Let’s start with the most important question that concerns all investors interested in the crypto industry. How to earn passive income on cryptocurrency? There are several ways to invest in digital assets with the aim of generating long-term income. It is important to have sufficient funds for long-term investments, as this can lead to more profitable ventures and minimize risks.
Main Investment Methods
Investing in cryptocurrencies and Bitcoin does not always require significant initial investments. In any market situation, there is a chance that a token that costs pennies today could become the next sensation tomorrow. While it is not wise to rely on such a scenario, one should not forget about miracles either. It is important to consider all possible scenarios. Careful decision-making is crucial when investing in altcoins, as they are considered riskier but potentially more profitable compared to established currencies.
There are now several popular methods for making long-term investments in cryptocurrency:
Buying tokens with the expectation of a long-term open market position. This strategy is adhered to by most Bitcoin enthusiasts, who even created a special motto 'HODL,' which is a deliberate misspelling of the word 'hold.' Investors confident in the bright future of the token $BTC buy as much as they can and plan not to sell until retirement.
Staking. After the Ethereum network transitioned to the new Proof-of-Stake validation method, direct investment in projects through staking has become extremely popular. Several major centralized exchanges, special cooperatives (staking pools), and investment companies now offer staking opportunities for $ETH . There are also staking options for other tokens released within networks that also work with the PoS consensus protocol.
Balanced portfolio management. A portfolio can be created that is managed automatically. Modern cryptocurrency trading bots can create and close market positions without user assistance, allowing experienced investors to use complex strategies such as statistical arbitrage or pairs trading.
It should be noted that the listed investment strategies are designed for medium to long-term investment periods.
Token Purchase
Most modern traders use the DCA (Distributed Cost Average) system for purchasing Bitcoin and other cryptocurrencies. This method can be fully automated.
The main task for the investor is to find suitable assets for accumulation. One cannot expect quick earnings here. This strategy is designed for many years, so dollar-cost averaging works best. You can start purchasing a small amount of assets each month or week using the DCA approach.
These assets should only be sold after they have increased in price several times. This has happened with Bitcoin multiple times, which is why you've heard about the huge number of millionaires who made money on this token.
Which cryptocurrency to buy for investment?
When it comes to the long term, one should not give in to the temptation to buy hundreds of cheap tokens and wait for them to increase in price. The vast majority of digital assets are not suitable for long-term holdings, and tokens can lose up to 99% of their value within the first year of existence.
When selecting cryptocurrencies for long-term investments, it is important to carefully consider your choices, taking into account market volatility and diversification methods to reduce financial risks.
Investors planning to create a sustainable portfolio of cryptocurrency assets should focus on tokens that have already established themselves in the financial world and are unlikely to lose significant value in the future. For example, the American SEC believes that Bitcoin has become 'too big to fail'.
What qualities should a token have to buy it for the long term?
Massive popularity in the cryptocurrency enthusiast community. Bitcoin, Ethereum, Monero, Ripple, and many other coins that already have a large market cap and will remain among the leaders even in a decade — these tokens will be excellent investment targets.
High liquidity indicates a high demand for the token. Highly liquid coins are always popular and often increase in price, as they provide holders with enhanced financial flexibility and the ability to use assets at any time.
It should be represented on a large number of exchanges. CEX platforms come and go, but cryptocurrencies do not. One should look for tokens that all platforms want to work with. Major centralized exchanges and fully decentralized exchanges should be happy to accept your chosen tokens.
Most investors still believe that BTC is the most reliable asset in the cryptocurrency industry. How to start investing in Bitcoin? If you are not afraid to work with centralized platforms, just register on an exchange like Binance, KuCoin, or Kraken. If you want to invest in 'bitcoin' directly, simply create a wallet and use the services of a P2P exchange.
Cryptocurrency Staking
Staking is a term deposit in the form of tokens that allows the platform to increase liquidity or ensure the validation of new block creation. For example, Ethereum staking requires mandatory management of a validation node. Each stake holder can act as a validator and earn rewards from the network. Significant growth is expected for cryptocurrencies such as $AVAX , MATIC, and Bitcoin, making staking even more attractive.
If you do not wish to directly maintain a node and monitor a computer constantly connected to the network, you can invest money in staking pools. These are special organizations that act as cooperatives, collecting funds from contributors to open a validation node in the Ethereum network. It is important to understand the risks and security associated with DeFi and its yield to make informed decisions.
The cost of one stake is 32 ETH, which is quite expensive for an individual investor, but for a group of investors, this is a more than manageable amount. In return, the network pays holders of stakes an annual percentage that is dynamically recalculated based on load. Currently, the annual percentage is 4.94%.
There are other staking options as well. For example, some networks allow stake holders not only to validate the addition of new blocks but also to participate in network governance through DAOs (Decentralized Autonomous Organizations). If you are interested in supporting a particular DeFi project, staking can be an excellent method for long-term investment.
