Cryptocurrency Investment Strategy - Energimine

Cryptocurrency Investment Strategy

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1. Choose the right mix of storage.

Cryptocurrency can be stored in several different ways. Digital assets are safeguarded in either hot or cold storage. A cold digital wallet differs from a hot digital wallet because the latter is stored on a hard drive rather than on the internet. 

2. Give Importance to Liquidity.

Liquidity is critical for cryptocurrency investors. Bitcoin is the most liquid cryptocurrency. It measures an asset’s ability to be converted into cash. The coin’s supply and demand are required for market participants to buy and sell at the best possible price. Cryptocurrency traders must act quickly because the market is constantly changing.

3. Learn to work with Volatility

The Volatility of cryptocurrency may be difficult for long-term investors to handle. Traders who profit from price fluctuations may welcome it. Because cryptocurrency is a new asset, speculation and hype can cause price volatility. It can be profitable for those willing to take advantage of the crypto market’s daily price volatility.

4. Keep track of how much you can afford to invest.

Don’t risk more than you can afford to lose. If you can’t afford to lose all of your money, don’t invest in cryptocurrencies.

5. Take out profits regularly.

Cryptocurrency experts advise traders to take profits regularly.  When taking profits, cryptocurrency investors must consider whether their cryptocurrency price will fall or rise. The best profit-taking strategy is to stick to a consistent one.

6. Diversify.

Lone Cryptocurrency investment is a bad idea. Diversify your cryptocurrency investments to reduce risk. In the long run, the dollar-cost-averaging strategy is effective. Dollar-cost averaging is an option for those who prefer to spread out their investments over time. 

Cryptocurrency Investment Strategy

Crypto Investment Strategy For Beginners

How to Invest in Cryptocurrencies

1. Investing in cryptocurrency is fraught with danger.

The cryptocurrency ebb and flow. Bitcoin prices plummet by 30% one week, then surge to record highs the following week.

2. The FDIC does not guarantee cryptocurrency.

If a bank fails, your accounts are protected up to a maximum of $250,000 in value. If your cryptocurrency exchange goes bankrupt, is hacked, or closes unexpectedly, you’re out of luck.

3. Taxable Cryptocurrency.

After 2014, digital currencies are subject to taxes.

4. Buying Digital Currencies.

You can trade and store digital currency on exchanges. Because cryptocurrency has been around for so long, the most well-known exchanges have proven dependable and easy to use. 

What amount of cryptocurrency should you purchase?

1. Take precautions. 

Maintain a 10- or 5-percentage-point stake in your portfolio. Wallets are used to store private keys. Keep your keys safe after you’ve purchased cryptocurrency. Hot wallet security is steadily improving, making them an easy way to store and transfer cryptocurrency.

2. Make wise financial choices.

Keep your cryptocurrency portfolio’s value stable. It is a mistake to buy a cryptocurrency and then ignore it. Add cryptocurrency to your primary investment dashboard and track its performance to avoid costly bitcoin investment mistakes. Because crypto trading is still in its infancy, keep an eye on your exchange’s regulatory compliance.

Cryptocurrency Investment Strategy 2022

1. Day-trading

This trading strategy employs intraday trades. Traders employing this strategy take advantage of intraday price changes in a specific cryptocurrency. Technical indicators help investors decide whether to buy or sell bitcoin.

2. Range trading

Market participants rely on analysts’ daily support and resistance levels. ‘Support’ is always lower than the current price of a cryptocurrency. The “resistance” price is the price above which the price cannot rise.

3. Scalping

Scalpers monitor a cryptocurrency’s daily volume, price movements, and entry/exit points. The goal of this trading strategy is to increase the number of trades. An experienced trader strictly adheres to margin restrictions and other rules to avoid losing deals.

4. Trading at High Frequency (HFT)

HFT is a quant-based trading algorithm. It develops algorithms and trading bots that allow for the quick entry and exit of cryptocurrency assets. Building these bots requires industry knowledge, arithmetic, and computer science. 

5. Make wise financial choices.

Crypto trading is becoming increasingly popular. Countries are understandably wary of cryptocurrency transactions. As central banks worldwide attempt to regulate digital currencies, cryptocurrency trading has become more dangerous. It is possible to reduce the risk of a market experiencing extreme Volatility.

6. Investing without much hype

Newcomers may mistake social media for a source of cryptocurrency news. Online hype should not influence a company’s investment decisions. Because digital currency is so popular, misinformation about it is quickly spread.

7. Research

Conducting extensive primary research is a critical trading technique. To do so, you’ll need to keep up with cryptocurrency news.

8. Arbitrage

Arbitrage is the practice of trading bitcoin on different exchanges. Traders can benefit from liquidity, and trading volume spreads. Take advantage of this opportunity to open accounts on currency exchanges with significant price differences for your currency.

