The cryptocurrency markets have repeatedly amazed participants with the ability to provide quick and easy profits, even though it is associated with very high risks. Surely you’ve heard the story of a miner who found some Bitcoin in their old wallet and suddenly became a dollar millionaire. There aren’t many people to get that lucky, but if you plan on becoming one, the crypto markets are the go-to place. Beginners may ask themselves, “What am I missing?” Today we will look into this question and find out if it is possible to double your crypto holdings in a single month or if this fate is only reserved for the chosen ones.
Yes, you can!
Crypto enthusiasts often get a chance to “make bank”. And one doesn’t necessarily have to be lucky. In most cases, traders are stopped by uncertainty or the good old fear of losing money. Let’s take a look at a simple example: in March 2020, when the markets collapsed amidst the pandemic crisis, crypto went down along with stocks, commodities, and many other assets. Many saw this as a collapse, and they, following the others, started getting rid of the rapidly falling assets. But for others, this situation has become a great opportunity to acquire cheap assets, which have by now, not only recovered but brought significant profits. Just have a look at any asset, such as Bitcoin (BTC), S&P500, or Gold (XAU).
Bitcoin alone rose by around 400% since then, from $ 3,900 to $ 19,300. And altcoins have shown even stronger growth: for example, Ethereum (ETH) grew more than six times from $ 90 to $ 600.
Below we will suggest a few tips, which will help you further benefit from crypto and ensure even higher profits.
Invest in DeFi
DeFi has become such a hot topic that the growth of Bitcoin by tens of thousands of percent will seem like a boring ride. Suffice it to recall the Yearn.Finance (YFI) token, which grew by more than 30,000% in just one month and even outperformed Bitcoin in terms of its price. At its peak, the price of YFI was four times higher than the one of BTC. It seems unbelievable, but that’s exactly what happened. The hype around the DeFi sector is somewhat reminiscent of the ICO boom in 2018 when tokens rapidly rose in price. This is a kind of déjà vu: only the figures and names have changed, but the essence has remained the same. However, as with any phenomenon, each hype has its time: you need to find the best moment to invest and choose the right project that stands the strongest chance to “moon”. Recently such projects were Yearn. Finance (YFI), Uniswap (UNI), Suhiswap (SUSHI), and the likes.
The growing demand for decentralized finance has led to a sharp increase in the profitability of crypto hedge funds, such as Pantera Capital. In August, the crypto fund invested in Yearn.Finance (YFI), Terra (LUNA), Polkadot (DOT), Ampleforth (AMPL), and several other DeFi tokens. The total value of associated assets under management increased by 100% in a single month. This is not a result of luck but a logical consequence of competent management and the acquired assets analysis. Anyone could have been in their shoes, but few took risks. The last ones to invest were unlucky, as it always happens with the ones driven by FOMO, similar to the situations with ICOs and Bitcoin in 2017. The moral here is that the opportunity must be seized quickly, but you still have to take risks. If you are risk averse, there are alternative ways.
Use a Trailing Stop Loss
Of course, investments in crypto funds like Pantera Capital are not feasible for everyone, as the initial investment amount starts from $ 100,000. On the other hand, young crypto investors have other ways to generate income during the DeFi boom. For example, the 3commas.io service has a Trailing Stop Loss tool which is available for all Bitmex exchange users that allows you to maximize profits by automatically moving the Stop Loss higher as the price rises.
When the price of the cryptocurrency rises, the Stop Loss will move until it rolls back and touches the Stop Loss, and the position closes. This is a great option for those who do not want to face significant risks: the trader determines the Stop Loss size. Thus, the investor controls possible losses in case the price goes in the opposite direction. All the actions on crypto exchanges can be done from a single place. If you are looking at the market but have concerns, the Trailing Stop Loss is a great option for you. It will surely help you get better sleep without worrying that tomorrow your $ 1000 will turn into a modest $ 10.
Use a trading bot
You can set up your own bot, which will trade for you 24/7. 3commas.io provides this feature as well. The bot can also trade with a Trailing Take Profit, and you won’t have to open positions manually. You just need to set the conditions under which the bot will perform. There also are pre-configured bots that you can use.
Bots can trade continuously and are immune to human emotions and error. Imagine that you can easily increase your profits with Trailing Take Profit enabled by several percent if price breaks through your original static take profit percent configured. Not bad, right? And there can be hundreds of these trades or even more where you can earn more profit than you originally expected.
Trade with leverage
Margin trading is a risky way, which should definitely be avoided by beginners. Nevertheless, it is a useful tool, but only if you are confident that you can estimate possible losses correctly. If you decide to give it a go, make sure that the losses do not exceed 2% – 3% of the deposit. Otherwise, only a few incorrect trades can quickly “eat up” your entire deposit.
Using a Trailing Stop Loss is a good idea in this case. This way, you won’t face excessive losses. In addition, margin trading allows you to trade in either direction: up or down. This is arguably the most significant advantage of trading with leverage. By the way, margin trading is available at Binance Exchange, which can be easily connected to your 3commas.io account.
If you use leverage, you can get 100% profit from a single trade. For example, if you use a 10: 1 leverage, your profit will be 50% if the price of the cryptocurrency rises / falls as predicted by 5%, and 100% if it rises / drops by 10%. Just don’t forget about the risks.
Use complex strategies
There is another not so obvious way to make money on the crypto market, even if the price goes in an unexpected direction – is to trade at a Stop Loss. This method is essentially a modification of a hedging strategy. Only you do not open the opposite trade immediately, but you place a pending order at the same Stop Loss price level of currently open trade.
In one of our articles, we explained how to earn when your position hits a Stop Loss, but that was relevant for trading Options. This method can be applied to both spot and margin trading. It is only suitable for short stops: the longer they are, the greater the risk you take.
It is a simple scheme: for example, you buy a Bitcoin for $ 10,000 and set the Stop Loss at $ 9,800, which is 2%. Then place a pending order at $ 9,800 with a mirroring stop, but in the opposite direction. If the price goes even lower, the former position will be closed, and you will get a profit from the latter one. Otherwise, you will just earn from the first trade.
Of course, do not forget about Trailing Stop Loss. It is best to use advanced or smart orders, which allow you to customize your trades in a flexible manner. For example, Binance and BitMEX have such orders that get canceled if another one is executed. Take advantage of the provided tools.
As you can see, there are many ways to double your crypto deposit in a single month or even faster. However, this will require some experience. We have a whole community where experienced traders are ready to help you. Visit our forum and read more on the topic to improve your trading skills.
Disclaimer: The contents of this article are not intended to be financial advice and should not be treated as such. 3Commas and its authors do not take any responsibility for your profits or losses after you read this article. The price prediction contained herein is based on data that was gathered from a variety of sources. This should not be used as investment advice. The user must do their own independent research to make informed decisions regarding their crypto investments.