7 Best Crypto Investing Strategies for Beginners [2024]

There is no doubt that crypto is one of the most popular places, where many people try to tune in. Recent data says, there are over 560 million cryptocurrency users worldwide. And the number of users is still growing. 

However, how can individuals who are new to crypto enter this crowded and complex crypto market for the first time? This particular market is very volatile, and prices go up and down, even within a short period of time. However, any user can take advantage of these changes and invest wisely with the right crypto investing strategies.

In this context, we have defined the basic crypto investing strategies that every novice should know, in order to get started the right way. For instance, if you are a frequent trader who does not or has never done day trading, then you can relax and understand these strategies anyway. Knowing the fundamentals will save you from unnecessary hazards and mistakes and possibly reduce your eventual financial loss.

What is cryptocurrency?

Cryptocurrency is a digital currency in which secure transactions and a new unit’s creation are controlled using cryptography. It is maintained by a decentralized system, which means this currency isn’t issued or regulated by a central authority. The transactions are recorded on a publicly distributed ledger called a blockchain.

The creation of new cryptocurrencies is done through a process called mining, where complex problems are solved by specialized hardware, earning new cryptocurrencies as rewards. This currency is maintained and secured by blockchain technology, ensuring security and transparency.

Furthermore, the benefits of diversification and easy accessibility can also be attained with this currency. But along with the benefits come several drawbacks too. The cryptocurrency is relatively new and extremely volatile, making it complex with rapid and unpredictable price changes.

Why do you need Crypto Investing Strategies?

Reckless investing in the crypto market, or any market for that matter, often leads to more losses than the gains one makes from them. Proper guidance and strategies act like the guiding light to help you distinguish and choose what would work best for you. There are several more reasons why you need crypto investing strategies. Some of the key reasons are mentioned below.

• Risk Management

  The main and most important reason for needing crypto investing strategies is to seek help from several strategies and diversifications to navigate one’s way through the constant price fluctuations in the cryptocurrency market. These strategies help ensure that you aren’t overly exposed to the potential risks.

• Planning and Controlling

  You can rely on crypto investing strategies like dollar-cost averaging and diversification to maintain emotional control and avoid any impulsive decisions. Moreover, strategies like the buy-and-hold strategy and swing trading can help ensure that your returns are maximized over some time.

• Education and Understanding

  Sufficient knowledge and understanding of a market and its workings are a must to ensure informed decision-making. This not only helps you avoid making costly mistakes but also ensures your chances of profit from the cryptocurrency market. These criteria can be met with the help of crypto investing strategies too.

• Long-Term Goals

  The fluctuations, especially in the short term, in the cryptocurrency market are comparatively high, making the option of long-term investing far more attractive. Crypto investing strategies to study crypto indicators help you focus on the long-term potential of your investments.

• Tax Planning

  While investing in the cryptocurrency market, it is crucial to consider the tax implications of your investments and plan accordingly. This helps ensure that their tax liabilities are minimized.

These are a few reasons why crypto investing strategies are crucial for anyone trading/about to trade in the cryptocurrency market.

How to Choose Which Crypto to Invest In?

Deciding on the type of crypto you want to buy can sometimes be overwhelming; however, simplifying it into some steps makes it easier. Here are some crypto investing strategies that you should consider to make smarter decisions.

• Understand the Project: Thoroughly research the purpose behind the cryptocurrency. What does it offer? Projects with real-world problems and a strong team are more likely to succeed.
• Look at Market Capitalization: The market cap shows the total worth of the coin. Larger market cap coins are usually more stable, making them safer for beginners. Smaller coins might offer higher returns but also have higher risks.
• Check the Development Team: The team for cryptocurrency should be solid with relevant experience. Also, a strong community can show that people trust the project.
• Consider Technological Edge: Always check, if this cryptocurrency offers new or solves common problems. Projects that offer new solutions, like faster transactions or better security, are more likely to be noticed.
• Evaluate Partnerships and Adoption: When a cryptocurrency works with big companies, it can be more trustworthy. See if it’s used in real places, like businesses or apps, because that means it has a better chance of doing well.
• Understand the Regulatory Environment: Rules can affect, how much a cryptocurrency costs. See if it’s okay with the law and if it might have trouble with the law later.

7 Best Crypto Investing Strategies

When it comes to investing in cryptocurrency, there are several strategies that people use to ensure profits. Some of these strategies are instant hits, while others land you on the wrong side of the boat.

So, to ease the burden of having to research and spend hours finding the best crypto investing strategies, here is a list of prevalent strategies in the crypto market.

1. Dollar-Cost Averaging Strategy

The foremost strategy on our list is the dollar-cost averaging strategy. In this crypto investing strategy, the same amount of money is invested in target security at regular intervals over some time, regardless of what the price is. A small, recurring purchase is made as per the predetermined schedule; it can be monthly or weekly, rather than purchasing manually each time.

In this strategy, an investor buys more cryptocurrency when the price drops and the same investor tends to buy less cryptocurrency when the price of that cryptocurrency rises. The investor also frequently makes opportunistic additional purchases whenever the market experiences a dip.

2. Buy-and-Hold Strategy

As per this crypto investing strategy, the investor determines the cryptocurrency he believes in and holds that particular cryptocurrency indefinitely. By doing so, the investor increases the likelihood of substantial gains from the given cryptocurrency.

This strategy is quite popular, especially among investors who are committed to the long-term potential and payout of crypto.

3. Day Trading Strategy

This crypto investing strategy is especially for investors who want to invest in the crypto market in the short term. The investor profits from short-term cryptocurrency price movements by buying and selling on the same day.

This strategy is the opposite of the buy-and-hold strategy. But with the profits earned comes a high level of risk and energy involved in using this strategy.

