Top 4 Passive Cryptocurrency Investment Strategies [2021] 💎

If you’re watching the Pomp podcast led by the now legendary Antonio Pompiliano of Morgan Creek Digital, you may have heard claims that HODLing hands down beats trading over the long term. 

Considering Pomp only invites expert speakers like Michael Savior and Jim Cramer, if you believed trading was the best way to colossal fortunes,you may have witnessed your whole notion of good investing being turned on its head. 

After all, most people don’t do extremely deep-dive analytics and thus the real secrets of making money on crypto remain hidden in the murky depths. Although it sounds like seriously dedicating time to very complex statistics is paying off for the show’s guests! Should you be going pro like them and studying every book in the Library of Congress of finance since the dawn of humankind? 

Should you actually HODL and witness gains that will outshine anything you could have possibly achieved trading? What about mastodon profits from staking that you could get by just sitting back? Maybe if you repeated what pro traders are doing for a small commission you could get so rich there aren’t enough zeroes in your bank account to display your balance?

Let’s make sense of the best strategies that admittedly work and get you real results. We’ll also take a look at some things you shouldn’t – ever. No, seriously. Don’t even think about it. 

1. Earning Interest 

Companies like BlockFi or Coinbase allow you to use their platform to deposit crypto and get rewarded (they do the heavy lifting and charge a usually small percentage so everyone benefits).

What is an interest rate? How does it work?

You open an account with a company that uses your crypto to make more crypto – essentially the same way banks make money on the money you deposit with them and miners make money on Proof of Work blockchains. This option is preferable, just like any case scenario where you hand over your money to professionals. 

Which platforms to choose from? 

One platform that does investment, profits, and reinvestment professionally is Midas.Investment. So as not to overwhelm you with technical details, here’s what you need to take away:

Midas offers a set of solutions under one roof that will suit those new to the market who just want to minimize effort, sit back, and relax, and those who get their kicks from serious instruments and complicated mechanics (plus a few features that will suit both types):

  • Interest rates for high market cap coin BTC and USDT;
  • Automated portfolios of cryptocurrencies with weekly payments;
  • More than 40 Masternode and Proof-of-Stake coins for every taste.
  • Multiple layers of security 
  • 15 000 investors all over the globe
  • $21M+ deposited 

Should you trust the team with your coins? Will they make an educated and reasonable choice? The difference is pretty much the same as with hiring builders to build a house or doing it yourself. If you’re exceptional at crypto, you could DIY, but if in doubt you should probably leave it to the pros. 

You can find out more about the way Midas takes care of business for you on the site

What assets are available?

Here are the most popular assets so far, starting with everyone’s favorite BTC, including Ethereum with its sharp increases in interest from corporate investors and colossal growth of scalability solutions, and frankly dubious assets like Tether for those who like, ahem, adventure.

Binance

This guide will illustrate the earnings you’ll get from Binance and how to get there:

“It appears that the best paying yields are associated with USDT and BUSD – which both attract a 7-day APY of 6%. At the lower end, Ripple and Ethereum attract a yield of just 1.40% and 0.87%, respectively.” Jean Galea

BlockFi

With a somewhat more interesting APY but still much fewer tools compared to Midas.Investment, BlockFi isn’t shy to do its own promotion. Well, if you don’t love yourself, no-one else will:

“With a BlockFi Interest Account (BIA), your cryptocurrency can earn up to 8.6% APY.” BlockFi

2. Staking

Many are turning to cryptocurrency staking in order to make money. Cryptocurrency has seen an increase in popularity and it’s possible that there will be a future where cryptocurrency is more common than fiat currency. With this, the benefits of staking crypto could potentially grow exponentially. Staking cryptocurrencies such as Bitcoin and Ethereum can offer many benefits for investors including low-risk, high reward; little to no experience required; increased liquidity; predictable rate of return over time.

Cryptocurrency staking is the process of holding coins in a wallet, rather than trading them on an exchange or gambling with them and getting rewarded for it. One can earn money by leaving their cryptocurrency untouched in wallets such as Jaxx, Exodus, Bitcoin Core, and Coinomi. These are popular because they don’t require you to do anything; simply deposit your cryptocurrency into the wallet and leave it there until your reward has been generated. 

So staking basically involves locking up your crypto and getting profits back. It’s a lot like crypto’s way of depositing the money in a bank, but, compared to the average deposit yield you’ll get in a bank (a couple of percents),  with staking you can get an average of 10% and often something in the region of 20%. 

