutions are great for new traders wanting greater investment insight.
Covesting
In late 2019, it was announced that PrimeXBT and Covesting.io would be entering into a partnership in order to develop a module that would be integrated into PrimeXBT and would bring crypto copy trading to the platform for the first time, creating the world's largest cryptocurrency copy trading market at PrimeXBT's Covesting module.
Following the launch of the Covesting module as a beta in April 2020, that beta ran for the following four months until August 2020 when it was announced as a resounding success following the investment of more than $1 million in capital by different followers on the platform and the ability for the top performing strategy managers threat form of. To be able to generate up to 1800% ROI for the followers.
Since then until now PrimeXBT's Covesting module has grown exponentially in popularity and although there have been many other copy trading platforms that have launch in the crypto space over the past years, Covesting and PrimeXBT has remained by far the largest form of cryptocurrency copy trading and the most popular as well.
Investing into a Crypto Index
Sometimes called basket trading, investing in to a crypto index has many benefits compared to investing directly into a cryptocurrency as it can be more cost-effective while giving the ability to leverage markets as a whole instead of just a piece of it as you have partial ownership of many coins and not a single one.
Crypto indexes are comprised of large crypto-coin selections that are grouped together and weighted in value by market capitalization; this is known as the market cap which is calculated based on the number of coins in circulation multiplied by its current value against the United States dollar, which varies daily.
As crypto values climb their market caps do as well which will increase the value of crypto indexes that are invested in that coin, and conversely when a coin held by the index falls its value will too but since other coins are held, losses can be offset by gaining coins which makes it a safer pursuit for new traders.
Whether a new or experienced beginner it is worth considering the advantages crypto indexes have to offer as crypto markets are known for volatility and sudden price swings that can cause tremendous loss if invested into a single-declining asset, crypto indexes spread the risk and reduce the chance of losses.
In Conclusion
Both Ethereum and Bitcoin have the highest adoption and exposure of any cryptocurrencies as a result of that pivotal spot at the center of the cryptocurrency market and that widespread adoption throughout the mainstream financial markets as well, with this leading to more the general population having some knowledge of Bitcoin and Ethereum that in the other cryptocurrencies.
Although there are many solid investment opportunities in 2021's bull run, Bitcoin and Ethereum remain rocksteady investment choices that will perform well throughout this year and are considered to be some of the safest bets of any crypto assets to invest into throughout the bull run, as well as both assets being considered to have high upside potential potential this year.
If you like to learn more about using the platforms that we have mentioned as some of the top performing crypto trading platforms to invest into Bitcoin and Ethereum in this year's crypto bull run, check out PrimeXBT, Binance, and Coinbase.