How to Invest in Bitcoin
If you’re looking to invest in Bitcoin, then you’re in luck. This cryptocurrency has been on the rise for quite some time, and its popularity doesn’t seem to be slowing down. More and more people are interested in investing in Bitcoin every day.
But how do you actually go about investing in Bitcoin? Well, that’s where this guide comes in. We’re going to walk you through everything you need to know about how to invest in Bitcoin.
Investing in Bitcoin: A Walkthrough
First, it’s important to figure out how much money you’re willing to spend on these new and exciting markets. Cryptocurrencies are quite volatile so never risk more than what can be affordably lost — it will help guarantee your safety during the ups-and-downs of crypto trading.
Once you’ve decided how much to invest, the next step is to find a good Bitcoin exchange. These exchanges allow users to buy and sell cryptocurrencies like Bitcoin, Ethereum, Litecoin, and more. There are many different exchanges to choose from, but not all of them are created equal. Some exchanges have better user experiences, while others offer more features or lower fees. Some exchanges offer better security features, while others are more user-friendly.
When deciding which exchange to use, it’s important to do your research. Make sure to read reviews and compare different exchanges before making a decision. Compare features, and weigh the pros and cons of each exchange before deciding which is right for you.
Once you’ve chosen an exchange, it’s time to start investing! Most exchanges allow users to buy a set amount of Bitcoin (or other cryptocurrencies) with fiat currency like USD, EUR, or GBP.
You can also often trade one cryptocurrency for another on these exchanges. For example, if you have Bitcoin and want to trade it for Ethereum, most exchanges will allow you to do so.
Many exchanges also offer a ‘wallet’ service. This is essentially a way to store your Bitcoin (or other cryptocurrencies) on the exchange itself. However, this is not always the safest option — it’s generally better to store your Bitcoin in a personal wallet that you control.
What Do You Need to Invest in Bitcoin?
To purchase bitcoins, what do you need? It’s easy enough to get started.
- A bank account or credit card or PayPal account to fund transfers.
- A wallet – hot or cold – to store your bitcoin balance.
- An account on a p2p exchange or brokerage firm to buy, sell, and trade bitcoin with ease.
The last one is key, as bitcoin prices fluctuate on a near-constant basis.
Methods to Invest in Bitcoin
When it comes time to purchase bitcoins, you have a few options. You could opt for a bitcoin ETF, where bitcoin is bought and traded by a company like a normal currency exchange, not like cryptocurrency exchanges.
Alternatively, you could use one of the many p2p exchanges or traditional brokerage firms, like Robinhood or eToro, to buy and sell bitcoin.
Lastly, there’s a chance to earn free bitcoin by mining, though it is taxing on one’s computer and electrical bill, and you have a lot of competition.
The key thing to know, however, is that there are plenty of methods to invest in bitcoin for both newcomers and pro investors alike.
Purchasing Standalone Bitcoin
The most common way to invest in bitcoin for newcomers is to outright buy bitcoin on Coinbase or buy bitcoin on Robinhood. These are two of the most common brokerage firms on the market today, and both allow new investors an opportunity to get in on the action relatively fast.
For both services, you will require a functional bank account capable of money transfers, and an account with whichever service you select.
The thing to know about buying standalone bitcoin, however, is that when to buy and sell is completely up to you. Services like Coinbase and Robinhood do not offer investors advice on how to use their cryptocurrency. It’s a learning process, but a rewarding one.
Greyscale’s Bitcoin Investment Trust (GBTC)
Greyscale is unique in that it genuinely believes cryptocurrency will revolutionize the economic and social aspects of life. They may not be wrong, too.
But for those who simply want to invest, the Greyscale Bitcoin Investment Trust proves an effective, safe approach to entering the cryptocurrency marketplace.
Essentially, Greyscale allows individuals to apply for private placement in their Accredited Investors group, or buy crypto through a brokerage account, and become a part of an investment community with eyes on the future.
All said, Greyscale is an asset manager that proves effective for investors of all types.
Amplify Transformational Data Sharing ETF (BLOK)
The Amplify Transformational Data Sharing ETF BLOK, which is an absolute mouthful of a name for an investment manager, focuses on reducing the risk associated with ETF BLOK investment tactics, like with bitcoin and other cryptocurrencies on the market.
