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The Complete Guide to Creating Bitcoin Investment Strategies in 2021

The Complete Guide to Creating Bitcoin Investment Strategies in 2021

by admin

Are you investing in Bitcoin?

The current cryptocurrency market makes investments more attractive. However, as a beginner, you might feel intimidated. After all, crypto is a relatively new way of investment compared to its traditional counterpart.

If you want to make the most out of your return on investment, our guide can help. Read on as we discuss the best Bitcoin investment strategies around:

1. Do Your Research

As a beginner, you must do your due diligence when it comes to Bitcoin investing. The more you understand about the investment risks and rewards, the better your chances of success. The crux of your learning is all about the underlying technology.

A lot of experts agree investors must have a concrete grasp of digital currency concepts. It includes the blockchain and the distributed ledger system. It could seem obvious, but a lot of people decide not to understand them.

Without a proper understanding of how the blockchain stores secure data, you will have no means of determining your success. However, investing time to learn about Bitcoin will take a long time. 

Consider working with a mentor to shorten the necessary learning period. Look for a trustworthy person or resource to engage. Once you find one, ask questions to gain a better understanding of your investment.

Are you tech-savvy? If so, look for the original 2008 Satoshi white paper and read it. It is only eight pages, but it is inspiring because of its ingenuity. 

2. Always Be Cautious

Investments will always carry some risk. However, consider how digital currencies like Bitcoin are in their early stage of development. It becomes more apparent when you compare it to stocks or bonds.

For this reason, Bitcoin and the cryptocurrency market remain a high-risk space. Adjust your mindset and only invest money you are willing to lose. Always start small and only put in a portion of your capital.

Never chase Bitcoin prices. Instead, think about a desirable entry point and stick with it. This cryptocurrency often gives you the proper foreseeable price action, but the timing always needs careful maneuvering.

Avoid making rash decisions by maintaining your patience. Let the right Bitcoin price come to you instead. Once it does, never use all your money to buy crypto at once.

Instead, invest a little at a time and wait to see how the market develops. If it is desirable, invest more.

3. Consider Diversifying Your Portfolio

Bitcoin had massive gains for several years. Because of this, media outlets have lots of stories about people becoming millionaires because of Bitcoin. These successes often tempt investors to put their entire budget in cryptocurrency.

However, most experts caution against putting all your eggs in a single basket. When you are investing in crypto, diversify your portfolio. It means considering altcoins and other assets like bonds or stocks.

Diversification saves you from total bankruptcy since you do not stick to a single investment. When one component declines, you will have other sources of profit.

For example, you have a simple portfolio. It consists of the following currencies of equal amounts:

  • Bitcoin
  • Ethereum
  • Litecoin
  • Ripple

If a digital currency decreases by 10%, another will most likely rise by the same rate. With this diverse portfolio, you have more chances of surviving even when Bitcoin’s price suddenly became $0. After all, your altcoins will continue to hold value.

However, consider your choice of altcoins carefully. Hundreds of other active cryptocurrencies exist in the market. Most of them are startups, meaning they will most likely fail.

4. Keep Your Coins in Wallets

Exchanges are the best place to buy digital currencies due to their vast network. However, avoid choosing them to hold your Bitcoin and other cryptocurrencies. A lot of these platforms suffer from hacking, even the primary players.

Instead of an exchange, move your coins in a Bitcoin wallet. Whether it is online, mobile, or paper, your currencies are safer. After all, the safety of your coins is your priority.

Take further action and mitigate risk with hot and cold wallets. The former is online, while the latter is offline. It is similar to keeping your cash in a wallet, a bank account, and a safe at the same time.

5. Be Ready for Volatility

Bitcoin and other digital currencies are notorious for their volatile nature. As an investor, your primary objective is to learn how to manage price fluctuations. After all, they are inevitable, so it is only a matter of time.

Aside from diversification, use a “buy and hold” strategy. It is all about resisting the temptation of making short-term investments. With this strategy, you will outperform day traders by a mile.

Most cryptocurrency experts believe a passive investment approach is better than active strategies. The former is simpler since it is more suitable for people with less experience in crypto trading. It also has lower trading fees, meaning your long-term operating expenses are lower.

How to Buy Bitcoin

Now you know some Bitcoin investment strategies, it is time to buy some. Your Bitcoin investment profile is barren without any currencies to trade. Here are some steps to get cryptocurrencies and start trading:

Look for an Exchange

As mentioned before, you can buy Bitcoin and other currencies from reputable exchanges. Hundreds of these platforms exist online, but only some are reputable enough. 

Picking an exchange is a tedious task. However, you can narrow down your search using the following qualities:


Unlike FDIC-insured bank accounts, crypto investments have no central institution backing. Once your account gets compromised, you can never recover your coins. It also applies when the exchange falls due to hacking and other cyber attacks.

When you choose to keep your crypto in an exchange, pick one with cold storage. Some platforms have independent insurance policies to safeguard against hacking.


Each exchange has varying fees and payment plans. Some use an upfront flat fee, while others get a percentage of your trades. These platforms charge fees based on price volatility and charge per transaction.

Available Coins

Not every exchange offers every cryptocurrency in the market. Most crypto exchanges will offer popular coins such as Bitcoin and Ethereum. As for more niche altcoins, only specific crypto exchanges will offer them. 

Fund Your Account

Creating a Bitcoin account on exchanges will have varying requirements. Some of these include the following:

  • Social Security number
  • Identification cards
  • Source of income

Most exchanges allow you to connect your bank account. With this, you can now transfer dollars to your exchange account. Bank transfers often cost less compared to card options.

Funding your account is not the same as buying cryptocurrency. Like traditional investments, never leave money sitting in your exchange account. Consider buying Bitcoin as soon as you transfer some funds.

Put an Order

After connecting a payment method, you can now put an order for Bitcoin. The process has slight variations depending on your preferred exchange.

In most cases, all you need is to enter the number of dollars you want to exchange for Bitcoin. After that, you will receive Bitcoin based on the current rate. Exchanges will also deduct transaction fees on the final amount.

Some exchanges have features designed for active trading. When you use these platforms, you can place both market and limit orders. The former means you will buy Bitcoin at its current market price.

As for the limit order, you will set a price you are willing to pay for the currency. Once it reaches this point, the exchange will automatically buy Bitcoin.

Alternative Ways to Buy Bitcoin

Some digital payment platforms allow you to buy crypto, like PayPal. However, these options are not for every investor. Some do not allow you to transfer your Bitcoin into your crypto wallet.

The worst part is they charge higher fees when you buy or sell crypto. They are also often exclusive to Bitcoin and other common currencies. Consider comparing the prices with traditional exchanges to determine whether it is worth your time.

Also, consider buying Bitcoin from a Bitcoin ATM. These are physical machines located in various places in the world. These machines offer convenience since you need not pre-register before buying Bitcoin for cash.

You can use a Bitcoin ATM locator to find the nearest ATM in your area. These tools are either web-based or come as an app. To learn what to bring, check out this link from ByteFederal: https://www.bytefederal.com/what-to-bring-bitcoin-atm/.

Use Better Bitcoin Investment Strategies Now

These are some of the best Bitcoin investment strategies around. Never let your lack of knowledge stop you from gaining crypto profits. Use these tips to ensure your investments bear fruit in the long run. 

However, investing in Bitcoin is only the beginning. As mentioned before, diversifying your portfolio allows you to manage investment risks and rewards better. With a healthy portfolio, you will never suffer from total loss.

Did you find this guide helpful? If so, consider exploring our other posts to expand your knowledge today.

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