The cryptocurrency markets are ideal for investors and traders that wish to take advantage of ever-changing token prices and high levels of volatility. In this guide, you will learn how to invest in cryptocurrency and make a profit as a complete beginner.
In addition to the basics, we will also walk you through the process of placing your first-ever cryptocurrency trading position with a regulated broker.
How to Invest in Cryptocurrency – 5 Simple Steps
For a quick overview of how to invest in cryptocurrency today online, check out the easy steps outlined below:
- Step 1 – Choose a Crypto Trading Platform: You won’t be able to buy and invest in cryptocurrency unless you have an account with a trusted broker or exchange. eToro is the overall best platform to invest in cryptocurrency – not least because it offers dozens of digital assets in a regulated, low-cost, and user-friendly environment. You can open an account with eToro by entering some basic personal information.
- Step 2 – Deposit Funds: You will also need to make a deposit before you can invest in cryptocurrency. At eToro, you can deposit funds easily via a debit/credit card or an e-wallet payment. ACH and bank wires are supported too. If you are depositing funds in US dollars then no fees apply and the minimum requirement is just $10.
- Step 3 – Research the Market: Cryptocurrency trading requires you to research the market in order to find profitable investment opportunities. A good starting point is to look for digital assets that might be undervalued or about to break out.
- Step 4 – Choose Which Crypto to Invest in: Once you have researched the market, you can use the eToro search bar to find the cryptocurrency that you wish to buy. When you find the correct market, click on the ‘Buy’ button.
- Step 5 – Invest in Crypto: The final step is to place a trading order. All you need to do here is enter your stake (from $10) and click on the ‘Open Trade’ button. The cryptocurrency markets are operational 24/7 at eToro, so your position will be executed instantly.
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Virtual currencies are highly volatile. Your capital is at risk.
As you can see from the above, learning how to invest in cryptocurrency isn’t hard.
However, in order to be a successful cryptocurrency investor that makes consistent profits, you need to have a firm grasp of how the crypto market works.
Where to Invest in Cryptocurrency
As a beginner, it is crucial to understand the importance of choosing the right crypto exchange or broker to invest in crypto assets.
After all, the platform will give you direct access to the cryptocurrency trading markets, so you’ll want to consider factors surrounding fees, supported pairs, tools, account minimums, and of course – safety. For those wondering how to invest small sums, the crypto market has been a popular choice amongst avid digital asset investors in the last few years.
If you’re still wondering where to buy and invest in cryptocurrency online – consider the top platforms that we have reviewed below.
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Virtual currencies are highly volatile. Your capital is at risk.
eToro – Overall Best Place to Invest in Cryptocurrency
We found that eToro ticks all of the right boxes and thus – this provider is the overall best place to invest in cryptocurrency online. eToro is a regulated broker that is approved to operate in the US, UK, Europe, and Australia. It holds licenses with various tier-one bodies – which is inclusive of the FCA, ASIC, and CySEC.
As such, you can be sure that you are trading cryptocurrency in a fair and legitimate environment. This top-rated broker requires just $10 to get started with an account – and the registration process takes less than five minutes. We also like that you have various payment options to choose from at eToro. Ever wondered how to invest in cryptocurrencies? Read our guide on the best scalping brokers to find which trading platforms offer the tightest spreads and fastest execution times.
This includes Visa and MasterCard payments, e-wallets like PayPal and Neteller, and ACH. All deposits and withdrawals that are made in US dollars are free of charge. In terms of supported markets, eToro is home to dozens of leading cryptocurrency assets including the best utility tokens. For instance, you can invest in Bitcoin, Ethereum, Dogecoin, Shiba Inu, Litecoin, BNB, ApeCoin and many more.
When it comes to fees, eToro offers a very simple and competitive pricing structure. In a nutshell, you will pay just 1% above the current bid/ask price for the cryptocurrency pair that you are looking to buy. We should also note that eToro offers copy trading tools. For those unaware, this enables you to copy the buy and sell positions of a successful cryptocurrency investor.
