Top 5 Cryptocurrency Trading Strategies

top cryptocurrency trading strategies best bitcoin trade tactics

With so many crypto altcoins being vaunted as the next most exciting investment since Apple stocks, many people are becoming increasingly interested in joining the cryptocurrency world. There are currently more than 1,800 cryptocurrencies when writing this guide, making the process of choosing the most profitable cryptocurrency a formidable challenge. 

Like other traditional financial instruments like commodities, forex, and stocks, cryptocurrencies can be traded on crypto exchanges or other professional platforms such as the Bitcoin Compass website. Trading cryptocurrencies can be a luxurious venture given their massive price volatility. Combining the high volatility with advanced trading tools such as the 100X leverage can intensify the profits generated further. 

The commonly searched queries on the internet today on the subject of cryptocurrencies are “What is the best cryptocurrency to invest in” and “What are the best crypto trading strategies?” Luckily, in this guide, I’m going to cover the most popular cryptocurrency trading strategies to make sure your trades end up profitable. 

Top Crypto Trading Strategies That Work In 2021 

1. Investing In Initial Coin Offerings (ICOs) 

An initial coin offering (ICO) is a capital-raising undertaking in the cryptocurrency and blockchain sector. ICOs are similar to initial public offerings (IPOs) that involve crypto assets. However, there are significant disparities between the two. The biggest advantage of ICOs is that they eliminate the need for third-party intervention and connect the project directly to the investors. 

The main reason for investing in ICOs is to generate profits and get a chance to participate in ambitious projects. Profits are not the sole reason you should participate in an ICO; token holders usually enjoy various other rights. Some of the privileges enjoyed include Payment rights, access rights, voting rights, block creation rights, governance rights, and profits and revenue rights. 

2. Amass The Most Undervalued Crypto Assets At Their Lowest Value 

It is a wise trading strategy to adopt one cryptocurrency and purchase ample amounts at its lowest price. It is a standard approach by investors and traders to withdraw a portion, if not all, of their holdings, which ultimately pushes its value further downwards. 

If you trust the cryptocurrency project, you should stick by it and hold the coins. An intelligent strategy is to purchase a token that has already reached its first low. Sometimes, this strategy pushes a token price down to prices even lower than its ICO price.

Usually, when an ICO gets listed on an exchange, it can be connected to presale investors, together with the original group and developers who receive the coins for free. It would be best if you remain vigilant of these excessively dumped tokens. 

3. Make The Most Of Breakouts 

This strategy can give you minimal difficulties if applied correctly. Serious crypto traders utilize this strategy by identifying a trend in its early stages. If you want to open a position in an explicit entry point, you should identify the resistance and support zones where the price is about to break out in a different direction. A given token cost can either break out upwards past the resistance zone or breakout downwards past the support zone. 

The best option for any trader is to identify a clear breakout past the resistance level and await the price to bounce off the resistance, which becomes your new support level. Immediately after the crypto asset begins trading above the new support level, the market volatility tends to intensify, and the price tends to follow the breakout direction. 

4. The Balanced Portfolio Strategy 

To create a balanced portfolio, you need to buy different cryptocurrency coins for the same amount across the market. For instance, let us assume you have a total capital of $1,500 and you want to invest in three cryptocurrencies such as: 

Bitcoin 
• Ethereum 
• Chainlink 

You will have to distribute your capital equally among the three by investing $500 in among the three coins. Allocating your money in this way means that you are spreading the risk across your portfolio. This is a decent way to experiment with different cryptocurrencies. You can quickly identify which cryptocurrencies are likely to succeed in the long run. Now you can invest a significant portion of the capital in cryptocurrencies that have more potential. However, you should ensure that the coins you invest in have different use cases. 

5. The Unbalanced Portfolio Strategy 

In this strategy, capital allocation is percentage-based depending on how well you think a particular cryptocurrency will perform. The highest portion of capital is assigned to the cryptocurrency you believe will perform best. 

The strategy is most appropriate for extensive researchers and analysts who have extensively scrutinized the coins they wish to invest in. The percentage allocation can be altered but with a substantial reason for doing so. The most extensive setback in this method is anticipating percentages wrongly and missing the opportunity for huge gains. 

Final Thoughts On Crypto Trading

All the above-discussed strategies are effective when applied correctly. You should choose one and stand by it, and you can experiment with the others after accumulating some trading experience. Regardless of the strategy you select, you should accept making losses in a massively volatile market. It would help if you prepared an effective entry and exit plan before executing any trade. Besides, you should not follow the crowd; invest in cryptocurrencies you believe in.

Bootstrap Business Blog Newest Posts From Mike Schiemer, Partners, & Blog Outreach Services