Making Money With Cryptocurrency
Why we are investing, how we are turning a weekly profit, and how to get started.
Since January 2021, we have been all in on cryptocurrency. It started slow as we researched various cryptos, studied the swings, the dips, and learned more about what these coins really were.
I now have daily conversations with friends and family about cryptocurrency. Some friends only know the hype, so I share everything I have learned with them in hopes of calming them down a bit. Others know way more than me and we talk much more deeply about blockchains and the future.
Due to all the interest, I am sharing all I have learned in the crypto space, the mistakes I have made, and how to get started if you have not already.
How we got started in crypto
I was helped out 4 years ago by a former client that asked if she could pay me in Bitcoin. At that point I knew I wanted to get into Cryptocurrency, but I didn’t know where to start. I said yes, and she showed me how to download a crypto wallet (which is what I’ll be showing you below) so that she could send me Bitcoin. I never looked back!
Long waiting period:
I took the advice of “never invest money you’re not willing to lose”, so I didn’t put any more funds into crypto for years. After we sold our house in Atlanta in January, we had some extra funds to invest, so I looked in my Coinbase wallet and noticed that my Bitcoin had increased over 300%. Needless to say, I was happy and ready to really learn about cryptocurrency.
Why we invest in cryptocurrency
1. It IS the next big thing
At least we think so. Cryptocurrency could potentially change the world as we know it.
"Just like the internet, DeFi (decentralized finance, one of the main applications for cryptocurrency) will gradually emerge from its Wild West days to become more secure and dependable – something millions of people can use every day,"
Due to it still being in the Wild West days, investing in cryptocurrency and DeFi is risky. Many believe DeFi is the future of finance and that investing in the disruptive technology early could lead to massive gains. But it can be difficult for newcomers like us to separate the good projects from the bad. And, there has been plenty of bad. This is the main reason why it is dangerous to throw money into a trendy, hyped-up coin that you heard about from a friend or online forum.
2. It could help diversify your portfolio
If you're eager to get involved in the crypto space, it wouldn’t hurt to invest a portion of your portfolio in cryptocurrency.
Personally, we took equity from our house sale, and sold what we felt were underperforming stocks from our portfolio, and put it into crypto.
Since it is often easier to research unfamiliar topics when you have skin in the game, diversifying into a new industry gave me the incentive to better understand crypto and how it works. The better you understand crypto, the better decisions you'll be able to make.
Just be sure you're only investing money you can afford to lose because cryptocurrency is a highly volatile investment.
What we use for trading & investing
We have multiple platforms we use, including Coinbase, EToro, Gemini, and Robinhood. They all have pros and cons.
Coinbase
Pros
By far the easiest app to use
You can EARN cryptos by watching short educational videos
They have a good selection of coins to purchase (over 50 at this time)
Privately insures it’s site for any losses due to hacks of the site
Cons
Fees are on the higher side (unless you have Coinbase Pro)
Customer service is almost non-existent
You can’t place market, limit & stop orders (available in Coinbase Pro)
Recommend? Yes
Yes, especially if you are brand new to the crypto world. To lower your fees, make sure to use Coinbase Pro.
EToro
Pros
Overall it is pretty easy to use
Social Trading allows you to chat with other traders, discuss ideas and vote on some particular subjects.
Copy Trading (a great feature!) allows you to choose an experienced crypto trader and automatically copy their every move.
Customer service is good (in my experience).
Cons
Not available in every state
17 crypto coins listed, which is more than some, but less than most.
Fees are known to be high (EToro calls it a spread)
Recommend? Yes
Yes, if you want to use the Copy Trading. Otherwise, their are cheaper ways to buy and sell crypto.
Gemini
Pros
On par with Coinbase for ease of use.
Over 50 cryptos
Site insurance of digital assets against exchange hacks.
Easy and quick setup for beginners to start using right away
ActiveTrader platform for more experienced traders
Cons
Similar to Coinbase, the fees are higher than other platforms
Recommend: Yes
Yes. Similar to Coinbase, Gemini’s higher fees are a good trade off for its security, insurance, and ease of use for someone new to crypto. Using ActiveTrader will help lower your fees.