In other words, you can actively buy and sell the digital currency markets without needing to do any research or place any orders. Another option you have – should you wish to invest in cryptocurrency passively, is to invest in an eToro smart portfolio. These give you access to a diversified basket of assets through automated trading and there are several smart portfolios that focus exclusively on cryptocurrency.
For this reason, eToro is one of the best social trading cryptocurrency platforms on the market.
Another superb feature that we came across when reviewing the eToro platform is that it offers free demo trading accounts to all of its customers. This means that after you sign up, you can invest in the cryptocurrency markets risk-free – as eToro will preload your demo account with $100,000 in paper money. This is a great tool for beginners to learn how to buy and invest in cryptocurrency.
You might also like the eToro crypto app for iOS and Android. This allows you to invest in cryptocurrency on the move, check the value of your portfolio, deposit/withdraw funds, set up pricing alerts, and much more. Finally, eToro also enables you to invest in thousands of commission-free stocks and ETFs – should you wish to diversify your cryptocurrency trading portfolio.
>>>Buy Cryptos Now<<<
Virtual currencies are highly volatile. Your capital is at risk.
Crypto.com – Invest in Over 250 Cryptocurrency Markets With Low Fees
The next platform to consider when learning how to invest in cryptocurrency is Crypto.com. Launched in 2016, Crypto.com is one of the most popular exchanges in this space – not least because it offers a regulated and low-cost environment for investors of all skill sets. In total, Crypto.com is home to over 250 digital currencies.
This includes everything from meme coins, DeFi tokens, stablecoins, and large-caps like Bitcoin and Ethereum. Having access to such a large library of markets is highly conducive for trading crypto – as you will never be short of investment opportunities.
Crypto.com also stands out for its low-fee policy. The most you will pay to invest in cryptocurrency here is 0.40% per slide. You can reduce your commission by staking CRO tokens, which is the digital currency backed by the Crypto.com platform. Further discounts are on offer when you trade larger amounts throughout the month.
Crypto.com also offers the best app to buy and invest in cryptocurrency for both iOS and Android. This allows you to invest in cryptocurrency with US dollars. You can deposit funds instantly with both a debit/credit card and ACH, albeit, the latter is perhaps the best option as no fees are charged. Otherwise, you will pay a transaction fee of 2.99% should you wish to use Visa or MasterCard.
If you are thinking about taking a longer-term approach to cryptocurrency trading, Crypto.com offers savings accounts that pay you interest for as long as your tokens are deposited. You can earn up to 14.5% interest per year and various terms are on offer – including flexible, 1-month, and 3-month accounts.
If you want to amplify the value of your cryptocurrency purchasing power, you can also access loans here. You will be able to get an LTV of up to 50% at competitive rates and flexible terms. Finally, Crypto.com is also worth considering if you are looking to gain exposure to NFTs. This is because the Crypto.com NFT marketplace offers thousands of unique tokens without any buyer fees.
>>>Buy Cryptos Now<<<
Virtual currencies are highly volatile. Your capital is at risk.
Binance – Low Fee Platform to Invest in Cryptocurrency Pairs
The final exchange to consider when deciding on where to invest in cryptocurrency is Binance. This platform is ideal for those of you that are searching for an exchange that offers huge liquidity levels and plenty of trading markets. In fact, Binance attracts tens of billions of dollars in volume each and every day.
Debit and credit card payments are accepted too, albeit, US clients will pay 4.5% in fees plus an instant buy commission of 0.5%. When it comes to standard trading commissions – this is where Binance really stands at. This is because you will never pay more than 0.10% per slide. By holding BNB – the native token of Binance, or trading large volumes, lower commissions are offered.
Binance is also popular for its fully-optimized mobile app for iOS and Android. As the app connects to your main account, you can buy and sell digital currency pairs on the move. In terms of storage, your Binance doubles up as a crypto wallet. You can also download the Trust Wallet – which is backed by Binance, should you require a non-custodial storage option.
>>>Buy Cryptos Now<<<
Virtual currencies are highly volatile. Your capital is at risk.
