Whilst we cover a lot of different philosophical and political advantages of crypto on this site, the fact is most people are interested in cryptocurrency to make money. 

There’s nothing wrong with that, money is very useful. 

Like all (responsible) crypto information sites, we are not willing to give anyone outright financial advice. To do so would not only have very real legal ramifications but also moral ones. 

We are not going to tell you how to invest your money; but we do think it is worth highlighting some of the main investment styles; for educational purposes only. 

Below are three common crypto investment strategies and some advantages and disadvantages of each. 

These are each focused on investing in a single asset but could be applied to a diversified portfolio as well; most “experts” recommend a diversified portfolio so that is definitely worth keeping in mind. 

Crypto Investment Style: Buy and “hodl”

The buy and #hodl# strategy involves purchasing a cryptocurrency and holding onto it for a long period, regardless of market fluctuations. This is popular among a lot of long term crypto believers. The basic philosophy is; “in X years time the price will be higher; so why worry about the daily price.”

Sometimes this strategy takes place on a shorter term, for instance buying at the beginning of a “#bull market#” with a view to sell in X months time. 

Advantages:

• Simplicity: Easy to understand and implement.
• Reduced Stress: No need to constantly monitor the market.
• Potential for High Returns: Historically, long-term holders of major cryptocurrencies like Bitcoin and Ethereum have seen significant gains.

Disadvantages:

• Volatility: Cryptocurrencies are highly volatile, and holding through downturns can be challenging; “not checking the market” is sometimes easier said than done. 
• Opportunity Cost: Funds are tied up and not available for other potentially profitable investments; those who missed out on the recent #memecoin# craze can attest to this. 

Dollar-Cost Averaging (DCA)

#DCA# is a popular investment strategy used in various markets, not just crypto. It involves spreading out the purchase of an asset over time to reduce the impact of volatility.

How it works: Instead of investing a lump sum, an investor buys a fixed dollar (or euro/pound/whatever) amount of a cryptocurrency at regular intervals, regardless of its price. 

This results in buying more when prices are low, and less when prices are high. We give an example of DCA in action in Cryptocurrency: is it a good investment?

This strategy is generally a medium to long term strategy. Many of those who #hodl# over the course of years will use #DCA#. Alternatively it can also be used within a crypto #cycle#. For instance some investors might DCA during a #bear market# so they don’t need to think about hitting the “bottom”. 

Advantages:

• Reduces Impact of Volatility: By averaging out the purchase price, the strategy mitigates the effects of market swings.
• Disciplined Investment Approach: Encourages regular, consistent investing. Lends itself well to having a “plan”.
• Low Emotional Stress: Reduces the pressure of trying to time the market perfectly.

Disadvantages:

• Slower Gains: Might perform worse than lump-sum investing if the market is generally rising.
• Ongoing Financial Commitment: Requires regular investment over time.

Short-Term Trading and Leverage Trading

NOTE: We said we would not give financial advice and we certainly aren’t going to tell you what to do. That said, MOST people (even crypto “veterans”) who try to short term (and especially leverage) trade, LOSE money. 

It is possible you are reading an introduction to crypto investment and also happen to be a savant at trading; but it is unlikely. Exercise caution. 

Short-term trading, which includes #day trading# and #swing trading#, involves buying and selling cryptocurrencies over short time frames to capitalize on price movements. Leverage trading, also known as margin trading, amplifies this strategy by essentially borrowing funds with which to trade.

Explanation:

Traders use #technical analysis#, #market trends#, and news (#macro#) events to identify and exploit short-term price movements. 

They often use #leverage# to trade positions larger than their capital would normally allow. For example, with 10x leverage, a trader can open a position worth $10,000 with just $1,000 of their own money. Positions can be held for minutes, hours, or days.

Advantages:

• Potential for Quick Profits: Opportunities to make profits in a short period.
• Increased Potential Returns: The use of leverage can amplify gains significantly.
• Less “cycle” dependent: When margin trading you can bet on the market going down as well as up; allowing you to earn during a #bear market# as well as a #bull market#.

Disadvantages:

• High Risk: Leverage amplifies losses as well as gains, and a small adverse price movement can lead to substantial losses, potentially exceeding the initial investment. 
• Stress and Time-Consuming: Requires constant monitoring of the market.
• Complexity: Requires a thorough understanding of #technical analysis#, #margin# requirements, and risk management.
• Extra Costs: Borrowed funds for leverage incur interest and transaction fees.

Conclusion:

In  Crypto as an Investment: Have a plan and stick to it, we talk about forming a plan. A big part of this can be integrating an investment style that fits with your schedule, investment goals, and aims. 

What is right for one person might not be right for another.

We would highly recommend you do further research on investment styles as we cannot stress enough this is simply an introduction to the topic.