In addition, your account won’t get frozen and your private details are going for a walk on the web through 5-6 intermediaries and anyone with enough skills to hack your bank’s security system, which in all likelihood looks mostly the way it did when it was built. 

3. Buying and HODLing

So does buy and holding work? 

Well, there is no easy answer, as you probably already learned, and different strategies work in different ways and with different degrees of effectiveness and not all the time but there are fundamentals.

Pros

  • No necessary actions. The easiest way of making money on crypto is basically just buying it at regular intervals. Some companies will allow you to partially convert paychecks into crypto. Essentially, you could just convert 20% of your salary in BTC or ETH and keep buying. 
  • No time-wasting. No need to buy expensive courses, learn methods, battle-test strategies. Your crypto comes gift-wrapped and ready to net you stellar rewards. 
  • Long investment horizon. An extended investment horizon has a better effect on risks: this means lower long-terms risks, increased volumes, and more acceptable risk-taking. 
  • Less stress. Set it and forget it! Sure you’ll need to minimally manage your money anyway, but anywhere near as much as you would with some other options (like day trading). 

Cons 

  • No self-development. Unlike with trading, when you HODL you won’t actually have to learn much or do analytics or develop in any way plus
  • No rebalancing. The assets you choose you’re stuck with. This means that if they fail, so do you. 

Other options like diversified portfolio managers offer automatic rebalancing. This means the company itself splits your cryptos the best way it can think of (for example, 60% BTC, 15% ETH, 15% promising new projects, and so on) and redistributes the portfolio every month, for example, to keep your chances optimal (if BTC should go to 0, not all your money goes out of the window). 

4. Index Investing

An index is a basket of stocks, bonds, or other assets that represent a particular sector. An index fund is an investment vehicle that tracks the performance of an underlying market index. The benefits to investing in this type of fund are lower costs and diversification over time because when one company falls in value, others will increase proportionately.

Index investors buy and hold securities in an attempt to replicate the market or a segment of it, such as small-cap stocks or technology stocks. In contrast, active investors buy individual securities and try to “beat” the market by choosing which ones will do better than others. 

In other words, index investing involves owning a portfolio of stocks that represent the performance of an entire market or segment. For example, one could invest in the S&P 500 to have exposure to large-cap U.S. stocks and small-cap U.S. stocks simultaneously, without having to pick individual stocks within those categories.

Among the advantages of this method are text efficiency, modest fees, fewer biases and insecurities, and many others.

In the crypto world, there is such a solution called crypto index, where you can also either build an index yourself from your favorite tokens or buy a ready-made one through the Tokensents project

What is TokenSets?

Set Protocol gives the traders an option to buy baskets in the form of tokenized assets known as Robo Sets – https://www.tokensets.com/explore

If someone is looking for investing in DeFi, without investing in the actual DeFi, here are the indexes for you – A Tale of Three DeFi Indices

Asset Selection

Normally assets with the highest market cap are included in index investing, but there’s far more to a good strategy. In brief, if there are any signs of a recession, you may want to invest more heavily in defensive stocks like utilities and consumer staples. If the economy is healthy, it’s important to balance out your portfolio with riskier investments that can give higher returns if they perform well. Look for small-cap stocks, cyclical stocks (like those related to commodities), and emerging markets stocks (riskier but with higher rewards potentially). You may also want to include assets that are performing well and exclude those starting to perform worse.

Allocation Distribution

How stocks are distributed means a lot. There are a few ways to choose how much of what should be in your portfolio but for simplicity’s sake and without having to hire a $250 an hour professional probably the best idea is to have more of well-known, established stocks that have been performing well over time (like 60% Bitcoin) and leave some room (10%) for new projects with potential and often rebalance

Conclusion 

Why is it important to use investment strategies?

The world of crypto is harsh and unforgiving. Investing in the wrong project can easily mean massive losses. However, it’s not only important to pick the right partners. 

On a meta-strategy level, as you do business, don’t forget to abide by the basic principles like diversification, keeping up with the latest news, which will severely impact the prices (so-called fundamental analysis), and reading all you can find on the subject matter before investing. 

On a more specific level, try to find out whether a) some methods statistically tend to get you results you need, b) whether outsourcing your work to a team or setting up and maintaining your own nodes is counterproductive or not, and c) which companies offer better returns. 

In short, strategies significantly increase your chances. Study them meticulously! Fail to prepare=prepare to fail. 

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