Cryptocurrency Investing Explained – Overview
The main premise of cryptocurrency investing is much the same as any other investment sector. For instance, just like stock investing, you will be buying and selling cryptocurrencies with the view of making a profit. You will be able to achieve this goal when you correctly predict the future direction of the market.
For example, if you stake $1,000 on Bitcoin at $40,000 per token and the digital currency increases to $44,000 – this would represent gains of 10% – or $100. And, just like stocks, cryptocurrency prices are determined by demand and supply. As such, the value of a cryptocurrency token will change on a second-by-second basis.
As we have explained earlier, you will need an account with a cryptocurrency broker in order to access this marketplace. You also need to remember that cryptocurrencies are both speculative and volatile, so wild pricing swings should be expected. This makes the process of learning how to invest in cryptocurrency even more important.
One of the best ways to approach the market is to understand risk-management tools. For example, by deploying stop-loss orders on every cryptocurrency investment that you place, you will never lose more than you are comfortable with. Bankroll management is also important. This will dictate how much of your account balance you can risk on per investment, in percentage terms.
>>>Buy Cryptos Now<<<
Virtual currencies are highly volatile. Your capital is at risk.
How Does Crypto Investing Work?
In the sections below, we explain the fundamentals of how crypto investing works. Be sure to read through each section to ensure that you are able to enter this market with your eyes wide open.
Crypto Pairs
The first thing to note is that when you invest in cryptocurrency, you will be speculating on ‘pairs’. Each pair will contain two assets – which can be fiat or cryptocurrency, or a combination of both.
For example, when you use a regulated broker like eToro, you can buy dozens of cryptocurrencies against the US dollar. This makes it easier to assess the current and future value of your chosen digital currency.
However, when you use a cryptocurrency exchange that does not have the legal remit to deal with US dollars, you will likely be investing in your chosen digital asset against a stablecoin like Tether.
Tip: If this is your first time learning how to invest in cryptocurrency – then it’s best to start off with BTC/USD. This pair – which will see you invest in the future value of Bitcoin against the US dollar, offers the most liquidity, least volatility, and tightest spreads.
Crypto Orders
Once you have decided which cryptocurrency pair to buy, you then need to set up an order. As a beginner, you might want to start off with a market order – which allows you to place a buy instantly at the next best available price.
When you feel more comfortable with how the markets work, you might then enter a cryptocurrency investment with a limit order. This enables you to specify the exact price that your order is executed.
Moreover, you will need to specify your stake when placing a cryptocurrency investing order. This simply refers to the amount of money – in dollar terms, that you wish to risk on the position.
Crypto Investing vs Trading?
When you invest in cryptocurrency, you are typically doing so as part of a long-term strategy. This means that you can buy a cryptocurrency and leave the tokens in your wallet for several months or years.
As such, there is no requirement to actively analyze cryptocurrency prices and market trends. Cryptocurrency trading takes a different approach to investment, insofar that you will be looking to enter and exit positions on a shorter-term basis.
- For instance, you might decide to buy Ethereum on Monday morning because its price has dipped to $2,700 and then cash out on Wednesday afternoon when the token increases to $3,000.
- In another example, a cryptocurrency investor might even open a position and close it a few hours later.
- For example, at 9 am, you might buy BNB at $420.
- And then at 11.30 am, when BNB hits $441, you might cash out at gains of 5%.
Ultimately, while cryptocurrency investing is suitable for passive strategies, trading requires you to actively monitor and analyze the markets to stay ahead of the game at all times.
>>>Buy Cryptos Now<<<
Virtual currencies are highly volatile. Your capital is at risk.
Why Invest in Cryptocurrency?
There are many assets that you can invest in as part of a short-term strategy. This includes stocks, forex, and even commodities like oil and gold.
With this in mind, in the sections below, we explain why you might decide to invest in cryptocurrencies as opposed to conventional financial instruments.
Market Diversity
In a similar nature to stocks, there are thousands of cryptocurrencies that you can buy and sell in the open marketplace. This means that you will never be short of investing opportunities.
