Investing Options in Bitcoin: A Guide to Living the Crypto Dream
October 22, 2020 (Investorideas.com Newswire) For some, investing in crypto has opened up an entirely new lifestyle, one where work from home literally means work from your home-office in Bali, while your wife looks after the house in Switzerland. While the crypto boom is said to be over, and fewer rags to riches stories are being run in major headlines, lucrative investments are still happening everyday.
And are happening in many new and inventive ways. There are now more ways to strategically invest your money in bitcoin than there ever has been in the history of crypto. Giving investors more choice, and more freedom- not just in how they invest, but how they can afford to live the lives that investing can afford them. Most people can't just run to Bitvavo, use the newbie friendly exchange platform to purchase hundreds of thousands of dollars' worth of bitcoin, and then sit on that investment for years to come. Which is what these new investment options hope to mitigate, giving more people the freedom to create investments that work for them.
Common Investment Vehicles
As the cryptocurrency landscape continues to broaden its horizons, it's bound to take a few pages out of the traditional financial and investment operations handbook. Particularly as into situational interest in the digital currency continues to rise. These types of investment vehicles, or derivatives, offer all different types of investors new and inventive ways to speculate on the future of bitcoin price. While this is definitely not an exhaustive list of possible derivatives, these are perhaps the most time honored and trustworthy.
Bitcoin lending is similar to that of traditional lending practices, except it's not based on credit. Instead loans are asset backed, either with fiat, or other cryptocurrencies. Bitcoin lending offers a provocative investment opportunity for many staunch HODLers, where they can essentially insure their stored wealth, but continue to make gains based on increased market liquidity and interest. What makes this market so incentivized for borrowers isn't just the comfortably low interest rates, but also the ease at which contracts can be made. No lengthy credit checks are necessary, instead using their holdings as collateral. So HODLers can hold onto their crypto investments for the long-term, while using loans to supplement more short-term endeavors.
Options are a form of trading that is intensely familiar in legacy markets. Options give investors the option to buy or sell bitcoin at a specific price. This means that you can buy or sell at a given and agreed upon price, known as a "strike price", within a certain time limit if you wish. There is no obligation to buy or sell within this trading format. Options allow traders to speculate on whether the price of bitcoin will go up or down, but doesn't require them to buy the crypto outright. To buy an option, investors pay a "premium", which is usually much cheaper than purchasing bitcoin itself. Should the price go in the direction that the option investor believes it will, the per specified price will stand, and buyers (call options) can purchase at deeply discounted amounts. Should the market drop as hoped (put options) you can sell at a slightly inflated price.
Cryptocurrency funds, or investment funds- or bitcoin funds for that matter, refer to a widely varied investment portfolio that is usually managed by a different person, or group of people, other than the investor themselves. Multiple investors can buy into these "funds" and share out on the profits that any given portfolio sees. The majority of investment funds that exist within the cryptosphere are venture capital funds, while the rest are generally logged as hedge funds. Venture capital funds refer to investment funds that are powered by multiple investors pooling cash to invest in small businesses or development projects- largely to do with DeFi and blockchain tech. Where hedge funds are portfolios that are managed only to mitigate risk with other, legacy markets.
Ah the HODL. The time tested, investor approved, favorite strategy among most crypto enthusiasts. The term may have come from a poorly spelled, drunken rant on a forum during bitcoin's formative years, but has become more of a cult classic move today. Many have turned this fat-fingered faux pas into a classic acronym, something else crypto lovers adore. "Hold On for Dear Life" has become the well-known battle cry of nearly everyone embroiled in bitcoin investment, as the coin has enjoyed a healthy ROI for most of its existence. One that grants the patient and faithful with some big payoffs. HODLing is merely the act of holding onto crypto investments for... well, eternity really. Instead, making small moves and investing in other cryptos and bitcoin trading vehicles with the cream, and saving the milk for later.
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