Since its beginnings in 2009, the cryptocurrency market has grown significantly, becoming a financial sector in its own right. It stands out in particular for its different investment options, each ensuring significant income for traders. So how to invest in cryptocurrency? What are actually the different ways to invest in cryptocurrencies in 2024? Here are 6 types of investment for you.
1. How to invest in cryptocurrency – Direct purchase of tokens
The first option available to you when you want to invest in cryptocurrencies isdirect purchase of these tokens. According to data provided by Statistamore than 575 million people held and used cryptocurrencies as of June 2023.
Purchasing cryptocurrencies allows investors to directly own their assets. Here, the goal is to acquire and store these currencies in the hope that their prices explodejust to make gains on your initial investment.
Given the extreme volatility of the market, many experts recommend that traders diversify their crypto portfolio. This is to mitigate the risks associated with this type of assets.
So, by betting on this investment option, you can opt for several cryptocurrencies at once, ranging from the most capitalized to promising new projects.
Besides Bitcoin which is the most important crypto, investors can invest in altcoins (Ethereum, Solana, etc.) or riskier but more explosive crypto nuggets like Dogeverse, 99Bitcoins Or Vienna AI.
For buy cryptocurrencies, you must go to exchanges dedicated to trading cryptocurrencies. There are mainly two types of exchanges: CEX (Binance, Coinbaseetc) and the DEX (Uniswap, Jupiter, etc.).
It is also possible to buy cryptos directly on the websites of pre-sale projects.
2. Staking for passive crypto income
Having emerged in the world of cryptocurrencies thanks to crypto projects using the consensus of proof-of-stake (PoS)THE staking is another popular investment option today. It consists of locking cryptocurrencies that you already have on a blockchain to help secure the network.
As rewards, you get additional cryptos by passive income can be daily, weekly Or monthly. This is an ideal choice for any investor wishing to hold their cryptocurrencies for the medium or long term. The most famous network working with this model is Ethereum.
3. Farming to take advantage of DeFi
Also known as Yield farming, Farming is, like staking, a crypto investment option offering passive income, but requires more management. It involves depositing cryptocurrencies to operate decentralized applications (dApps) in exchange for rewards.
Here, it will no longer be a question of “staking” your cryptocurrencies, but rather of lending them in these platforms of the DeFi (decentralized finance). The funds lent thus make it possible to provide liquidity, which will be used for trading needs and borrowing.
Once a user borrows tokens from the platform, the latter must repay with interest which is ultimately distributed to the investors who made their cryptocurrencies available to the application.
Among the dApps specialized in farming, you have Pancakeswap, Sushiwap, Raydium Or Quickswap. Reference trading platforms like OKX also offer farming offers.
4. Buy crypto ETFs via a securities account
Also called “trackers”, ETFs are financial instruments that track the evolution of an asset or a pool of assets. Concretely, they follow the movements of the assets to which they are backed, in order to offer gains to the investors who own them when the underlying asset increases in value.
Thus, by opting for ETFs, investors find a way to benefit from the performance of a stock or a commodity, without holding it directly.
Since January 11, 2024, the Securities Exchanges Commission (SEC) has finally approved the 11 spot crypto ETFs offered by traditional players in the world of finance.
This is a unique opportunity for all investors wishing to invest in Bitcoin, without being confronted with the regulatory challenges of this market. Among the Bitcoin ETFs listed on the stock exchange, there is in particular theiShares Bitcoin Trust (IBIT) from BlackRock, Ark21 Shares Bitcoin Trust (ARKB) from Ark Invest or the Bitwise Bitcoin ETP Trust (BITB) from Bitwise.
Other cryptocurrencies could also get dedicated ETFs in the coming months. Ethereum spot ETFs are currently under review by the SEC, which is expected to rule on the subject by May 30, 2024. In Hong Kong, they are already launched.
5. CFDs and crypto stocks
There are also CFDs and shares of crypto companies to invest in the sector. A CFD (Contract For Difference) is a derivative product that replicates fluctuations in the asset it represents. It thus allows you to bet on movements of the underlying asset (upward or downward variation).
Just like ETFs, crypto CFDs are an alternative if you don’t want to hold cryptocurrencies directly. THE Crypto CFDs are offered by online brokers who at the same time offer contracts on the Forexraw materials, indices, etc.
When it comes to crypto stocks, you have the option of betting on publicly traded entities that specialize in the cryptocurrency and blockchain technology sectors. This particularly concerns cryptocurrency exchanges like Coinbase or companies specializing in mining like Riot Blockchain.
6. Crypto futures and options
Futures and options are other derivative products that can be backed by cryptocurrencies. Just like ETFs and CFDs, they allow investors to benefit from the performance of crypto currencies without the need to hold them.
As an example, a crypto futures contract associated with Bitcoin allows you to speculate on the price of BTC and take buy or sell positions.
Crypto options work differently. They are contracts that give the investor the right to buy or sell a cryptocurrency at a price agreed in advance.
Be aware that there are both call and put options, as well as an expiration date on each options contract. The price fixed in advance is called the strike price.
Options and futures are rather advanced instruments. I recommend that you educate yourself on their concepts before risking funds.
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