Moreover, there are cryptocurrencies to suit all financial objectives and appetite for risk. For example, if you are learning how to invest in cryptocurrency as a complete beginner – then you might decide to stick with large-cap projects. This would include the likes of Bitcoin, Ethereum, and BNB – all of which carry huge market capitalization.
On the other hand, if you seek higher levels of volatility, then you might look to invest in smaller-cap cryptocurrencies like Compound, Chiliz, Enjin, and Dash. These projects each carry a market capitalization of under $2 billion.
If you really have an appetite for high risk, you might even consider investing in micro-cryptocurrencies that have a market capitalization of under $100 million.
Volatility
Another reason why short-term investors are now turning to cryptocurrency is that this marketplace is extremely volatile – especially in relation to traditional stocks.
For example, it is not unusual for smaller-cap cryptocurrencies to increase in value by several hundred percent in just a single day of investing. At the other end of the scale, the value of a cryptocurrency can decline by over 90% in the same timeframe.
Such huge pricing swings won’t be suitable if you are just learning how to invest in cryptocurrency. Instead, it’s best to stick with the likes of Bitcoin and Ethereum, which will rarely move in value by over 10% in a 24-hour period.
Huge Growth Potential
Even short-term investors can target significant gains in a short period of time.
- For example, let’s suppose that you staked $2,000 on STEPN.
- When you opened the trade on April 12th, 2022 – STEPN was priced at $2.20 per token.
- On April 19th, 2022, STEPN was priced at $3.34.
- As such, in just seven days of investing, the value of your position increased by over 50%.
- This means that on an original stake of $2,000 – you made a profit of $1,000.
This example is just one of many. The key point is that the cryptocurrency markets provide plenty of high-growth investing opportunities each and every day.
How to Make Money from Crypto Investing?
There are a wide variety of ways to make money from the cryptocurrency investing markets – which we discuss in more detail in the sections below.
Cryptocurrency Investing Capital Gains
The main way that seasoned cryptocurrency investors make money is via capital gains. This refers to the amount of profit that an investor makes from a specific position.
You can work this out by subtracting the price that you paid for the cryptocurrency from the value at which you cashed the position out.
For example:
- Let’s say that you stake $1,000 on /USD
- When you place the order, ETH/USD is priced at $2,950
- A couple of days later, ETH/USD has increased to $3,150
- This translates into gains of 6.77%
- On a stake of $1,000, the capital gains on this position amount to $67.7
Liquidity Provision
Another way that you can make money investing in cryptocurrency is to provide exchanges with some much-needed liquidity. This is more of a passive investing strategy, insofar that you won’t actually be buying and selling digital currencies yourself.
Instead, by depositing surplus tokens into an exchange, you will be paid interest. One of the best ways of achieving this is via crypto yield farming, which, in return for depositing cryptocurrency into a liquidity pool, will allow you to earn interest.
Other Ways to Make Money
In addition to the above, you can also make money from cryptocurrency investing via:
- Long-term crypto investments
- Crypto staking
- Crypto interest accounts
Crypto Price Movements
Cryptocurrencies are valued based on demand and supply. However, unlike the traditional stock markets, there is no single centralized exchange like the NYSE or NASDAQ. Instead, cryptocurrencies are traded across a wide variety of exchanges.
And as such, there will always be a slight variation in prices between each provider. With that said, the forces of market arbitrators ensure that these pricing differences are minute.
For example, as of writing, BTC/USD is priced at $40,719 on Coinbase. On FTX, the same pair is priced at $40,721. As such, this amounts to a difference of just 0.0049%.
The best way to assess crypto price movements is at CoinMarketCap – which is the gold standard for real-time valuations across more than 300 exchanges.
Best Cryptocurrency Investing Strategies
It is important to come up with a strategy when learning how to invest in cryptocurrency. Otherwise, you may as well throw a dice when attempting to determine which way the markets are likely to move.
The best crypto investing strategies for beginners are discussed below.
Bankroll Management
Before you even place your first cryptocurrency investment position, it is crucial to understand bankroll management. In a nutshell, this refers to the maximum amount of money that you can risk on a single investment.
