Over the past decade, cryptocurrencies have emerged as one of the most popular investment choices. Due to its inherent volatility, this asset class can help you make significant profits – given that the market conditions are in your favor.
The good thing is, it is still not too late to get into the cryptocurrency arena. In fact, dozens of new digital assets are being launched, providing you with more and more investment opportunities. This article will tell you about the different ways you can get into the crypto market space and put your money to work as a student.
First, Educate Yourself
There is a complete frenzy surrounding crypto these days. With celebrity tweets and social media promoting digital assets, there is plenty of information out there, which can be overwhelming and confusing. Consequently, if you are a beginner in this market, it is paramount that you are completely aware of the risks involved before you invest any money. This can be particularly crucial if you are using funds provided by your parents or from your student financial aid.
The only way to do this is to do the due diligence yourself. If you are worried that you might not have enough time to dedicate to this research, you can rely on an educational platform to help your academic needs. For instance, you can ask for professional thesis writing help from WritePaper with editing and proofreading your assignments. This will help you save tons of time while you focus on learning about the world of cryptocurrency and how to invest in it.
Here are the different ways students can get into the crypto space:
- Direct Investments Into Cryptocurrency
When you think of getting into the crypto space, the obvious choice is to treat it like any other investment. That is, you will be buying a digital coin hoping that it will increase in value over time. When this happens, you can cash them out to make profits. If you choose this method, you will be essentially taking ownership of your coins.
In cryptocurrency circles, this approach is broadly referred to as holding. Meaning, if you are a crypto holder, you believe that your chosen crypto project has a significant potential to grow in value over time. As such, you hold onto the assets you’ve purchased for a few years. What you need to know here is that the crypto markets are highly speculative. And as such, you can be facing tremendous profits or losses.
For instance, if you take the case of Ethereum, a single token was priced at $0.70 at the time of its launch in 2016. Today, this cryptocurrency is at the peak of its value, priced at $4,812 at the time of writing. This translates to a gain of over 600000% for early investors, who held onto their coins.
On the other hand, this hasn’t been a steady increase. Ethereum had gone through monumental ups and downs throughout these years – during which many investors decided to cash out. As such, if you choose to be a crypto holder, you need to make sure that you study the market thoroughly and know what you are getting into.
- Investing via Crypto ETFs
You might already be familiar with the saying not to put all your eggs in one basket. The same stays relevant for cryptocurrency investments as well. It is never a good idea to invest all the money you have into a single digital asset. Instead, you should be thinking about diversifying – meaning, to purchase different tokens.
However, as a beginner, you might not be able to gain expertise to handpick the best assets from thousands of available options. This is why you might want to consider a crypto Exchange Traded Fund. These ETFs track a basket of cryptocurrencies, so if you invest in one ETF, you are essentially putting your money into a large collection of different digital coins. This can reduce the risk associated with your investments.
- Cryptocurrency Trading
Investing is not the only way to get into cryptocurrencies. You can also trade them against other assets, but this will require you to dedicate more time. Additionally, you also need to know how to use charting tools and technical indicators to arrive at your trading decisions.
You can trade cryptocurrencies against both fiat currencies, such as US dollars, euros, or the British pound, or against other digital assets such as Bitcoin, Litecoin, or Ethereum. Essentially, you will be speculating that a certain trading pair will increase or decrease in value. If you are right, you will make a profit, and if not, you turn in a loss.
As you can see, cryptocurrency trading can be very complex, especially for beginners. Moreover, these are often carried out in short durations. Meaning, you will be buying and selling cryptocurrencies within minutes or seconds, depending on your trading strategy. Therefore, taking ownership of coins is not practical, and you will be dealing with CFDs – a financial instrument that merely tracks the value of an asset.
- Passive Cryptocurrency Investment Tools
Lastly, there are brokers that allow you to passively invest or trade cryptocurrencies. This means that all you need to do is to invest your money, and the platform will take care of your investments and auto-balance your portfolio based on market conditions. If you are a student with no time to dedicate to market research, this might be your most feasible option.
For instance, the popular crypto broker eToro offers a tool called CopyPortfolio. Here you can choose to invest in a predefined portfolio that has a collection of crypto assets. Alternatively, brokers like Ally Invest also allow you to gain access to Robo advisors, where your assets will be automatically managed by financial experts and algorithms.
While these allow you to profit without doing much legwork, there might be some conditions that you need to fulfill – such as minimum investment requirements. Moreover, when you are entrusting your money to a third party like this, you need to be extremely cautious and make sure that you have chosen the right provider.
- Pick Your Crypto Platform Wisely
Perhaps, the most important concern when deciding to invest in cryptocurrency is finding the right platform that can facilitate your investments. As we have mentioned already, there are different types of providers you can choose from – based on how you want to approach this arena.
No matter which direction you choose, make sure that you check the following aspects when making your decision:
- Safety and security offered, including whether or not the platform is regulated in any manner.
- Number of cryptocurrencies supported
- Types of cryptocurrency markets accessible to you
- The payment methods supported
- Ease of using the platform and trading interface
- Options to store your cryptocurrencies
- Fees and commissions you are liable to pay
- Educational resources that help you learn about the crypto industry
- Access to passive investment tools
In simple terms, you want a provider that offers you the features you seek without charging you high fees and commissions. Using the right broker will decide how much of the actual profits from your crypto investments you will be able to keep for yourself.
To sum up, you must realize that cryptocurrencies are highly volatile. So, before you invest as a student, make sure that you take sufficient time to study the market, pick the right type of crypto assets, and a suitable broker. And, as with any investments, do not risk more than what you can afford to lose.