HomeBitcoinInvest in Bitcoin
Bitcoin logo

How to Invest In Bitcoin In 2021

Bitcoin logo
Bitcoin (BTC)
...
24H Change
...
7 DAYS CHANGE
...
Market Cap
...

Created in 2009 to replace traditional fiat cryptocurrencies, Bitcoin didn't get much traction until late 2017 when it almost broke the barrier of $20,000 price. However, the introduction of new crypto tokens and regulatory legislation held it back for a couple of years with immense fluctuations in price. In the last few weeks of December 2020, the price of Bitcoin has witnessed the highest ever gains with Bitcoin touching the all-time high of over $28,300. At the time of writing, the BTC token is now trading around $60,000.

Bitcoin is a decentralised blockchain network that relies on a proof of work protocol to authorise transactions. These transactions are absolutely immutable and cannot be altered or deleted without consensus. Individuals who take part in the authorisation and verification process are rewarded with BTC tokens. The total supply is capped at 21 million bitcoins.

4 Ways to Invest in Bitcoin

Whether you are looking to invest in Bitcoin in the long term or for short term monetary gain, you need to be aware of all the methods that you can use to invest in Bitcoin and other cryptocurrencies. 

1. Buy Bitcoin through an Exchange

If you want to invest in Bitcoin in the long-term, then the ideal way for buying and selling Bitcoin is through a cryptocurrency exchange. These are digital platforms that sell you BTC coins directly so you can own, hold, and sell them anytime you want. That being said, it has to be kept in mind that for holding or storing Bitcoin for months, you will need a compatible Bitcoin wallet. There are two different types of digital wallet that you can get:

  • Hardware Wallets - These are physical devices like flash drives and contain hardware that disconnects them completely from the outer world. It means that they cannot be accessed by any network and your private key is offline. That's why hardware or cold wallets are the safest way to store bitcoin and other cryptocurrencies. Trezor and Ledger Nano S are two of the top bitcoin wallets.
  • Software Wallets - These come in the form of websites, web apps, and desktop applications. They offer less security as compared to hardware wallets but are more convenient to use and make your Bitcoin tokens more accessible for trading. Some leading software wallets for storing bitcoins include Coinbase, Atomic Wallet, Edge, and Exodus.

Our Recommended Exchange

Since there are a number of cryptocurrency exchanges on the internet, we have made the decision-making process easier for you by comprehensively reviewing all major exchanges and selecting the best platform for both amateur and veteran bitcoin investors.


1
Min. Deposit
$50
Exclusive promotion
Our score
10
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Start Trading
Payment Methods:
Wire Transfer, Bank Transfer
Full Regulations:
CySEC, FCA

2. Buy Fractions of Bitcoin through an Exchange

Many people who are new to investing in Bitcoin and other cryptocurrencies often get discouraged by the high price. For instance, at the time of writing, a single BTC token is worth more than $60,000, which means that there won't be many people who afford to invest in an entire Bitcoin token. However, you don't need to be discouraged at all!

With a digital currency like Bitcoin, you don't actually need to buy the whole unit of the digital asset or coin. For example, the smallest unit of Bitcoin is called 'Satoshi', which is equal to 0.00000001 BTC. At the current price of bitcoin and taking high price volatility into consideration, that's worth less than a penny. This means that you can invest in smaller quantities that you can afford. All you need to do is:

  • Select your favourite Bitcoin exchange from the ones we've recommended.
  • Sign up on the exchange and go through the registration process.
  • Invest in Bitcoin according to your financial requirements.

It is important to keep in mind that investing in Bitcoin incurs a network fee since the transaction has to be processed. That's why you should buy enough BTC that covers your expense; otherwise, you will end up paying more in terms of fees than your profit. If you don’t want to deal with the network fee, then there are other methods to invest in Bitcoin which are listed below.

3. Trade Bitcoin through a Broker

Cryptocurrency brokers are also digital platforms, but unlike Bitcoin exchanges, they do not sell you Bitcoin or other cryptocurrencies directly. Instead, they let you invest in the token of your choice by making predictions about their pricing. This is done through a wide range of financial instruments, the most popular of which is Contract for Difference or CFD. Other instruments include options, futures, and ETFs.

Bitcoin brokers are a better option for those investors who don't want to hold BTC tokens for a long time and just want to cash in on the price volatility that is not offered by fiat currencies (forex). Another positive of investing through a broker is that you don’t need to get a bitcoin wallet and manage your BTC tokens.

Our Recommended Broker

As there is a wide variety of cryptocurrency brokers you can use, we have made it easier for you to choose your favourite broker by evaluating all popular crypto brokers and shortlisting the best platforms for both amateur and professional Bitcoin investors.

