Numerous strategies can be used to make money in the cryptocurrency markets. Your method might be based on whether you plan to use cryptocurrencies for payments to vendors or whether the money is discretionary for investment purposes. Additionally, you might want to use leverage to trade or generate revenue for the long term. Each of your choices will point you to different facilitators who can provide you with the best process.
I Plan to use Cryptocurrencies to Pay My Vendors
If you plan to use cryptocurrency as a payment mechanism, you can consider a buy crypto strategy or a trading strategy. You will need a company that allows you to make payments across cryptocurrency addresses, such as PayPal or Coinbase. Paypal announced that it would begin to allow its customers to pay with cryptocurrency when the balance in the account is equal to or more than the product’s price. This scenario is a waterfall event and will continue to bring cryptocurrencies into the mainstream. Paying for a good or service in cryptocurrency has become as easy as hitting a button. It will not be long for banks to follow suit. You do not want to be the only bank in the market that is not allowing its customers to pay for a service in bitcoin. You can buy and hold your cryptocurrency or trade it using short-term analysis. PayPal has yet to add sophisticated trading bells and whistles or news related to the capital markets, making it less than an optimal place to invest or trade cryptocurrencies.
The Use of Leverage
If you want to trade or enhance the growth of your crypto, you might consider a broker who provides leverage. Leverage is ingrained in contracts for differences (CFDs), allowing traders to increase their notional trading value with borrowed capital.
For instance, you will only need to post 10% of the volume of bitcoin you want to trade. Using borrowed capital, you can increase your leverage and enhance both the gains and losses you experience on a trade. If you have a long-term view, this can also help you mix and match how much exposure you want to cryptocurrency.
When you purchase or sell a CFD, you track the movements of cryptocurrencies like bitcoin but do not own the underlying cryptocurrency. The CFD provider will buy and sell cryptocurrency throughout the day, allowing their product to track the digital coin.
Trading Versus Investing
The concept of investing for the long-term means you believe that the trend will be higher or lower over a long period. Since the major cryptocurrencies have a finite number allowed in circulation, you might assume that the long-term trend is up if acceptance is on the horizon.
If you plan to trade the cryptocurrency market, you want to make sure you have access to trading tools. Your CFD broker is likely to have sophisticated charts and graphs that will allow you to track the movements of a CFD cryptocurrency. This situation could include charts that allow you to draw trend lines or analyze moving averages. Some studies follow momentum or whether your cryptocurrency is overbought or oversold.
The Bottom Line
The upshot is that there are many ways to invest or trade the cryptocurrency market. Your trading will be best suited using CFDs or Exchange Trade Funds (ETFs). These product offerings allow you to avoid owning a cryptocurrency, and instead, you own a product that holds cryptocurrency. CFD brokers will provide charts and graphs and robust liquidity. Alternatively, if you plan to use cryptocurrency for payments and fund transfers, then a service like PayPal or Coinbase will help you use an address to transfer your digital coins.