9. Betting on Volatility

Cryptocurrency is a high-risk investment. Bitcoin futures contracts are traded based on Volatility. Over the course of one day, the price of Bitcoin fluctuated by more than 30%.

10. Put and call options should be purchased concurrently. 

Ensure that the strike price and expiration date are in sync. Selling a call and putting options simultaneously is an excellent way to profit when the value of a cryptocurrency falls or rises dramatically.

Long-Term Crypto Investment Strategy

Several long-term bitcoin investment options go beyond simply purchasing and storing a fixed amount of bitcoin. Due to the high Volatility, only invest money you can afford to lose in cryptocurrency.

  • Dollar-cost averaging is an investment strategy involving making a fixed amount of money each month or quarter over an extended period. Using dollar-cost averaging, you can invest $10,000 in a security with a down payment of $833 per month. The coin’s value influences how many coins you buy using dollar-cost averaging.
  • When investors stake their coins, their digital wallet is used to validate more transactions.
  • Staking is a method of amassing assets or earning income from investments over time.
  • Market timing is a risky and challenging investment strategy. Nobody can predict how a stock, asset class, or industry will perform in the future.
  • Bitcoin ETFs will be available to investors for the first time in 2021, allowing them to gain exposure to Bitcoin without actually holding it. These funds do not own bitcoin but invest in Bitcoin futures and blockchain companies. 

Frequently Asked Questions

1. Is investing in cryptocurrency a good idea?

Cryptocurrency can pay well as a high-risk investment and cost you your life savings. The value of cryptocurrencies, particularly bitcoin, began to fall in 2022.

  • Volatility: A cryptocurrency’s value can fluctuate dramatically. Despite your gains, you risk losing everything.
  • Scams: Fraud is common and widespread. Companies that deal in cryptocurrencies may exaggerate the benefits to investors while downplaying the risks.
  • No compensation scheme: The Financial Services Compensation Scheme (FSCS) covers UK bank deposits, not bitcoin investments.

2. Which Cryptocurrency Is Best To Invest For Beginners?

Cryptocurrency benefits ordinary investors, many of whom are newcomers. Since 2009, there have been numerous additional cryptocurrencies, each with its price, availability, demand, transaction speed, fees, and supporting technology. 

  • Bitcoin (BTC) 
  • Ethereum (ETH)
  • Litecoin (LTC) and 
  • Bitcoin Cash (BCH)

3. Is It Too Late For Crypto?

Simply put, investing is a way of life. It is commonly assumed that cryptocurrency is still a young technology with a bright future. Purchasing bitcoin is similar to investing in stocks. 

Cryptocurrencies disrupt financial systems like Uber and Lyft disrupt transportation, Airbnb disrupts lodging, and Amazon disrupts retail. It may or may not be successful. Investing in rare coins isn’t always a bad idea. It makes no difference if the value of cryptocurrency falls. 

What Is The Next Big Cryptocurrency?

While predicting which cryptos to invest in can be difficult, there are numerous opportunities in this volatile industry. These are the top-ranked digital currencies for the year 2022:


The value of BTC and Ether has stagnated due to Terra’s massive hit. Ethereum, Bitcoin’s main competitor, is poised to overtake it in importance.


ADA is a well-known and rapidly growing blockchain with numerous viable applications. Because it is a proof-of-stake blockchain, ADA has sparked an interest.


In 2022, you should also keep an eye on Binance Coin. Regarding trading volume and users, Binance is the largest cryptocurrency exchange. BNB allows for investment, payments, and trip bookings. 


Tether is at the top of the stablecoin pyramid. Despite being less volatile than other cryptocurrencies, it is not entirely trustworthy. Investors lost faith in stablecoins after UST depegged from the dollar, but Tether remains a wise investment.


Decentraland is a blockchain-based virtual reality game that accepts MANA tokens as currency. Users can purchase items, land, and other gamers. Gamers can use Decentraland to create and market their online content, generating extra income. 

The Sandbox:

The Metaverse cryptocurrency Sandbox is growing in popularity. As a result, even when the crypto market is down, SAND tokens have a reputation for being suitable investments.


Polkadot’s primary goals were to create a decentralized app and a banking service like ETH. Polkadot customers are enthusiastic about the Web 3.0 movement. DOT is a blockchain collaboration. It is secure because its primary blockchain is based on proof of stake.


In 2022, Apecoin had its year. NFT is a new digital currency created by the Bored Ape Yacht Club NFT collection. Apecoin has performed well since the crypto market crisis, as investors have shifted to NFTs. APE is expected to become the world’s most popular cryptocurrency.

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