The use of cryptocurrency for earning passive income keeps getting better as a new day unfolds.
This has led to the evolution of low risk crypto investment methods and strategies for consistent profit.
But then, crypto trading still becomes dreadful to a lot of crypto beginners and even experts.
This is because of the high risk that is associated with cryptocurrency trading.
This fear has led to the development of other less risky means of earning passive income with cryptocurrency.
Low risk cryptocurrency investment strategies has saved a lot of people from the dreadful path of crypto trading.
But the sad thing is that a lot of people still do not have an idea about these low risk methods of earning passive income from crypto.
This guide is meant to enlighten you more on it.
In the course of this guide, you will learn how to invest in cryptocurrency at a lower level of risk and the following will be discussed;
- Holding cryptocurrency Method
- Staking Cryptocurrency Method
- Lending Cryptocurrency Method
How Low Risk Crypto Investment Method or Strategy Works
The use of crypto investment is one of the less risky ways you can earn passive income from cryptocurrency.
It is not tedious as some that you have to consistently be in front of your screen to observe market movements.
It is as simple as having your cryptocurrency in your wallet and then initiating the crypto investment function.
Such functions include crypto holding, crypto staking or crypto lending.
After you have activated the function, the rest is just for you to sit back and enjoy consistent profit without doing any other thing.
The profits you receive depends on the APY of the crypto you are lending.
Benefits of Using Low Risk Cryptocurrency Investment Method or Strategy
Some of the benefits of investing your cryptocurrency are;
1) Double Earnings From Crypto Assets
When you make use of passive income earning methods like staking, you earn in two ways.
You earn from the price gain of the cryptocurrency and also earn from the staking rewards you receive.
The same thing applies when you lend your cryptocurrencies.
You earn from the price gain of the crypto you lend.
You also gain from the lending profits that you receive for lending your crypto.
2) Easy to Use and Beginner Friendly
When it comes to earning passive income using any investment method like holding, staking or lending, you can activate it easily.
This makes it very easy for total beginners to start making money from their crypto easily.
3) Crypto Quantity does not Drop in Bearish and Bullish Season
Quantity of available crypto is always the same when holding or more when staking or lending during bear and bull seasons.
This maintains the quantity of cryptocurrency assets that you hold when crypto market faces a loss during the bear season.
Your crypto quantity also is not negatively affected when the bull season comes.
4) The Risk Level is Very Low
When it comes to using methods like holding, staking and crypto lending, the risk level is very low.
This makes it a great earning option for use in the bullish and bearish market.
Best Low Risk Crypto Investment Methods and Strategy
Making consistent profit with the use of trading is never guaranteed.
Sometimes you win, sometimes you lose.
At some of the times you face a loss, it might eat deep into your capital thereby putting you out of business.
With other methods and strategy, you can reap consistent profit in an easy way.
Such strategies and methods make earning from crypto consistent.
These methods include holding crypto, staking crypto and lending crypto.
1) Holding Cryptocurrency Method
When talking about investing in cryptocurrency, the most common method people use is holding crypto.
This method is less risky as compared to some high risk crypto earning methods.
Such high risk methods include futures trading, options trading, etc.
With the use of futures trading, I have seen someone blow a big account.
The amount was high as it was in millions of dollars.
This loss occurred in a matter of few hours.
Such occurrences make people fear crypto trading more.
In the case of holding crypto, the loss is always low.
How Holding Cryptocurrency Investment Method Works
How the holding method works is as simple as buying a crypto, holding it in your wallet for a period of time you choose and then selling when the price soars.
A lot of cryptocurrency users make use of the holding method of crypto investing without being aware of it.
This is because a lot of people like buying cheap crypto.
They keep it for some time and then sell them when the price soars after a given period of time.
A lot of times, cheap cryptocurrencies are mostly used in this method.
This spans across cryptocurrencies under one dollar, crypto under a cent,etc.
Some expensive cryptocurrencies are also used.
This could be cryptocurrencies like bitcoin, ethereum, etc.
The general idea in this method is just buying at a particular price, holding for a given period of time and then selling when the price soars.
With this method, you make profit at a much lower risk level when investing your crypto as compared to when you trade.
This is why a lot of people love this low risk crypto investment method so dearly.
It is mostly popular in usage by crypto beginners to earn some profit while they strengthen their cryptocurrency trading strategies and knowledge.
Advantages or Benefits of Holding Cryptocurrency Investment Method
There are so many benefits that can be seen in the holding method of investing your crypto.
