Cryptocurrency investing enthusiasts have started 2021 on a high note. On January 3, Bitcoin exceeded the $ 34,000 mark and has since stabilized above $ 30,000; an increase of more than 350% over one year. Ethereum, the sector’s second flagship virtual currency, exceeded the $ 1,000 mark on the same date, and has been hovering around this threshold since the start of the year, recording a staggering increase of 483% over one year. Crypto has always been a high-yield investment, but the start of 2021 promises to be more promising than ever, in particular thanks to the increased interest of several large institutional players who are boosting the prices of these digital currencies.
How to get the most out of your cryptocurrency investments?
There are several techniques for investing in crypto. One of them is to store your crypto in a safe and passively wait for their fruition. The second is to trade, that is, to sell and buy a crypto for short periods of time in order to take advantage of fluctuations in the currency. Among the trading techniques, the results season trading strategy consists of waiting for the publication of financial results following the closing months of the quarterly results. It usually takes place in January, April, July and October, and gives the underlying market trends, to allow investors to focus their funds on sectors in good financial health.
3 key steps before embarking on virtual currency trading
To be successful in trading in cryptocurrencies, you have to set up an investment strategy, as with any other more classic investment method:
- Choose a dedicated broker or an online trading platform;
- Fund your account, that is to say deposit funds to be able to invest in cryptocurrencies;
- Do your research and choose the cryptocurrency in which to invest. To do this, focus on technical analysis (TA), which allows you to anticipate the rises and falls of cryptos thanks to technical indicators. This allows you to anticipate market trends and therefore start trading calmly. It is also advisable to seek the advice of a community of experienced investors (forums, Slack, etc.) or to consult dedicated articles on the subject of cryptocurrencies.
The main cryptocurrency trading strategies
There are many strategies for investing in cryptocurrencies. Among the most popular are:
Holding, also known as hodling among insiders, is one of the most popular investment strategies and one of the simplest. It simply consists of not selling your cryptos, and waiting for prices to rise, again and again! Be careful though, crypto are volatile currencies, and the risk of loss should not be overlooked.
A trending market is a “trend” market. This strategy therefore consists of investing in healthy, growing sectors or markets and keeping an open position, as long as you deem it necessary. To succeed in this investment strategy, it is important to stay abreast of the latest market trends and news likely to impact the price of virtual currency, which is by nature more volatile than any other type of investment. Trading by earnings season is a variant of trend trading since it consists of investing according to market results, published quarterly.
Hedging consists of “hedging” your crypto and thus limiting the impact of currency fluctuations. By hedging, the investor will therefore open short strategic positions to cover his long positions. For this, we can have recourse to contracts for difference (CFD) which allow to position on an asset, without holding it. This avoids having to sell long-term crypto to be able to invest. This technique of short selling is obviously not without risks and it is necessary to put in place risk management strategies in order to guard against market fluctuations.
Cryptocurrency is an investment of the future with unrivaled rates of return. While investing in virtual currency is not without risk, it is nevertheless within everyone’s reach and is experiencing growing interest, including from institutional investors; a pledge of its seriousness, and the fact that this trend is well on the way to lasting.