4. Swing Trading Strategy

As per this crypto investing strategy, the investor capitalizes on the short-term and medium-term price swings by holding positions for several days, even weeks. The positions are held using several technology indicators that help identify entry and exit points in the market.

5. Diversification Strategy

As per this crypto investing strategy, investors invest in cryptocurrencies from different slabs to avoid situations of overexposure to losses.
Exchange-traded funds (ETFs) are SEC-registered investment companies that allow investors to pool their money in a fund that invests in assets such as stocks, bonds, and more. ETFs can be used to diversify a portfolio and gain exposure to various crypto assets.

6. Arbitrage Strategy

In this crypto investing strategy, investors trade on multiple platforms or exchanges to earn profits. The investor looks for the given cryptocurrency at the minimum price across all platforms.

He then purchases that at lower prices before sell the same cryptocurrency for a higher price on another platform. The purchase and sale of the given cryptocurrency on different platforms is how investors using this strategy earn profits.

7. Staking Strategy

This crypto investing strategy encourages the investor to hold and lock their assets in a wallet, which further supports the operations of blockchain networks. In return for holding and locking assets, the investor earns rewards, which are the same as earning interest. This strategy is less active but is considered a potentially rewarding one.

Additional Key Points Related to Investing Strategies

These are some other key points that you should keep in mind while investing in the crypto market. The below-mentioned points are crucial as well to ensure that you are investing right in the crypto market.

• Taking advantage of airdrops 

  Airdrops are free tokens that are distributed to create awareness about a new cryptocurrency in the market. These airdrops can be used by investors for investment, trading, or converting into cash.

• Liquidity Considerations

  Good investors prefer cryptocurrencies with higher liquidity, as this helps reduce price volatility and enhance overall stability.

• Crypto Indicators

  Some commonly used crypto indicators are moving averages, relative strength, crossovers, on-chain activity, and mempool size. These technical indicators, when used with blockchain analysis, ensure a more complete perspective for investors.

• Courts and Regulations 

  Legal cases, regulatory developments, and legislative proposals (domestic or international) alter stake yields, development funding, and other dynamics. This further affects the price of cryptocurrency and its adoption.

• Use Safe Storage 

  Investors can store their cryptocurrency in a hardware wallet (like Trezor and Ledger) or with a trusted crypto custodian. This ensures that the investor has reinforced security protections.

• Invest what you can afford to lose 

  The crypto market is comparatively new and extremely volatile, meaning that there are significant gains and losses. The main reason is the scepticism and opportunism in the crypto market. Thus, one shouldn’t invest more than 5% of their portfolio.

With this, we come to the end of crypto investing strategies and precautions that you can keep in mind the next time you invest in the crypto market.

Top Cryptocurrencies in the Market 

This segment of the article talks about the top cryptocurrencies to invest in the market at present.

There are over 10,000+ cryptocurrencies around the world. Some of the currently trending currencies are:

Ethereum (ETH)

Bitcoin (BTC)

Solana (SOL)

Binance Coin (BNB)

Dogecoin (DOGE)

Toncoin (TON)

Ripple (XRP)

What is the Good Time to Invest in Cryptocurrency?

There is no perfect time to invest in cryptocurrency. Some investors prefer to buy early when prices are low, while others wait for the market value to go down. But the best timing is when investors are mentally prepared for the risk and cryptocurrency fits their financial goals. Here are some things to consider when investing:

1. During Market Corrections: Buy when prices go down after they reach their highest point to get better deals.
2. Long-Term Plan: Use dollar-cost averaging (DCA) by investing a fixed amount regularly to help you avoid buying high and selling low.
3. Be cautious of hype: Avoid purchasing when prices go up quickly because of media hype, as this could lead to short-term bubbles.
4. Bitcoin Halving Events: These things often make prices go up later on, which can be a good time to invest.
5. Financial Readiness: Only invest money you can afford to lose, and make sure you have a solid financial base.

Conclusion

In summary, for the first time, facing such phenomena as investing in cryptocurrency may seem to be a challenging process, but at the same time, certain crypto investing strategies will make it easier. Fundamentals such as knowing what the market is, how to protect your funds, and the possibilities to invest are opportunities, that will enable beginners to better their choices.

If you are a beginner, try to start with small, and most importantly, do your own research first, and focus on your long-term goals rather than trying to make quick profits. Remember, the crypto market can be very changeable, so being patient and planning carefully are key to doing well.

With the knowledge from this guide, you can start investing in crypto with more confidence and avoid mistakes that new people often make. Take your time, learn as you go, and always know what’s happening in the market.

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Frequently Asked Questions

Q1. Which are the best crypto investing strategies?

The best crypto investing strategies include the buy-and-hold strategy, dollar-cost averaging strategy, swing trading, arbitrage strategy, and staking strategy. There are other strategies too, like the diversification strategy, the day-trading strategy, and the master note strategy, that are equally popular.

Q2. Which crypto gives the highest return?

Some of the cryptocurrencies with higher returns include Bitcoin (BTC) and Ethereum (ETH). The market capitalization of Bitcoin is $1.39 trillion, whereas the market capitalization of Ethereum is $455 billion.

Q3. Are there any tax implications when implementing a crypto-investing strategy?

Yes, you should take into consideration certain tax implications while investing in the crypto market, as they affect the gains and losses of your investment. For instance, under Section 115BBH, gains from the sale of cryptocurrency are subject to a flat tax rate of 30%.

Q4. What are the top cryptocurrencies in the market at present?

The top cryptocurrencies present in the crypto market at present are:

• Bitcoin (BTC)
• Ethereum (ETH)
• Solana (SOL)
• Binance Coin (BNB)
• Dogecoin (DOGE)