This is why the percentage of people using this method is very high.
Some of the advantages include;
- Available for all Crypto
One of the greatest benefits of using the holding method for passive income is that it is available for use across all cryptocurrencies.
This makes it easy to make passive income across all cryptocurrencies.
This is because you can buy a crypto you want and hold it for some time.
When the price soars, you then sell them for profit.
It is as simple as that.
This is why it is the easiest method of earning passive income.
This is due to how straight forward it is for people to use.
Compared to other methods, crypto holding stands tall as it is available for use with any crypto.
This has a slight difference when it comes to other crypto investment methods like staking.
This is because staking cryptocurrencies is not available for all crypto assets.
- Low Level of Risk
Cryptocurrency can be really volatile a lot of times.
With just the blink of an eye, the marker direction can speedily move against you.
This renders your trading strategy profitless.
Due to this, the quantity and value of your crypto asset turns from green to red.
This pain is more felt by cryptocurrency traders especially the futures traders.
This will be illustrated in two ways.
Case A is a crypto person holding crypto of $1000.
If the crypto market price drops by 5%, he loses $50.
Case B is a futures crypto trader with $1000 using a 10X leverage.
If the crypto market price drops by the same 5%, he loses $500.
This is why crypto holding is one of the best low risk cryptocurrency investment methods.
- Easy in Usage and Beginner Friendly
Profiting from the use of this method is quite easy and straight forward.
This is because it does not have a long learning curve as compared to crypto trading.
This makes it easy for a total beginner to start making profit easily.
This is because this method is as simple as just buying and holding your cryptocurrency in your wallet.
- Crypto Quantity Does Not Drop Across Bearish and Bullish Seasons
When you hold your cryptocurrencies in a wallet, the quantity does not drop.
In the bearish season, the quantity remains the same.
Also in the bullish season, the quantity still remains the same all through.
That means that if you buy 500 pieces of ADA now and hold for the next 50 years, you will still go back to see it intact.
Irrespective of how bullish or bearish the crypto may be within the 50 years period, it does not affect your crypto quantity when you are holding.
- Available for Use Across all Types of Crypto Wallets
The implementation of holding cryptocurrency can work in any crypto wallet.
It can be used in centralised exchanges.
It can also be used in decentralised exchanges too.
It works well with hot wallets.
Also with the use of cold wallet, you have no issue when holding your crypto assets.
This level of versatility in the use of crypto holding makes it an all round success.
- Low Limitation in Amount to Hold
Unlike other crypto investing methods like lending and staking, crypto holding method is limitless in amount you can hold.
This is as a result of no limits in the amount of crypto you can buy and hold.
The only limit you may encounter is the amount of money that you have.
- Funds are always Available for Withdrawal Anytime
When it comes to money, everyone wants to have express access to it anytime.
This is due to the fact that an emergency need may arise in an impromptu way.
When such an incident occurs, your need for money becomes urgent.
This easy access to your funds is fast and instant when you hold your cryptocurrency.
Disadvantages or Limitations of Holding Cryptocurrency Investment Method
Irrespective of the great benefits of holding crypto, there are some limitations that it has too.
- Profit is only One Directional
When you buy and only hold a cryptocurrency, you can only make money from just one way.
Your profit only comes when the price rises above the price that you bought the crypto.
This makes some experienced crypto users look to other less risky crypto investment methods.
This is done in order to earn more from their cryptocurrencies.
When this happens, they make use of cryptocurrency staking.
This spans across staking cardano to staking other crypto that use proof of stake consensus mechanism.
- Profit Margin is not High
The profit that is made when holding a crypto is enticing at times.
Sometimes regret sets in when you see what others who used methods like futures trading earn.
Let us use a case study to explain this;
A cryptocurrency user buys a crypto at $1000 and holds till the price gets to 50% gain.
That makes the new price $1500.
His profit becomes $(1500-1000) = $500
Another cryptocurrency user buys the crypto at $1000 and Longs it by 10X on futures till price reaches 50%.
With the gain of 50% in the crypto price, the futures trader makes (50×10)%
This translates to a profit of $5,000.
While a crypto holder made $500 in profit, a futures trader made $5000 with the same percentage of crypto price gain.
Cryptocurrency Staking Method
Buying and holding crypto is a good strategy of earning from your crypto investment at a low risk.
But then after you discover other low risk ways of earning passive income from crypto, the beauty of just holding crypto fades away.