Robinhood
Pros
No Fees for buy and selling crypto
Very intuitive platform that is easy to use
Buy and sell stocks as well
You can place market and limit orders for buying and selling
Cons
A lot of bad press for “outages” that restrict trading on some of the hottest cryptos and stocks (Dogecoin and Gamestop for example)
Only 7 cryptos available to buy and sell
You don’t have a wallet to store your cryptos, meaning you can’t transfer or trade, you can only buy/sell.
Recommend? Yes and No.
While it is user-friendly, the cons are a little heavier on Robinhood. I would only recommend using it for crypto if you already use it for stock trading and don’t want the hassle of signing up for a different platform.
Update: A few other trsutworthy exchanges that I have now downloaded and used:
Voyager: Easy to use, fast to setup, great fee structure, great for staking and earning!
Crypto.com: Similar features to Voyager
Kucoin: More advanced with more features but more difficult to navigate. A HUGE number of cryptos available.
How we are turning a weekly profit trading cryptocurrencies
While we are HODLing (Hold On for Dear Life) most of our cryptocurrency for the long term, we are also trading a portion of our portfolio to make some weekly gains. We then choose to reinvest those funds into more crypto (especially during those epic dips!) or use for monthly income. We do this two ways:
Trading Bots:
Ever heard of them? They are exactly what they sound like! You connect your wallet to a trading software, setup your parameters, and let the bot do its thing, buying low and selling high, and making you a daily profit.
My best bot, trading MATIC, is returning 3% per day, but most are in the 0.45 - 1% range per day. That’s 13.5 - 30% per month, or 164 - 365% per year! The MATIC bot is on pace to make a 1,000% annual return! (although I am not counting on the pace to continue for 12 months).
“I use bots as a hedge. If the values of the coins go down or stay stagnant for a long time, the bot can still generate useable cash for us.”
We use Bitsgap for bot trading
…and have been extremely happy with the results so far. I have also recommended it to many people so far and the two friends that have started their own bots have seen a lot of success as well.
“My mind is still blown how well those bots work.”
“Bots are doing well! They seem to do much better with volatility."
This really isn’t meant to be a commercial for Bitsgap, but it’s been a success for 3 out of 3 people so far (me included), so I need to share a good thing! I’ll update this section as things progress into month 2, 3, etc…
Here are a few screenshot examples from my AAVE bot on May 13 to better show how they work:
Based on how much AAVE and cash I used to set up this bot and how I set up my peramteres, it generates $15.66 per sell trade. Over the 26 days the bot has been active, it has created 107 sell trades.
Total profit so far: $1,665
Avg. bot profit per day: 0.78%
On pace for an annual profit of : $22,528.31
This is just one of my 4 bots (although one of my better ones).
A short video about how it works
Monitoring the cryptocurrency market and waiting for the best opportunities to execute trades can be hard. Bitsgap’s Automated Trading Bots powered by a high-frequency trading algorithm allow you to maximize the return 24/7 regardless of the market trend. Start your free 14-day trial today and launch your first bot on Bitsgap.com
Regular Day Trading:
Now that I am more comfortable with the volatility of crypto and have been tracking certain coins for the last 5 months, I can make better decisions about buying at the right time. Timing the market is impossible, and I have made my fair share of mistakes, so much so that I don’t do much of this anymore. But if you are patient enough, you can find those dips to buy and hold long enough to make the profit margin you are waiting for.
A Bitcoin example:
While Bitcoin is a coin I am HODLing, it provides a great example. Zoomed out to show the last year, you can see the consistent ups and downs.
Since February, bitcoin has consistently dipped into the $42-$49k range about once a month before spiking into the $58-$64k range.
If you are patient and comfortable holding on for a few weeks to a month, you can make 20% gains on your bitcoin trades.
The risk is:
If it tanks to to $30k and stays around there for a few weeks or months. You’re money is stuck unless you want to sell at a loss (don’t do it unless you absolutely have to!) or hold it until it becomes profitable again.
If you sell at what you think is the peak but runs up another 20%, you miss out on the gains and it kind of resets to a new normal, forcing you to wait and watch before you can responsibly invest again.
Personally, this is my least favorite and most stressful way to do crypto investing.
