How to Build Your Crypto Wealth

If you want to make a profit through cryptocurrency investing, following time-tested approaches is recommended.

How to Build Your Crypto Wealth

Building wealth offers the freedom and flexibility you need to pursue your passions and dreams, whether it’s traveling the world or starting a business. Accumulating money is a means to an end. It allows you to do bigger things in life and your community. It opens doors, frees up decisions, and makes life possible, regardless of what’s going on in the economy.

You can make money through cryptocurrency, but you won’t become a millionaire overnight. With more stable coins like Bitcoin or Ethereum, you don’t have to take a commensurate amount of risk to make long-term returns. Simply put, you can grab a piece of the pie.

If you hope to make a profit through cryptocurrency investing, it’s recommended to follow time-tested approaches.

Buy and Sell Crypto on an Expert-Picked Exchange

Investing risk vs. wealth — Stock Focusing themetic investing protect risk and wealth from recession and inflation economic chart background

If you can’t wait to buy, sell (or trade) cryptocurrencies, you’ll be happy to know that it’s easy to get started. You can invest in digital assets easily and securely through an exchange that offers competitive transaction rates.

There are countless platforms globally, with more launching every day. Many factors come into play regarding selecting a cryptocurrency exchange, yet volume has always been a major determinant.

Binance is the largest cryptocurrency exchange in the world by trading volume. The 24-hour volume is reported at $6,586,081,322. As far as cryptocurrencies and exchanges are concerned, reputation matters, so don’t create an account until you’ve rigorously researched the exchange you’re considering.

Digital assets like Bitcoin experience price swings that produce trading opportunities. The question now is: How do you know when to buy and sell? In case you didn’t already know, you must buy low and sell high.

There’s no guarantee whatsoever this strategy will be successful, so ensure the market conditions are favorable. Pay close attention to trends and technical indicators to get a much better understanding of what momentum is driving prices and make well-informed decisions based on bullish or bearish movements.

There’s still some risk involved because you can’t accurately time the market, so take into account consumer sentiment or geopolitical events.

Get a General Feel of What’s Out There

Bitcoin and altcoins cryptocurrency over $100 bill

Bitcoin preserves the encapsulated wealth, meaning that it retains its worth over time. Its limited supply is enforced by the protocol, which states that only 21 million Bitcoins will exist. As the cryptocurrency is edging closer to its maximum supply level, fewer coins will be available for public circulation, and Bitcoin will become scarcer.

Bitcoin is often compared to gold because it tends to rise as the recession is approaching, so it’s a useful hedge against market corrections. If you have a high-risk tolerance, but you’re in a high financial position, you should consider investing in altcoins. They’re smaller and have lower valuations.

As the name clearly suggests, altcoins refer to cryptocurrencies other than Bitcoin or Ethereum that provide new or additional capabilities. Since there are so many altcoins, figuring out which one has the long-term potential can be challenging.

Take the time to do your homework and examine various coins, looking at their use cases and networks. It’s best to ignore overvalued assets and stick to undervalued altcoins because they’re in a better position to make up for lost ground.

Polygon is one such example. Many investors consider it heavily undervalued. It comes as no surprise, considering Polygon’s native token (MATIC) failed to hit a price increase. Still, it has growth potential and has been consistently profitable.

Lock Your Coins in a Crypto Wallet

As a newcomer, you buy cryptocurrency from an exchange and leave your holdings to the website’s custodial wallet. You can transfer your cryptocurrency to a wallet to have more control over it.

That said, not all wallets are created equally, so learn the differences to make better decisions. Technology gives you ownership of your funds, but you’re responsible for your own safety in today’s cryptocurrency ecosystem.

If you intend to hold Bitcoin or Ethereum as a long-term investment, keep it in cold storage to protect it from hackers by using a flash hard drive. Keep track of your private keys and store them in a secure place.

Clearly, you don’t spend your money. If you don’t plan to sell your coins in the immediate future, staking can help you earn passive income. Volunteer to take part in transactions on the blockchain, and you’ll receive a share of the transaction fees or newly created tokens.

Proof of work cryptocurrencies like Bitcoin use mining, so they don’t support staking. Ethereum, on the other hand, allows staking. Liquid staking solutions make it possible for you to state your Ethereum without being caught in the protocol.

In return, you get tokens that can be used as collateral or fiat money.

Set a Time Frame, a Stop Loss, and a Goal

Bitcoin, BTC, and cryptocurrency trading

Finally, yet importantly, you must decide on a time horizon before investing. It can be anywhere between five to 10 years, so determine how long you’re willing to hold. Your strategy will depend on how long you can keep your money invested.

Investments in the cryptocurrency markets can generate investments in the long run, yet they’re still exposed to short-term market fluctuations. If you don’t want to lose all your money, set a stop-loss order so that you’re not exposed to market volatility. It’s a safety measure that protects you by setting price limits based on your risk tolerance.

What’s most important is to have a goal for investing in cryptocurrency. Not only can it help you define your objectives, but it can also help you stay focused and motivated.

Saying something like "I want to be comfortable in retirement" is useless. Have a specific date and dollar cost. Write down your goal by answering the questions who, what, when, where, and why.

As you explore the world of cryptocurrencies, you must stay true to yourself and, above all, your objectives. Consider factors such as your income, age, and future outlook.

Bottom Line: Be Patient and Smart

The present time abounds in opportunities, and cryptocurrency is the most interesting one. If you’re looking to build long-term wealth, take your time.

This article is a partnership with Getx Local SRL.