Are you looking for different ways to invest in bitcoin? As you know, bitcoin is highly volatile and involves high-risks; you need a proper strategy to become profitable. However, keep in mind that you never invest more than your risk tolerance zone.
Well, there are many traditional ways to invest in bitcoin, such as:
- HODL: Buying bitcoins and holding it for a long time.
- Day Trading: Buying and selling for profits within a single day by analyzing its price charts.
- Option and Future Trading: These are derivative trading of bitcoin
Among these traditional ways, day trading is the most popular, and some traders who have some expertise also trade in the options and future. Many bitcoin traders at Crypto Revolution make significant profits by day trading this year.
Anyway, let us know about the top five ways to successfully invest in bitcoin in 2020. For that, you need to know about different types of investment options available for bitcoin.
Bitcoin Investment Types
In the last ten years, several ways of investing in bitcoin have evolved. The following are the major types of bitcoin investments.
- Direct Investment
- Capital Market Investment
- Index Funds
These are the major types of bitcoin investment types. But most of the retail investors with basic knowledge want to invest directly in bitcoin. On the other hand, professionals who have some experience and knowledge of investing invest in different types of investment options available.
Now let us know how you can become successful in investing or trading bitcoin by following the five profitable investment strategies.
HODL is a misspelled word of the hold. It was intentionally used by a trader in a bitcoin community, which has then become popular. Since then, anyone who is buying and holding bitcoin for a long time is known to be a “Hodler.”
In this strategy, the investors purchase bitcoin and hold it for a long time. The investor believes in the future value of bitcoin and considers the volatility just as a jerk in the long-term journey.
Long Position Trading
Long position trading refers to buying at a lower price during the start of a price rally (uptrend) and selling at the end of the rally. It is one of the popular investment strategies and people who want to invest in short term gains; they opt for it.
Nowadays, many trading exchanges offer leveraged trading. That means you can borrow money from the broker for trading. However, this is not recommended for beginners.
Short Position Trading
This is the opposite of long position trading in terms of position. That means you need to call for sale transactions first then buy transactions later. It is profitable when the price of bitcoin is in a downtrend.
Once you look at the price chart, you can easily understand it. You order a sell transaction when the price starts moving downward and buy it when you predict that it will not go down further. So this is also a popular day trading strategy.
Bitcoin Future Trading
In this method, you trade on a contract instead of investing in bitcoin directly. That means you speculate on the future value of bitcoin, whether it will decrease or increase, and you bet on the contract.
Bitcoin Option Trading
Like traditional options trading, bitcoin also offers the options trading. Here also you get the basic options to call and put where you pay a premium for the right. You make a contract of buying or selling the number of bitcoins on a future date.
Finally, I hope you have got a clear idea of different ways to invest in bitcoin. Now start investing by preparing your own strategy. Remember, you cannot control the price of bitcoin or risk involved in it. The only thing that is in your control is your wealth, so learn how to manage your fund. In case you need any help, reach out in the comment section. Lastly, share your views on this post, and please mention your favorite strategy.