We received a lot of comments on last week’s article about trading cryptos.
Many readers were very excited by the profit potential…
Others, however, were a bit confused.
So today, to clear up any confusion, I’ll explain three simple trading strategies.
Once you understand these strategies, you’ll be ready to trade cryptos like a pro.
Pro Strategy #1 — Currency Trades
When you think of crypto-currencies, you probably think of Bitcoin.
But as it turns out, there are more than 1,000 different “cryptos” out there, and it’s estimated that a new one hits the market every other day.
These cryptos are often lumped into a broad category called “crypto-currencies” — but many of them aren’t currencies at all.
Let me explain…
Bitcoin, Litecoin, Ethereum, etc. — these are digital currencies.
But other cryptos are what’s called tokens, which I’ll explain more about in a minute.
First let’s look at currencies, and look at what causes their price to move:
Basically, a currency becomes more valuable because of increased demand.
For instance, if more vendors start accepting a certain currency, demand for it could rise — and in turn, so could its value.
In fact, one of the reasons Matt and I started investing in Bitcoin years ago was because the IRS announced that it would allow citizens to pay their taxes with it.
This provided a strong signal that Bitcoin was a stable currency — which encouraged hundreds of other vendors to start accepting Bitcoin, too.
With more vendors accepting Bitcoin, more consumers felt comfortable buying into it…
And this increased demand helped our Bitcoin to rise in value by more than 1,000%!
To buy and trade popular currencies like Bitcoin and Ethereum, you can use a website called Coinbase.
To purchase lesser-known, “up-and-coming” currencies, you can use a website called Bittrex.
Pro Strategy #2 — App Tokens and ICOs
Last week we introduced you to the concept of an Initial Coin Offering, or “ICO.”
In many ways, an ICO is similar to an IPO, where a company goes public on a stock exchange…
But with an ICO, investors like us don’t get shares of stock — instead, we get “tokens.”
As we explained last week, these tokens are used for specific “smart contract” applications.
Smart contracts are an innovative new type of computer program. They make financial transactions simpler and less costly.
Unlike a currency, the value of these tokens isn’t based on how many vendors accept them — in fact, vendors don’t accept them at all.
Instead, what drives their value is the popularity of their underlying Smart Contract application.
So if you believe that a new Smart Contract app will become popular, then investing early — i.e., during its ICO — could hand you fantastic profits.
For example, last June, Matt and I looked at an ICO for a company called TenX.
TenX plans to create a credit card that can be used anywhere Visa and Master Card are accepted — but instead of dollars, it uses Ethereum and Bitcoin.
After doing research on it, we believed it could become popular — and we were right:
If you’d invested during TenX’s ICO, you’d be up 377% in just a few months!
Unlike currencies, you can’t buy into ICOs on exchanges like Coinbase or Bittrex…
Instead, you invest in them directly from the Smart Contract companies.
To learn more — and to keep tabs on upcoming ICOs — check out a resource called Smith & Crown.
Pro Strategy #3 — Secondary Token Markets
Investing in ICOs can be very profitable, but it can also be extremely complex.
But here’s a simpler way of investing in new app tokens:
Just wait until after its ICO, when its tokens start trading on secondary exchanges.
This is one of our favorite strategies. It often gives you the chance to get into a popular token for less than its ICO price.
You see, once these tokens start to trade, early investors are so eager to take their profits that they sometimes dump their tokens too aggressively, and that causes their price to tank.
But that’s when savvy investors can step in, pick them up cheap — and then wait until the price goes back up.
This is exactly what happened when I bought into the PivX app token this summer:
I got in after the ICO, when the price crashed to just $1…
And today it sits at roughly $3.80.
That’s a 380% profit in less than three months.
We Can Help
I hope what I’ve written today clears up some of the confusion from last week’s article.
Remember, our main focus at Crowdability is on early-stage private market investing.
But we decided to share our insights on crypto-currency because it’s something we’re investing in personally, and because we’ve received hundreds of questions about it from our readers.
So if you still have questions about how to trade and profit from crypto-currencies, please let us know in the comments below.
We’ll do our best to help!