At this point, I will only buy coins that I think could be great in the next 2-5 years and hold. I might sell 25-50% of them if I notice a spike so that I can re-buy in later when it dips, but I have missed major gains by doing this too (the price kept going up. And up and up and…)
If that does happen, I just keep the cash in hand and wait for another dip, whether it’s the same coin or a different coin.
How to get started
Download a wallet and create an account (verify your identity, add a bank/funding source, etc)
Take a look at my pros and cons above and choose the right platform for you. In my opinion, you can’t go wrong with any of the first five.
Start looking at all the various coins and their price history graphs to see what you might want to invest in first.
A few of my favorites in no particular order (not financial advice, just coins/projects that I have become comfortable with. It may or may not be a good time to buy these cryptos depending on the market cycle) :
Ethereum (ETH)
Bitcoin (BTC)
Uniswap (UNI)
Cardano (ADA)
Polygon (MATIC)
AAVE
Celo (CGLD)
Tezos (XTZ)
Litecoin (LTC)
Cosmos (ATOM)
Polkadot (DOT)
AMP
Avalanche (AVAX)
Algorand (ALGO)
Compound (COMP)
Take the plunge and buy something!
If you have $1,000 to start your crypto investing, put $500 into the coins you want. Save the other $500 for dips or new coins that come along (There is nothing worse than putting all your money in right away and it goes down 20% in the next few days. It happens!).
If your portfolio is down and you want to buy another coin, selling your current coins at a 20% loss is never good. So keeping some of your portfolio in cash helps prevent you from having to sell at a loss. It also allows you to buy more at that 20% dip so that your average cost is much lower.
Common crypto scams to be aware of
1 . Social Media Giveaways
It’s incredibly unlikely that someone is hosting a legitimate giveaway that requires you to first send your own money. Giveaways are just that…GIVEAWAYS. As for the dozens of replies thanking said account for their generosity – they’re just fake accounts or bots deployed as part of the giveaway scam.
Example of a social media giveaway scam - Coinbase.com
2 . Pyramid and Ponzi schemes
Ponzi Schemes: The organizer will take an investor’s crypto and add it to a pool. The only inflow of crypto into the pool comes from new entrants. Older investors are paid off with newer investors’ crypto, a cycle that can continue as more newcomers join. The scam unravels when there isn’t any more crypto coming in – unable to sustain payouts to older investors, the scheme collapses.
Pyramid Schemes: A pyramid scheme is distinct in the way it promises revenue for recruiting new members. Take an example where the organizer gives Alice and Bob the right to enlist new members for 1 Ethereum each, and takes a 50% cut on their subsequent revenue. Alice and Bob can offer the same deal to those they recruit.
In general, buying into any crypto program is not needed. You can profit from crypto from buying, selling and trading coins yourself, without paying fees to others and recruiting others.
Examples of a Pyramid scheme - Bitcoin.com
3 . Pump and dump schemes
Pump and dump schemes are nothing new. The stock market has had this going on for years. In the crypto space, the price pumps are conducted by spreading hype and fake information about a coin on social media posts and comment sections (people attempt to hijack discussions and inject comments about a coin they are trying to hype into otherwise genuine conversations.)
How to spot: The easiest way to identify a pump and dump scheme is when an unknown coin suddenly rises substantially without a real reason to do so. This can be easily viewed on a coin’s price chart. Also, a surge in media mentions. If an entirely unknown coin with a market capitalization of only a few million dollars suddenly appears all over Twitter and Facebook, one should be wary.
4. Fake social media accounts of credible people
This is becoming the most widely used scam.
A social media account of a credible crypto expert or group will be duplicated to look exactly like the real thing. They will message people and offer to help them set up their crypto accounts, buy their first crypto, etc.
During the account setup process, they will ask for the username and password (or they setup the accounts for you, create the username and password themselves, then give you access so that you can connect your bank account).
Once funds are transferred into the crypto account so that you can make your purchases, they withdraw your funds and they are gone.
How to avoid: Never ever ever ever share any login info with anyone. If you need help with setting up accounts, it’s best to use customer service. If a friend offers to help and you trust them, a phone or Zoom call (or in-person meeting) is best to ensure you are actually talking to the right person.
Are you into crypto and have any extra tips?
Do you have any coins that you are really excited about?
Comment below and let’s start talking!
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