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Can You Make a Living Trading in Cryptos?

make a living trading cryptos

June 28, 2021 | 

893 Views | 

JOHN K MWANIKI | 

Get Into Cryptocurrency Trading Today

Everyone interested in the crypto market is after the big prize; money. Between 2019 and 2020, the trading volume of cryptocurrencies experienced a 78% increase. More people are starting to trade cryptos and using them for transactions. 

The one thing that potential investors would like to know about this space is, can they make a living trading in cryptos

Already, there are millions of people making a living out of it. While this reality exists, not everyone can make a living out of it. It is either they fall into the trap of scammers, they lose their entire investment capital, or they lack the know-how. 

There are several ways that people make legitimate money through crypto trading

Proven ways to make a living trading in cryptos

Here are several ways you can make a living trading in cryptos.

1. Earning dividends

Traders and investors are buying cryptocurrencies and holding them to earn dividends. Some of the cryptos call the dividends' rewards'. This is the passive income that crypto investors get from holding the assets in their wallets for a given period.

Worth noting also is that crypto dividends do not work like stock dividends. They do not come from the excess cash generated by a company. The amount received in rewards by the traders is determined by the amount they hold in their wallets and the trading volume of the specific crypto. 

The good thing about earning crypto dividends is that you don't have to stake your assets. Note that not all cryptos are suitable for your investment portfolio. Take time and research to identify coins that align with your investment objectives. 

2. Buy and hold strategy

The buy and hold strategy is among the most used by investors to make a living trading in cryptos. They purchase different cryptocurrencies and hold them until they rise in value. At this point, it is when they sell them at a profit. 

This trading strategy requires analysis of the coins to identify the ones that are volatile and stable at the same time. Traders look for such coins so that they can make money from their rapid shift in value. Bitcoin is an excellent example of cryptos that have the mentioned characteristics, making it a viable investment in this case. 

Investors are also advised to diversify their investment by having a mix of altcoins with a promising future in their portfolio. 

3. Day trading

If properly executed, day trading can be a lucrative way to make a living trading in cryptos. If you don't have a good strategy, however, this strategy can prove to be challenging. The good thing about day trading is that investors have the opportunity to take advantage of the market features any time of the day, seven days a week. The market never closes. 

There is also volatility in the crypto market, which provides traders with tons of opportunities for profit-making. There is transparency when it comes to data in the crypto market. What does this mean for the traders? They don't have to pay to get their hands on this data. 

Day trading requires intense technical analysis. The trader has to invest their time studying the charts and analyzing the performance of the assets they are interested in. It is considered one of the most involving trading strategies, but there is a bright side: it can also be gratifying.

It is worth noting that traders can also save on taxes while day trading by using regulated futures cryptocurrencies.

4. Running coins master nodes

You can make a living trading in cryptos by running the coins' master nodes. The income comes in the form of rewards, and the value of the coins going up. Traders using this strategy also contribute to the stability of the blockchain. The network activity of the specific blockchain will also determine how much money you will make. 

It is a good way of making passive income if you are a node operator.

5. Crypto arbitrage

This strategy takes advantage of the cryptocurrencies that trade at different prices at various exchanges. Essentially, the traders buy cryptos at a low price in a given exchange and then sell them at a profit in another exchange. 

Several factors make arbitrage possible. For instance, the variance in liquidity. Liquidity is not the same across the different exchanges. Also, the exchanges vary in terms of who trades in them. There are exchanges for institutional investors and others for retailers. 

The variance in preferences between such exchanges creates an arbitrage opportunity. The other condition that supports arbitrage is a different withdrawal and deposit times at the exchanges. This determines the ability of the exchanges to catch up with the market. At the same time, the transaction fees also vary, creating an arbitrage opportunity. 

This trading strategy comes with several benefits. For one, it is low-risk. By buying and selling digital assets almost immediately, the traders avoid the risk of long-term investment. Crypto arbitrage also does not rely on bull and bear markets. Regardless of the direction the market is taking, the traders will earn. 

You can make a living trading in cryptos in a highly volatile market with minimal risk by using this strategy. To successfully do crypto arbitraging, you need to have reliable and the latest technology that will allow you to make fast moves. 

Cryptos arbitraging can further be broken down into spatial arbitrage and triangular arbitrage.

6. Staking Cryptos

Crypto staking is yet another common strategy used by traders to make money. The technique involves locking the cryptos to receive rewards. Note that as traders hold the coins in their wallets, they secure the particular blockchain. 

Make living trading in cryptos using the various strategies

The strategies listed above have proven effective as investors have used them over the years to make a living trading in cryptos. If you are looking to venture into the crypto space, you can select one that you feel is suitable for you.

It is also vital to study the different strategies to understand their pros and cons before settling for one.

Buy & Sell Cryptocurrency Instantly

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