1
Min. Deposit
$50
Exclusive promotion
Our score
10
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Start Trading
Description:
eToro offers a wide range of cryptos, such as Bitcoin, XRP and others, alongside crypto/fiat and crypto/crypto pairs. eToro users can connect with, learn from, and copy or get copied by other users.
Payment Methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA

4. Invest in a Bitcoin ETF

An ETF or Exchange Traded Fund is a financial instrument that bundles in a variety of stocks and other digital assets to minimise trading risk. ETFs are created and managed by deliberately selecting those assets that are likely to perform well in the future based on their historical performance, market indicators, and other factors. This ensures that even if one or a couple of assets don't see any increase in their prices, the loss gets offset by the performance of other assets. The idea of an ETF is to ensure that your investment has a very high probability of leading to a net positive i.e. profit.

If you want to invest in Bitcoin, but also want to manage your risk, investing in a Bitcoin ETF is a smart idea. You can do so through the traditional stock market as well as many digital platforms such as brokerage firms that offer a Bitcoin ETF. You can also invest in an ETF that comprises entirely of cryptocurrencies if you don't want diversification in the asset class.

5 Bitcoin Investment Strategies

If you want to invest in Bitcoin, there is a multitude of ways to do so. Some of the most popular Bitcoin investment strategies are listed below.

1. Buy and ‘Hodl’

What is it?

The word 'HODL' comes from a frustrated and drunk Bitcoin investor who went on to unload his long rant on the internet in 2013 when Bitcoin hadn't gone mainstream. The aforementioned investor made a pledge that despite the original cryptocurrency not gaining traction at the time, he will continue to 'hodl' onto it since he believed in the idea of the decentralised blockchain and peer to peer currency network that can replace fiat currencies.

Buy and 'hold' generally means that you believe in the long-term success and performance of the Bitcoin project as well as the BTC token. That's why you invest in BTC and continue to hold it for months, even years before you sell it off to realise your major profits. 

What is the benefit of using this strategy?

The best way to buy and 'hold' is to invest in bitcoin through a cryptocurrency exchange. Some of the major advantages of this investment method include:

  • Major profit gains in the future through a long-term BTC investment.
  • Don't need to worry about day to day price volatility of BTC.
  • Demonstrating your support for the Bitcoin project and its vision.

2. Day Trading

What is it?

Another way to invest in Bitcoin and other cryptocurrencies is the exact opposite of 'hodling'. Instead of purchasing and storing your bitcoin tokens for a long period, you sell them in a matter of minutes or even seconds to make quick gains. This method of investing is more like how investors trade stocks and foreign exchange pairs. The idea is to make the most of the price volatility of the asset you are investing in instead of waiting for long-term gains. 

What is the benefit of using this strategy?

Investors who are looking to trade bitcoin should go to a crypto broker instead of a bitcoin exchange. If you are interested in day trading, you don't need to own the coins and store them in a wallet. You can simply bet on the price of bitcoin through financial instruments such as Contract for Difference or CFD. The key benefits of day trading include:

  • Higher potential of making a quick short-term profit and secondary income
  • No need to deal with the inconveniences of owning and storing BTC coins
  • Wide range of comprehensive tools, support, and expert advice available. 

3. Shorting

What is it?

Shorting or short-selling way of investment sits right in the middle of long-term and day trading. You neither hold your BTC tokens for months nor do you buy and sell Bitcoin within minutes. Instead, you hold your trading position for a few days or weeks to maximise your profit before selling your bitcoins off. This method works well when you are in a position to evaluate the promising factors that can affect the price of the coin in the coming days.  

What is the benefit of using this strategy?

Shorting or short-selling can be done both through an exchange and a broker. It depends on how long you want to hold onto your BTC tokens. You might also need a bitcoin wallet if you are looking to store your tokens for more than a week. If you don't want to deal with a wallet, bitcoin ETFs are also a good way to short BTC tokens. Top benefits of using the shorting strategy include:

  • Maximising profits in the shortest period of time
  • Leveraging your capital to optimise your return on investment
  • Offers a more balanced investment strategy compared to day trading and long-term investment. 

4. Using a Trading Bot for Trading

What is it?

A trading bot is an automated software that opens and closes trading positions on your behalf. All you have to do is specify certain limits and restrictions, so it operates within those guidelines. Most trading bots rely on economic and financial models as well as algorithms that are integrated along with artificial intelligence to make accurate and precise predictions. Moreover, bots also have the ability to open and close positions within a fraction of a second to maximise your profits. 

What is the benefit of using this strategy?

There are many crypto trading bots you can rely on, just make sure that you are using the one that is highly reliable and reputed. Check out the reviews before you use one. Some of the major advantages of using a trading bot include:

  • User-friendly way of investing in bitcoin for amateur traders/investors
  • Makes investment and trading of cryptocurrencies more inclusive
  • Comes with a wide range of features including accurate predictions, a quick way to open and close positions, data and analytics, and more.