This is because with just holding crypto, you make profit in one direction only.
But with other low risk cryptocurrency investment strategy, you earn in double ways.
Such investment methods and strategy include the use of cryptocurrency staking.
This is clearly shown when staking ADA crypto.
With crypto staking, you earn from staking rewards.
You also earn when the price of the crypto coin gains in value too.
This makes it a double way of earning from your cryptocurrency at a low risk level.
How Staking Cryptocurrency Investment Method Works
Crypto staking is a proof of consensus method that pays validators staking rewards for validating transactions on the blockchain.
Validators are crypto users who stake their cryptocurrencies in a staking pool to verify transactions on the blockchain of the staked crypto.
This can be done in a solo pool where you are the only one in your staking pool.
For this to be productive and profitable, you have to stake a high number of the crypto.
It can be done in a group by joining a large staking pool to earn well.
Such best group pools include the binance staking pool where millions of people stake their cryptocurrency.
Binance staking pools also offer better APY as compared to other staking pools.
For increasing the power of a staking pool with your staked crypto,. you are rewarded with staking rewards.
This staking rewards is mostly paid out with the crypto you staked.
That means that if you stake cardano, your staking rewards will be paid out in cardano.
Every staking pool has a time frame in which they pay out staking rewards.
Some pay out on a weekly basis, some pay out monthly.
With the use of binance, you receive your staking rewards daily.
This staking rewards is paid into your spot wallet.
This means that you can use it to stake again and earn more.
You can also choose to withdraw to fiat and spend it or use it to trade for more profit.
Also, know how to avoid unsuccessful staking of crypto for the best staking experience.
Advantages or Benefits of Staking Cryptocurrency Investment Method
A lot of big names in cryptocurrency are gradually migrating to the proof of stake consensus mechanism.
This includes cryptocurrencies like ethereum.
Such level of migration is due to the diverse advantages that the proof of stake consensus mechanism offers.
Some of the advantages include;
- You Earn Crypto Profit in Two Ways
The beauty of staking is really felt when you earn staking rewards from your staked cryptocurrency.
This makes it a double way of earning passive income.
You earn when the coin appreciates in price.
You also earn staking rewards from your lock staked cryptocurrency.
This will be shown in two case studies.
Case A: a crypto user holds a crypto of $1000 for a month and it appreciates by 20%.
That gives him a profit of $200.
Case B: another crypto user staked his $1000 worth of crypto which appreciates by 20% in a month.
He gets paid a staking reward of $60 for the month.
His total profit for the month becomes $260.
That is how profitable crypto staking can influence earning passive income.
- You Make Less Loss in The Bearish Seasons
A bearish season is a time a lot of crypto users fear.
This fear is higher with those that hold cryptocurrencies.
This is because the bearish season will reduce the value of their cryptocurrencies.
This reduction really affects people who only hold the most.
As for crypto stakers, the staking rewards they earn reduces the magnitude of loss that they face.
Let us see this in an example below;
Case A: a crypto holder has $1000 which reduced by 10% during a bearish season.
This accumulates to a loss of $100.
Case B:a crypto user staked crypto of $1000 which reduces by 10% just like the crypto holder.
Within this period, he earns $60 from staking rewards.
The loss he makes from the 10% loss in his $1000 is $100.
But he gains $60 as staking rewards from his staked crypto.
This puts him at a loss of (-100+60) = $40
This makes his loss smaller than the person that only holds cryptocurrency.
This is because he made an extra $60 from staking which reduces the loss.
Thereby making his loss $40 as opposed by the $100 loss a person who only holds crypto faced.
Disadvantages or Limitations of Staking Cryptocurrency Investment Method
The benefits of crypto staking method of investing crypto may be too enticing to make you look away from other strategies.
Irrespective of this, it still has some limitations.
Such limitations are;
- Crypto Staking is not Available to all Cryptocurrencies
When it comes to the use of crypto staking, it is limited to few coins.
This is because staking is functional on proof of stake consensus mechanism.
If a crypto coin was not built with such consensus mechanism, staking will not be possible.
That is why this low risk cryptocurrency investment strategy does not work for all crypto.
This makes it a bitter experience for some people who would have cashed out in two ways from their investment.
When you are faced by this, you can use other methods similar to crypto staking.
This has to do with the use of binance flexible savings for passive income.
Flexible savings is available on binance for lots of coins that cannot be staked.