The amount is determined in percentage terms, against your current account balance.
For example:
- Let’s suppose that you have $2,000 in your crypto exchange account.
- You decide that you want to stick with a 2% bankroll strategy, which means that you can’t risk more than $40 per order.
- With that said, as your account balance increases, so will the maximum size of your stake.
- For instance, let’s say that you have built your balance up to $3,000.
- In this scenario, you can now risk up to $60 per trade.
Crucially, if you go through an extended losing run, your bankroll will be protected – not least because your maximum stake will reduce. For example, if your balance went down to $1,000, at 2%, you would only be able to stake a maximum of $20.
Stop-Loss Orders
Another commonly used strategy that is implemented by seasoned cryptocurrency investors is to ensure that stop-loss orders are always deployed. As we briefly noted earlier, this will ensure that you never lose too much money on a single position.
- For example, let’s suppose that you want to limit your potential losses to 5%
- You decide to risk $1,000 on BTC/USD – which is priced at $50,000
- This would require you to set your stop-loss price to $47,500
As per the above example, if BTC/USD declines and it hits a price of $47,500, your investment will automatically be closed. This prevents you from experiencing further losses. As such, the most you can lose on a $1,000 stake is 5% – or $50.
Take-Profit Orders
In addition to stop-loss orders, you should also look to lock in your profit target when the respective price is met. After all, the cryptocurrency markets can move at an extremely fast pace.
- Meaning – that unless you are glued to your screen 24/7, you might miss a suitable opportunity to cash your position out.
- The easiest way to achieve this strategy is via a take-profit order.
- The fundamentals here work in exactly the same way as a stop-loss order.
- This is because you simply need to instruct your broker or exchange of the price that you wish the take-profit order to be executed.
For example, you wish to stake $1,000 on BTC/USD at an entry price of $ 50,000. You want to make a profit of 20% on this position. As such, you would need to set your take-profit order to $60,000.
Take Advantage of Market Dips
In a similar nature to the US stock markets, cryptocurrencies often move in sync with each other. That is to say, when broader markets are bullish, many cryptocurrencies go through a prolonged upward trend.
And similarly, when the markets are bearish, most cryptocurrencies will enter a downward cycle.
- This means that you can look to capitalize on market dips by entering a buy position on high-grade cryptocurrencies.
- In doing so, you will be entering the market at a discounted price.
- For example, the previous all-time high of BTC/USD is over $68,000.
- Since hitting this high, BTC/USD has gone through a prolonged market correction – even dipping below $33,000.
In entering a position at this price point, you’ll be giving yourself an attractive upside target on a solid digital asset.
Invest in Cryptocurrency Passively
If you don’t have the skillset to analyze cryptocurrency prices, then it might be worth looking into a passive investment tool. This will allow you to invest in cryptocurrency without needing to actively research the markets.
One of the best ways of achieving this goal is via the eToro copy trading feature. This enables you automatically copy the same positions as seasoned cryptocurrency investors of your choosing.
You’ll want to focus on investors that have an extended track record on eToro in terms of ROIs and risk management. The minimum copy trading investment required is just $200.
Crypto Investing
Ever wondered how to invest in cryptocurrency for the short term? Crypto investing for a short term is a specific strategy that requires you to enter and exit positions within a 24-hour period. This means that you will be looking to buy a cryptocurrency and then sell it a few hours later.
In doing so, you will be looking to target smaller gains. However, as you will be placing orders much more frequently, these gains can quickly add up.
Due to the tight profit margins that you will be working towards, both stop-loss and take-profit orders are even more important when investing in the short-term.
If you wish to invest in the cryptocurrency markets, the vast majority of your research will need to focus on technical analysis.
This means looking for historical pricing trends and how they might influence the future direction of the respective cryptocurrency.
>>>Buy Cryptos Now<<<
Virtual currencies are highly volatile. Your capital is at risk.
Is Cryptocurrency Investing Safe?
Cryptocurrency investing is not risk-free from a variety of perspectives, it’s important that you understand the steps that you can take to remain safe.
