Let’s face it right away.
Crypto trading is not for everyone
And it’s not just that crypto trading is not for everyone.
The truth is that many times, there is just not a good opportunity to trade.
The market is choppy, there are stop hunts, the volume is too thin.
So, there is this question that bothers all crypto beginners: Can you profit from your crypto holdings even if you don’t want to trade?
You can, but for the most part only if you are ultra-longterm bullish on crypto.
Let’s take a look at the options you have.
1/ Build a “hodl” strategy
This is the simplest method ever.
The basis of it is simply to decide whether you think a cryptocurrency is worth keeping for the long run, and hold it in your wallet.
With only a little more effort in your crypto holding strategy, you can make the actual profit taking much simpler for yourself.
Basic Hodl Strategy Step by Step
- Find a crypto with good fundamentals: network effect, resistance to bad news, a use case showing that it’s more than a vaporware.
- Once you find cryptocurrencies you want to keep, decide on how long you are willing to hold them. Ballpark is good enough: A decade? A year?
- Split that period and make a mental note on how often you will re-evaluate your investment. You can go with seasonal cycles, as long as they are relevant. Crypto traders all week all year, but there are seasonal things like the halving cycle of Bitcoin.
- Every time your point of re-evaluation comes, you can decide to rebalance and take out some amount from your profits, or to cut your losses, or to just keep holding everything.
If you are wondering about how much to invest and how to pick the best time to buy - that’s already speculation. If you are a beginner, you will do best with DCA, which is dollar cost averaging.
- Learn everything about dollar cost averaging in ATNET Strategy.
2/ Crypto Lending
If you have significant amount of Bitcoins (or Ether, or any other cryptocurrency that is traded on an exchange) you can lend it to crypto traders and other people who will pay you interest.
There is a range of lending platforms where you can do this. There are places like Ethlend where you can lend a range of some 250 ERC-20 tokens.
You can also go for margin and swap funding options for major coins via exchanges like Bitfinex or Bitmex.
- Read more on how to manage the amounts and rates for which you lend out in ATNET Strategy post on lending.
If you don’t want to manually manage the lending rates, a crypto lending bot can take care of it either for free or for a fee. The platform 3commas offers easily configurable crypto trading bots.
3/ Run a Masternode
Masternode is a cryptocurrency full node with a wallet that keeps the full copy of the blockchain. By that it supports the coin’s network.
A masternode must be always up and running and is required to perform certain tasks for the cryptocurrency network. You as the masternode owner get a payout in your node’s currency as a compensation for this.
In addition to these responsibilities, running a masternode also requires an upfront investment.
You will need to buy the node’s currency and hold it in the node wallet as a minimum to start running your node as a masternode.
Staking might be the easiest way to get some extra income on some of the cryptocurrencies you hold.
It is in fact less work than holding, because it requires no strategy or evaluation - as long as you are primarily collecting more of a coin.
In order to stake a cryptocurrency, it has to follow the proof-of-stake consensus mechanism. But in 2020, there are variations of “wrapped” cryptocurrencies. That means you can also stake bitcoin in its wrapped form, or even a fiat currency. The crypto trading platform Kraken is one of the places that lets you do that.
In the past you could earn up to 10% extra coins in a year by just holding and staking them. As the barrier to start staking gradually became lower, the earnings also decreased.
As of 2020, for the more mainstream cryptocurrencies you will earn better by lending them via margin funding.
5/ Mining and other early opportunities: Bounties, Rebates, Cashback…
In 2020, mining of the most popular proof-of-work coins (like Bitcoin) is a lost case unless you are in special circumstances.
These days, mining is only really profitable if you are a big player, if you have cheap electricity and special equipment.
If you have mining rigs and cooling stuff left over from when small scale Bitcoin mining still paid off, you can still make some money with that on the altcoin markets.
There are new proof-of-work cryptocurrencies getting launched all the time. With new coins you can get into mining early when it’s easy and pays well.
Here on ATNET we sometimes alert you on these opportunities through our Crypto Airdrops page.