How? By involving investors with their active management approach to ensure timely decisions and assess both unique opportunities and the many risks associated with investing in an ever-changing space. Their goal is to offer investors like you total transparency, convenience, and access to countless blockchain and crypto companies worldwide.
BLOK, to this day, remains actively managed to ensure a higher return on assets without placing as much risk on the individual investor.
Bitwise 10 Private Index Fund (BITW)
If you want to diversify your investment portfolio, few other assets have the same level of risk and reward as cryptocurrency. It’s this reward that draws in so many new investors worldwide, and why so many asset managers come to the forefront these days.
One such investment fund is the Bitwise 10 Large Cap Crypto Index, brought to you by Bitwise. It’s a more secure way to buy cryptocurrency, including bitcoin, track risks, weigh rewards, and rebalance your investments on a monthly basis.
The fund is, overall, designed for security and convenience above all else. And anyone interested in the Bitwise Hold 10 Private Index Fund symbol can sign up to invest with the company, or buy in publicly using a brokerage account and the ticker: BITW.
Tips to Invest in Bitcoin
Understand Your Risk Tolerance
Like all other forms of investment, there are risks associated with bitcoin and all cryptocurrencies on the market. Some would consider this bitcoin high-risk investment well worth the time and energy, though.
If you want bitcoins to invest in, consider how much you’re willing to lose to make it big. Everyone has a cut-off point where, after a significant drop, it’s time to sell. Others, however, will ride the wave.
Diversify Your Portfolio
While holding a large bitcoin portfolio can prove lucrative in the long run, the key to a sound investment strategy is to diversify your portfolio. If you’re interested in other forms of crypto, like say, Ethereum or, heck, even Doge, then go ahead and buy a few coins elsewhere.
No one said you have to only invest in bitcoin. That would be a bold yet shallow move that most long-term and experienced investors would disagree with wholeheartedly.
It’s sound advice to dip one’s toes into cryptocurrency. To buy a single bitcoin, it currently costs tens of thousands of dollars. Too few have that kind of money lying around to invest in a digital currency.
Instead, start small. You can purchase small pieces of bitcoin through a brokerage account and, over time, it will add up significantly. Before you know it, you’ve accumulated a massive bitcoin wallet worth thousands, if not tens of thousands, of dollars.
Bitcoin Investment Strategies
Once you have your Bitcoin, it’s time to start investing! There are many different ways to invest in Bitcoin, and each method has its risks and rewards. Here are a few of the most common methods:
Trading Bitcoin on Short-Term Volatility
When it comes to bitcoin trading advice, the one thing most financial experts will tell you is that short-term volatility does not matter for long-term investors. Price fluctuations will see bitcoin short-term prediction plans rise and fall, and the bitcoin forecast short-term solution is to stick with the cryptocurrency for the long-term to see impressive gains.
As we’ve seen in the past, bitcoin continues to fluctuate in price. But for the most part, it generally rises higher than the previous year at some point or another.
Trading is the most common way to invest in Bitcoin. This involves buying low and selling high and can be quite risky, as it’s possible to lose money if the market moves against you.
Mining is the process of verifying transactions on the blockchain and receiving rewards in the form of Bitcoin. This can be a risky investment, as it requires a lot of upfront capital and hardware.
Holding is probably the safest way to invest in Bitcoin. This simply involves buying Bitcoin and holding it for a long period, regardless of the ups and downs of the market. This method requires patience and discipline but can be quite profitable in the long run.
Once you’ve decided how to invest in Bitcoin, it’s important to keep an eye on the market and monitor your investment. The cryptocurrency markets are very volatile, so prices can rise and fall quite dramatically.
It’s also important to diversify your investments. Don’t put all your eggs in one basket! Invest in a variety of different cryptocurrencies to minimize your risk.
No matter which method you choose, always remember to do your research and never invest more than you can afford to lose. Bitcoin is a volatile market, and investments can go up or down at any time. With that said, happy investing!
The Bottom Line
The bottom line is, when it comes to investing in bitcoin, think long-term over short-term gains. Most investors – amateur or otherwise – do not put themselves into a position where buying bitcoin one day means selling it the next for a quick profit. That’s small-scale thinking and, unfortunately, unlikely to make you any sort of profit in the long run.
The idea with bitcoin is a fluid, long-term investment that gains traction, as it has over the years, and bolsters the digital economy. You’re part of that economy now, as an investor, so think big and plan ahead when and how to buy and sell bitcoin!