First and foremost, the majority of cryptocurrency exchange and platforms are unlicensed. As such, in using an unlicensed platform, your funds are at risk.
This is why we like eToro – which is regulated by several tier-one licensing bodies and approved to offer cryptocurrency brokerage services to US residents.
Next, you need to think about the risks of losing money from your investing activities. We discussed these earlier in terms of bankroll management and ensuring that both stop-loss and take-profit orders are always deployed.
Another safety measure that you need to think about is the storage of your cryptocurrencies. After all, when using a crypto platform, the provider will be responsible for keeping your digital currencies safe.
This is why it’s important to assess what security controls the platform offers. For example, eToro offers a custodial wallet service that utilizes institutional-grade security practices.
This means that you do not need to worry about keeping your own private keys safe. eToro also has an internal risk management department that is tasked with keeping its customers safe from financial crime.
How to Invest in Cryptocurrency – Full Tutorial
This guide has covered how to invest in cryptocurrency in a risk-averse manner. If you’re ready to put your newfound theoretical knowledge into practice, we are now going to show you how to get started today .
Step 1: Create an Account
You will need to create a verified account before you can deposit money into the eToro platform. Enter your full name, email address, and phone number, followed by your desired username and password.
Click on the ‘Create Account’ button to proceed to the next step – which will require some additional personal information from you, alongside a quick overview of your prior investment experience.
You will also be asked to upload a copy of your passport, driver’s license, or state ID card. This ensures that your identity is verified as per KYC regulations.
Step 2: Deposit Funds
The next step is to deposit some US dollars into your eToro account – which you can do without paying any fees.
If you want your deposit processed instantly, then select a debit or credit card, PayPal, Neteller, or any other supported e-wallet. Bank wires and ACH can take a couple of days to settle.
The minimum deposit across all supported payment methods is just $10.
Step 3: Search for Cryptocurrency
If you feel ready to start investing in cryptocurrency with real money, switch back to ‘Real Portfolio’ mode. Then, use the search box to find the cryptocurrency that you want to invest in. As you can see in the example image below, we are searching for Ethereum.
You can also view the full list of supported cryptocurrencies by clicking on ‘Discover’.
Step 4: Invest in Cryptocurrency
Click on the ‘Buy’ button next to the cryptocurrency that you want to access. This will then populate an order – which we explained in great detail earlier in this guide.
To reiterate, in addition to entering your stake, you will need to decide between a market or limit order. You also have the option of deploying a stop-loss and/or take-profit order.
When you are ready to enter your position, click on the ‘Open Trade’ button.
>>>Buy Cryptos Now<<<
Virtual currencies are highly volatile. Your capital is at risk.
Cryptocurrency Investing – Conclusion
The cryptocurrency markets are volatile and speculative, which makes this investment sector ideal for short-term investors. In reading this guide, you should now know how to approach the cryptocurrency investing scene in a risk-averse manner.
We’ve discussed many strategies that you can take to outperform the market – even as a beginner. If you want to invest in cryptocurrency with real money right now – you only need $10 to get started on the eToro platform.
Crucially, this popular platform gives you access to dozens of cryptocurrencies in both a regulated and low-cost environment.
Frequently Asked Questions on Cryptocurrency Investment
How do I invest in cryptocurrency and make money?
In order to make a profit from cryptocurrency investment, you need to sell your digital tokens for more than your initial price. This can only be achieved if the value of the cryptocurrency increases in the open market compared to the price you paid for.
What is the best place to invest in cryptocurrency?
The best place to invest in cryptocurrency today is eToro. You will be able to buy and invest in cryptocurrency in a low-cost, user-friendly, and regulated environment. You might also consider Binance when searching for the best crypto investing platform for its low-fee policy across 250+ markets. Crypto.com is also considered as one of the best crypto apps.
What is the best way to invest in crypto?
If you are a complete beginner, then the best way to invest in cryptocurrency is via a long-term strategy. This means buying a collection of high-grade cryptocurrencies and holding onto your investment for the long term.
>>>Buy Cryptos Now<<<
Virtual currencies are highly volatile. Your capital is at risk.
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