There are numerous alternatives, and selecting the optimal path isn’t always straightforward. To simplify this process for you, we’ve assembled a list of methods to generate revenue with Bitcoin:
- Hold Bitcoin (HODLing)
The most straightforward method is to purchase Bitcoin, retain it, and anticipate an increase in its value. Why is this scenario applicable? Over the years, Bitcoin has experienced substantial price appreciation, and many investors advocate the “HODL” strategy. Bitcoin’s price experienced a surge in late 2024 when it exceeded $100,000 for the first time, and early investors who retained their Bitcoin realized significant profits.
Getting started with HODLing
If you’re a novice, the most prudent approach is to acquire Bitcoin during price declines.
Employ a dollar-cost averaging (DCA) strategy. Consistently purchasing small amounts rather than attempting to time the market assists in mitigating volatility and alleviates the stress of predicting price fluctuations.
Securely store your Bitcoin in a hardware wallet and activate two-factor authentication to safeguard your assets.
- Lend out your Bitcoin
Desire to earn revenue with Bitcoin passively? Lending your Bitcoin can be a superb avenue towards achieving this goal. Essentially, you permit others to borrow your Bitcoin in exchange for interest payments. Here are some methods you can utilize:
Centralized crypto lending platforms: The most convenient option is to engage with a centralized lending platform like Wirex, where you deposit your Bitcoin, and they manage everything. You receive interest typically ranging from 2% to 12% annually while the platform takes care of loans and associated risks. It’s convenient, yet you must place your trust in the platform to secure your assets.
Decentralized finance (DeFi) lending: If you favor a more proactive, tech-oriented approach, DeFi lending might suit you. Platforms like Compound function without intermediaries and frequently offer higher interest rates. However, there’s a caveat bugs in smart contracts, market downturns, or sudden liquidity crises can jeopardize your funds. If you’re familiar with blockchain technology, DeFi can be a rewarding (albeit riskier) alternative.
Peer-to-peer (P2P) lending: Prefer to establish your own terms? P2P lending platforms like Aave allow you to negotiate interest rates, loan periods, and collateral directly with borrowers. This approach can yield higher returns but necessitates increased effort and carries the risk of borrower defaults.
OTC lending for substantial Bitcoin holders: If you’re handling significant quantities of Bitcoin, over-the-counter (OTC) lending may be worth considering. This involves lending directly to institutional borrowers or affluent investors through tailored agreements. The potential returns are high, but so are the risksthis method is best suited for seasoned investors.
- Trade Bitcoin
If you enjoy the excitement of the market, trading Bitcoin might be appealing. It revolves around buying low and selling high. However, as straightforward as it may sound, it demands strategy, analysis, and risk management. Here are several methods to trade Bitcoin:
Day trading: In this methodology, you acquire and dispose of Bitcoin within a single day, intending to take advantage of minor price fluctuations. It is dynamic and necessitates continuous market observation, technical analysis proficiency, and self-control.
Swing trading: Swing traders retain Bitcoin for several days or weeks to seize more significant price oscillations. This technique depends on technical analysis and market sentiment, striking a balance between short-term profits and long-term planning.
Position trading: If patience is your advantage, position trading may be suitable for you. This long-range strategy concentrates on Bitcoin’s overarching trends, adoption, and macroeconomic elements rather than immediate price variations.
Scalping: For those who excel in rapid decision-making, scalping entails executing numerous or even hundreds of minor transactions within a single day, benefiting from slight price alterations. It is fast-paced and high-risk but can yield consistent returns for adept traders.
How to commence with crypto trading
Enroll with a trustworthy trading platform: You will require a reliable exchange, such as Coinbase, to trade Bitcoin. You can access trading instruments and features once you register, complete the verification process, and fund your account.
Comprehending technical analysis: Acquire the ability to interpret charts, identify support and resistance levels, and utilize indicators such as moving averages, RSI, and Bollinger Bands.
Learn about risk management: Establish stop-loss orders to restrict potential losses, diversify your portfolio, andmost importantlymaintain composure. Emotional trading results in errors.
Bitcoin arbitrage
Bitcoin arbitrage entails purchasing in one market and selling Bitcoin in another where the price is elevated. Traders employing this tactic arbitrageurs profit from the discrepancies in exchange prices. Earning money with Bitcoin through this method is straightforward in theory, but competition and fees can complicate it in practice.
Invest in Bitcoin-related financial products
Numerous investment products can provide exposure to Bitcoin without actually holding it. Here are some of the most widely recognized alternatives:
Bitcoin futures: Futures enable you to speculate on Bitcoin’s future price without possessing any actual coins. You consent to purchase or sell at a predetermined price on a specific date, and if the market shifts in your favor, you gain profit. However, be cautious futures trading can be hazardous if you are not vigilant.
Bitcoin trusts: Bitcoin trusts, such as the Grayscale Bitcoin Trust (GBTC), hold Bitcoin for investors and issue shares that trade on secondary markets. These can be advantageous if you desire exposure without managing private keys or wallets.
Try binary trading
Binary trading has been around for some time, and Bitcoin is included. A call option yields profit if Bitcoin surpasses a designated price, whereas a put option is profitable if it falls below. The advantage? Your maximum loss is limited to the premium you paid thus risk is constrained.
Binary or options trading essentially involves wagering on whether Bitcoin’s price will be higher or lower at a specific moment. If you are correct, you receive a set payout. If not, you forfeit your investment. Earning money with Bitcoin in this manner is straightforward but precarious more gambling than investing.