Cryptocurrency has rapidly become mainstream as an investment asset class, but putting your hard-earned money into fairly new technology prompts many doubts. In fact, there are many different ways to invest your money in crypto, from buying cryptocurrencies directly to investing in crypto funds and businesses. The plethora of options in crypto investment makes it all the more tricky.
If you are considering investing in cryptocurrency, then you must research various options and their pros and cons to make a better decision. To add crypto exposure to your portfolio, you first have to align your investment goals with other financial needs.
Regardless of how much money you have and what type of investor you want to be, this article can help you see the bigger picture of the crypto investment industry. Let’s have a look at a few different investment options in one of the newest and most inventive asset classes that can be used to draw some worthy income from crypto in 2023.
Cryptocurrency
Cryptocurrency is a virtual, electronic-only currency used as a medium of exchange. It’s a hot commodity these days, especially if you choose the most popular and traded coins. For example, Bitcoin, the most traded digital coin, is the most widely available, has significant price fluctuations and attracts many traders daily.
Another investment widely preferred is Ethereum. Ethereum ranks second in the trading top and is most likely here to stay, especially since the merge in September 2022 secured this type of transaction and made the whole process environmentally friendly.
Crypto is a go-to for investors who are willing to risk money in exchange for the possibility of much higher returns. The risks of this investment stem from its volatility: its price can quickly fall or rise.
This can happen with any digital coin, so it’s best to be prepared before making a cryptocurrency purchase. Examine the most popular cryptocurrencies and choose a reputable exchange that records and tracks fluctuations in real time.
You can base your trading strategy on the prices that appear when you open Binance, as the colours green and red are likely to inspire you immediately. Don’t forget that there are various types of investors – you can be a long-term investor who holds on to an asset in the hopes that its price will rise and bring profits, a trader that makes his plan according to the actual price and so on.
Also Read: 10 Best Crypto Trading Strategies
DeFi Lending Protocols
DeFi is an excellent way to extract passive income and boost your portfolio. Also, there are many platforms that offer stunning interest rates so you have plenty of options to choose from. Understand that a DeFi lending protocol allows users to lend and borrow cryptocurrency assets without the need for third-party involvement.
By using the DeFi lending platform, lenders can earn DeFi yield which can start a new stream of revenue for crypto holders. The platform offers long-term investors the chance to earn high returns via DeFi interest rates.
Some of the best DeFi lending platforms to begin are Aave, Oasis (MakerDAO), Sturdy, Compound, Alchemix, Fulcrum, Solend, and Anchor. To choose which platform will be best for your investment purposes, you must strategize if you want to deposit the funds for a longer period of time or if you are looking for flexible deposits.
Various DeFi lending platforms offer a wide range of interest rates and it all depends on the chosen DeFi project, its blockchain, and the deposited currency to generate more DeFi yield over time.
Crypto Staking
Crypto staking helps you earn interest on your existing holdings and investors now have a range of platforms to choose from for their different coins, staking periods, and crypto interest rates.
The widely used platform to earn interest on crypto includes AQRU which offers up to 12% interest with no lock-in periods, Crypto.com where you can stake 40+ cryptocurrencies and stablecoins, and Nexo offers compound interest daily.
Most recently, Binance.US announced a 6% APY (Annual Percentage Yields) Ethereum staking program. In this, users can begin staking ETH with as little as 0.001 ETH. Staking rewards change based on the volume of Ethereum transaction fees, among other factors.
Crypto IRAs and Investments
If you want to generate a passive source of income then you must consider opening a crypto IRA. It’s a more traditional approach to investing in crypto for your retirement accounts. One such example is My Digital Money which offers a special type of retirement account that allows you to invest in cryptocurrencies instead of conventional ways to invest in stocks and bonds.
All you have to do is open an account with one of the companies that offer crypto IRAs, and then transfer some money into it. Once your account is funded you can use it to buy cryptocurrencies.
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