Staking allows participants to earn in three ways simultaneously:
Payment of annual dividends in the form of a non-fixed annual interest rate.
Increasing the portfolio in the form of tokens that you initially invested.
Potential profit from selling tokens at a profit after a price increase in the market.
The last point, of course, depends on how well the token will strengthen its position in the market. If ETH increases in price, the investor will earn significantly more than the promised 4.94%, but the opposite scenario is also possible. When evaluating the risks of investing in cryptocurrency through staking, the biggest threat is the price drop of the token during the period when they are locked.
Using Automated Systems
When it comes to cryptocurrencies, investments in 2025 are often evaluated in terms of direct investments in the tokens themselves. However, you can achieve high returns and reliability by using proven trading methodologies.
It is also important to conduct thorough performance evaluations of automated trading systems to minimize financial risks and enhance investment efficiency.
Let’s analyze an example of statistical arbitrage:
The investor identifies a group of assets that correlate in the market in terms of price changes.
Then another group of assets is determined, which is inversely related to the first group.
Market positions are created for all assets (buying those that are rising in price and selling those that are falling).
If the market situation changes, the portfolio is adjusted to maintain balance.
Statistical arbitrage is one of the most common methods of managing risks for a portfolio. While financial institutions previously required a huge amount of human resources, there is now a trend towards replacing people with bots or expert systems powered by artificial intelligence.
With the right level of knowledge and persistence from the trader, it is possible to create a large-scale strategy using statistical arbitrage alone. You just need to use a modern automation platform that allows one person to run hundreds of trading robots simultaneously.
How to Earn from Cryptocurrency Investments Using Bots
There are other ways to create durable trading systems capable of generating stable income for the investor. From the available automation tools, one can assemble a separate portfolio.
It is important to understand the market and make the right choice of investment options to maximize income and minimize risks.
Here are just a few of the interesting products that an average trader can use to form their own unique trading system:
DCA Bots. These robots create market positions in any market considering the peculiarities of the dollar-cost averaging method. Instead of opening one large position, several are opened at predetermined intervals, allowing for a lower average purchase price of the asset.
GRID Bots. This is a more complex version of the DCA bot with strategic placement of take profit and stop loss commands. Orders create a grid on the chart, hence the name grid bots.
Customizable Bots. You can also choose your own trading system with a risk level that suits you, and then simply configure the bot to follow the instructions without deviations.
Many novice traders who are considering the possibility of using bots ask the question: 'How to start investing in cryptocurrency?' For this, you will need three main 'components':
An account on the TradingView analytical platform, where most bots receive trading signals according to user instructions.
An account on the automation platform where you can set up scenarios for the bots to execute.
An account on a centralized exchange with a functional API, where bots will create orders.
Networks and Security
Cryptocurrencies utilize blockchain technology, which is a decentralized network that stores information about all transactions. The blockchain is transparent and secure, as all transactions are verified and confirmed by a network of computers. This makes cryptocurrencies a reliable tool for conducting financial operations.
To ensure the security of cryptocurrencies, complex algorithms and cryptographic methods are used. Cryptocurrencies also use networks such as Tor to ensure user anonymity and security. However, despite the high level of security, cryptocurrencies are not immune to hacking attacks and other types of cyber threats.
To protect their funds, investors should use reliable wallets and exchanges, as well as adhere to security rules when working with cryptocurrencies. Furthermore, investors should be aware of the risks associated with investing in cryptocurrencies and take measures to minimize these risks. In Russia, cryptocurrencies are regulated by specific laws and regulations that define their use and circulation.
Risks and Issues
Investing in cryptocurrencies is associated with high risks, including the risk of losing funds due to market volatility. Cryptocurrencies can also be subject to hacking attacks and other types of cyber threats, which can lead to loss of funds. Additionally, investors should be aware of the risks related to cryptocurrency regulation, as legislative changes can affect the value of cryptocurrencies.
To minimize risks, investors should conduct thorough evaluations of cryptocurrencies before investing and monitor changes in the market. Investors should also be aware of issues related to the scalability and security of cryptocurrencies and keep track of the development of new technologies and solutions. In Russia, investors should also be aware of the risks associated with cryptocurrency regulation and monitor changes in legislation.
To address issues related to cryptocurrencies, investors can consult experts and receive professional advice. Additionally, investors can use various tools and platforms to minimize risks and maximize profits from investing in cryptocurrencies.
In conclusion
The main objective of long-term investments is to preserve capital and grow it without high risks for the investor. The most reliable methods in the field of cryptocurrencies remain purchasing stable tokens, cryptocurrency staking, and creating balanced automated trading systems.
Various well-known foreign companies are actively involved in the cryptocurrency market, developing strategic plans to integrate digital assets into their long-term development.
This article is presented as introductory information. Therefore, each of you will choose your own path, your own strategy for earning and investing in crypto coins.
