Investing $100k in crypto sounds like a big deal but the truth is that it is actually a big deal. For an industry with a market value worth over $1 trillion and with multiple investment options, it is understandable to feel lost at sea. The crypto trading space often rewards those who stick to a proven strategy.
This article uncovers the smartest ways to go about investing $100k in crypto. Whether you are an expert investor or a newbie to the industry, this article is for you. Not only will you learn about staking and its benefits but you will also discover equally productive alternatives such as swing trading.
Also, if you’re still on the hunt for a great crypto exchange, we’ve got 5 of the best to check out right here.
Congratulations on Saving 100k!
So, you’ve got $100k. Not just 100k in savings but 100 grand to invest. Of course, assuming you are not going to be investing your entire life savings. That is quite the dream for most people congratulations are in order.
It really doesn’t matter how you got the money as long as you didn’t cut corners or rip someone off. Who cares whether you won the lottery or cashed out the inheritance gramps left for you. Undoubtedly, you plan to increase your net worth by investing the money. This brings us to the meat matter. Stake that money!
Smartest Way to Invest 100k in Crypto Safely
Staking is widely regarded by experts as one of the safest ways to earn decent to huge returns on your crypto investments. David Lawant, the director of research at Bitwise Asset Management alongside other experts and speculators has called labeled staking a ‘big business.’ But do not just take anyone’s word for it without understanding the entire concept of staking.
What is Staking?
Trading cryptocurrencies is risky considering how volatile the market usually is. Rather than having to go through the stress of trading, many crypto owners are now exploring the option of staking. Some cryptocurrencies such as Ethereum, Cardano, Algorand, Polkadot, and ChainLink use a proof-of-stake mechanism to verify transactions as well as consensus on their networks or blockchain. For such cryptos, users who lock up their crypto funds for a period of time to help maintain the transactional operations get staking rewards after their lock-up period expires.
To become a validator and enjoy staking rewards, you must own a minimum number of coins. However, even those who do not hold enough coins can still earn rewards by pledging their coins in partnership with a validator. You can also stake your assets with a crypto exchange or through staking pools. With staking, investors can earn annual percentage yields of over 1,000% as well as huge amounts of passive income throughout the time.
In a single sentence, Staking is the process of locking up or delegating your crypto holdings in order to earn rewards. The process is not risk-free since liquidity, market, and security risks will always remain with digital assets such as cryptos. However, the benefits far outweigh the risks. If your considering staking your cryptocurrency the place we would recommend doing so would be BlockFi.
Benefits to Staking
Well over $130 billion are locked up to support PoS networks in the crypto world. Staking crypto assets comes with numerous benefits including:
- Scalability: Staking effectively solves the problem of network speeds. This is the biggest problem of the Bitcoin blockchain. With a more scalable network enabled by staking, users can enjoy fast and seamless transactions.
- Eco-friendly: The whole process of staking is eco-friendly. PoW mining networks like Bitcoin’s, demand tons of energy which adds to environmental degradation. However, things are different with PoS networks. They are less energy intensive and you do not need any equipment or costly electricity bills to start staking.
- Passive income: While the two previous benefits affect your income indirectly, earning passive income is what appeals to us the most. Not only do you earn passive income, but you also get to do so without putting in much effort. The interest rates vary depending on the asset staked. Earning around 20% of your investment is not uncommon. Do the math. At least, 20% of $100k earned every year for doing little work sounds cool, doesn’t it?
Other benefits of staking include improved security and governance of the network and the satisfaction that comes with playing a key role in the ecosystem of the asset. Also, you do not need to have any expert knowledge or specialized skills to start staking.
Alternative to Staking – Swing Trading
Of course, staking is not the only way to invest 100k in crypto. So, if you want to diversify your investment portfolio or become more active in the crypto universe, you might want to consider swing trading.
Swing trading involves holding long or short positions for more than one trading session in order to make profits. Swing trades typically last a few days to several weeks or months, which essentially means short to medium-term. Swing trading comes with some work since you have to manage trades and anticipate price moves and market swings. Swing trading is often considered low-risk compared to other forms of trading.
The basis of swing trading revolves around capturing a swing with prices moving sideways. The objective is to close a trade before an opposing pressure comes in. This can be done with a number of techniques such as:
- Trading with momentum after a confirmed change in market direction
- Holding long positions after the market price channel drops to lower bands
- Getting your stop-loss techniques spot on with the right risk/reward ratio
Swing trading techniques when applied with discipline and skill bring profits despite the exposure of the trader to overnight and weekend risks. It is safe to see swing trading as the sweet spot between investing and day trading.
Benefits to Swing Trading
Swing trading comes with a number of benefits such as:
- Less time: You do not need to spend so much time trading unlike with day trading. It is less stressful, which makes it appealing to people who have other businesses. With a properly planned schedule, you can do swing trades alongside your day job.
- Maximizing profits: You can make the most of your trades and enjoy short-term profits by capitalizing on market swings. potential by capturing the bulk of market swings. The results are particularly outstanding when the market (index) is in a sideways zone.
- Access to capital: Unlike staking, you do not need to tie your capital down with swing trading. If your trade isn’t working as planned, you can cut your losses if they are small and move on to invest in a more valuable asset.
Top Crypto Exchanges
1. Uphold
Uphold is considered to be one of the safest ways to buy cryptocurrency by many digital asset experts. Since launching in 2014, Uphold has maintained an exemplary reputation for security among its customers. The site is unique in the sheer amount of assets it offers. You can get started on Uphold here.
Pros
- Available in more than 180 different countries
- Transactions sent between Uphold users are completely free
- Huge list of cryptos available
Cons
- Fees are unclear in certain buy and sell spreads
2. Binance US
Binance US is a cryptocurrency exchange for U.S. residents that allows users to buy, sell, and trade supported cryptocurrency. Binance US also offers “staking,” or lending of several cryptocurrencies, paying users interest for lending their crypto assets. They have a wide list of cryptos available and super low trading fees. You can get started on Binance US here.
Pros
- Great looking interface on desktop & mobile
- Beginner friendly
- Low trading fees
Cons
- Fewer crypto-to-crypto currency pairs than global Binance site
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Final Thoughts
Investing 100k in crypto is not as hard as it seems. With the right strategy and good risk management, you could be swimming in profits in no time. Staking alongside its alternative, swing trading remains one of the safest ways to invest your money. However, some things must be put in place. Invest in yourself and get more knowledge about the crypto market because you need to understand what you are doing.
If you prefer to make relatively quick profits and do not have the patience that comes with staking, swing trading might be the better option for you. On the other hand, if you prefer to be passive and would rather wait to cash out your investment, staking is the better option. It is also less risky and does not require technical knowledge like swing trading.
Before staking or swing trading, take some time to research the most valuable assets to stick with. Only use reputable exchanges and platforms with vetted levels of security and user protection policies. It is also important to note that staking and swing trading are not get-rich-quick’ schemes, so you might be better off having a long-term or sustainable plan.