5. Hedging Bitcoin

What is it? 

Hedging bitcoin or other cryptocurrencies involves opening trading positions that strategically cover the gain or loss of another position. You can rely on shorting, CFDs, and futures to hedge your Bitcoin investment. 

What is the benefit of using this strategy?

Since Bitcoin's rise, the token has also turned into a major asset class that is competing with conventional assets like gold and stocks. This means that traders and investors are now looking to secure their trading positions to ensure they don't lose their capital. The benefits of hedging bitcoin include:

  • Ensuring your original trading position doesn't lead to any financial loss
  • Managing your risk to maximise your profit potential with no downside
  • Covering the price volatility of bitcoin for better profitability. 
Buy Bitcoin Today!

What to Consider Before Investing in Bitcoin

Before you invest in Bitcoin, ensure that you are aware of all the major factors that can affect the price and investment decisions. Some of the key considerations include the following:

Fees

The first factor that you should keep in mind is your transactional costs which include a variety of fees and charges. If you are using an exchange, it means that you are directly buying Bitcoin tokens which will incur a network fee. For instance, at the time of writing, Bitcoin's average transaction fee is close to $7.00 per transaction. This can be impacted by the demand and price of the BTC token. Apart from that, the exchange may require you to pay a fee for their services, including deposit and withdrawal charges, wallet fee, and inactivity charges.

On the other hand, if you are investing through a broker or purchasing a financial instrument to bet on the BTC price, you won't have to pay the network fee. However, you will need to cover the cost of commission, transaction charges, deposit and withdrawal fee, wallet fee, and an inactivity fee. Also, keep in mind that the bank or your payment processor may also deduct their service charges. This is why it is important to come up with an investment strategy that covers all of your costs while providing a healthy profit margin.

Risks

Just like any other asset class, Bitcoin also comes with its own set of risks. Since it is a relatively new digital asset, you need to ensure that you are managing your risk in an effective manner. Some of the major risks you need to consider include:

  • Market and price volatility can change overnight. You can overcome it by hedging your investment in bitcoin through ETFs or investing in different tokens that show promise.
  • Lack of regulatory oversight can lead to financial loss or even fraud. To overcome it, only rely on exchanges or brokers that adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations to safeguard your data and funds.
  • Cybersecurity challenges, such as hacking and data breaches. You can avoid these by ensuring that your BTC tokens are stored in a safe and reputable Bitcoin wallet such as Ledger Nano S or Coinbase.

Payment Methods

Another aspect of investing in Bitcoin is choosing the right payment method since it can make or break your investment experience. The most popular payment methods used to invest in Bitcoin include:

  • Invest in Bitcoin with Cash - If you want to invest in Bitcoin with cash, find the nearest Bitcoin ATM or teller service. You can rely on CoinATMRadar.com to find the nearest Bitcoin ATM to invest in BTC.
  • Invest in Bitcoin with Credit / Debit Card - Another option is to use your debit or credit card to invest in Bitcoin as all crypto brokers and exchanges support the payment method. You can make an instant payment, but it can also be relatively expensive.
  • Invest in Bitcoin with Bank Transfer - For investing in Bitcoin through bank transfer, you first need to verify if your selected exchange or broker supports the payment method in your region. While bank transfers are slow, it is usually the most affordable payment option and helps if you want to withdraw to your bank account.
  • Invest in Bitcoin with Cryptocurrency - If you own any other altcoins such as ETH or XRP, you can use them to invest in Bitcoin using an exchange. Keep in mind that there is an exchange fee involved, which can be volatile depending on the demand at that moment.

Why Invest in Bitcoin?

You are the best person to make the decision whether you should invest or not. When it comes to the digital markets, currently, Bitcoin has everything going for it - from price and technological success to demand and internet hype. That being said, some of the major reasons to invest in Bitcoin include:

  • The leading cryptocurrency with more than 60% of the share of the crypto market
  • Most likely to stay around with sustainable success in the next ten years
  • Immense faith in technology and cryptocurrency opinion leaders, analysts, influencers, and celebrities
  • Most mainstream and well-known cryptocurrency in the world
  • The highest all-time high price of $28,300 with the highest market capitalisation
  • Volatile enough for day trading and short selling along with the long-term potential for those who want to 'hodl'.

Summary of Investing in Bitcoin

If you are looking to invest in Bitcoin, there are multiple effective ways to do so. Every investment method has its own pros and cons, and you need to evaluate your own investment objectives, strategies, accessible capital, and available time to identify the best possible investment method. This will allow you to leverage your time and financial resources in the most effective manner so you can optimise your profit returns.

We use cookies to personalise content & ads, provide social media features and offer you a better experience. By continuing to browse the site or clicking "OK, Thanks" you are consenting to the use of cookies on this website.