- No Access to Crypto Asssets During Locked Staking Period
When you stake your cryprocurrency, you cannot use them again for any other task.
The only way you can have access to them is by unstaking it or early redeeming your staked crypto.
Unstaking your crypto comes with a price.
This price is that you will lose all the staking rewards that you were paid.
Also, the same value of the staking rewards will be deducted from your staked capital too.
This becomes a painful experience in times of emergency where you want an instant access to your funds.
- You Lose All Staking Rewards When You Unstake
When you stake a crypto, make sure that you plan your financial calendar well.
This is because your funds will be totally locked during the staking period you choose.
So if you choose a staking period of 6 months, you will be unable to access your staked funds for 6 months.
But there is still a way you can access your account though.
The only issue is that it comes with a price.
This is because you will lose all your accumulated stake rewards.
To access your funds during a locked staking, you have to unstake the crypto.
This will reverse all the staking rewards you earned back to the staking pool.
This is why you have to project your future financial needs before using a long stake duration.
Lending Cryptocurrency Method
Staking of cryptocurrency is a passive income earning method a lot of people love so much.
The bitter side of it shows up when the crypto you hold does not support staking.
This brings a high level of disappointment to a lot of people.
This makes them to just hold their crypto only especially for beginners.
If that has ever happened to you before, stay calm as there is another way you can earn.
If your crypto does not support staking, you can lend your crypto and still make money.
This has been a great earning alternative to a lot of people.
The pay is also very consistent too.
How Lending Cryptocurrency Investment Method Works
Lending your cryptocurrency is easy to use even to a total beginner.
To be able to lend your crypto, you must use an exchange that supports crypto lending.
Such exchanges include Binance, Nexo, etc
You can also make use of cold wallets which is more secured to lend your cryto.
Cold wallets like trust wallet support lending of cryptocurrency too.
To be able to lend your cryptocurrency, you need to following the steps below;
- Have funds in your wallet.
- Select the quantity of crypto you want to lend.
- Confirm your lending
After you have confirmed your lending, your profits will start dropping into your spot wallet.
The amount of profit you earn depends on the APY of the lending.
Advantages or Benefits of Lending Cryptocurrency Investment Method
Lending of cryptocurrency has a lot of benefits attached to it.
Some of these benefits include;
1) Earning in a Double Way
Just like in the case of staking crypto where you earn in two ways, it is possible when lending cryptocurrencies too.
When you use low risk crypto investment methods like lending, you earn in two ways.
One of the ways you earn is gain from the rise in price of the crypto.
Another way that you earn is with the lending profit paid out to you.
This makes lending a great crypto earning method to use.
So if the crypto asset you have does not support staking, use lending to make more passive income.
2) It has a Low Level of Risk
Making money from crypto lending is not as risky as other methods like trading.
With the use of crypto lending, you get paid consistent profit without doing anything.
This makes it very low risk method to use irrespective of your level of crypto knowledge
3) Crypto Lending is Beginner Friendly
Using the lending feature for passive income is very easy to use.
This is because of how simplified the exchanges that support it have made it.
To lend your crypto, you just have to send money to your wallet, activate the lending function and that is all.
After that, you just have to seat back and enjoy the profits as they keep dropping consistently.
Disadvantages or Limitations of Lending Cryptocurrency Investment Method
Crypto lending is a great low risk crypto investment method but has some limitations too.
Such limitations are;
1) Crypto Lending is not Available for all Cryptocurrencies
One of the challenges you may face with the use of crypto lending is that it does not support all the cryptocurrencies.
This is because crypto lending mostly supports well established cryptocurrencies like bitcoin, ethereum, etc.
This limitation in the number of supported cryptocurrencies limits some crypto users from making extra passive income.
2) Low APY From Some Cryptocurrencies
When it comes to the profit you make from lending some cryptocurrencies, some are usually small.
This is due to the low APY that some cryptocurrencies have.
This makes the lending of some low APY cryptocurrencies undesirable to a lot of cryptocurrency users
Conclusion on Low Risk Crypto Investment Methods
The adoption of less risky methods of investing in cryptocurrncy keeps increasing on a daily basis.
This is as a result of the positive results a lot of people have derived from it.
It has also become a safe haven for so many crypto beginners.
This is because it offers beginners the opportunity to earn while learning of other earning methods like crypto trading.
It also helps crypto experts to earn passive income too.
This why the use of low risk cryptocurrency investment methods keep increasing sporadically.
Let us know your suggestions or questions by using the comment section below.
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