If you’ve already started crypto investing, but are unsure how to profit in different crypto markets, be bear or bull, I’ll share 6 different ways you can make money in any cryptocurrency markets.
If you prefer to learn by listening:
Cryptocurrency Whales profit in all markets
Regardless whether it’s a bull market, bear market or a sideways market, crypto whales are able to generate profits in both long- and short-term trades.
If you are invested in crypto, you should think and act like a whale in order to profit in all market conditions.
3 considerations before we proceed
Before I get into the 5 ways you can make money in any crypto markets, here are some points to note:
- Risk vs Reward
There will be a trade off between risk and reward for each of the methods I share below. You’ll need to weigh your risk and rewards before choosing a method that suits your risk appetite and investment style.
- Difficulty of Execution
As you dive deeper into crypto, there’ll be processes and investing methods that are more difficult to understand and execute.
Do take the time to do your own due diligence and understand the underlying mechanisms before you put your money to work!
- Timeframe
Some trades are suitable for a short-term play while others are for the long term. You’ll need to decide how long do you want to be invested and how actively you want to manage your trades, before selecting a suitable strategy to profit from the crypto markets.
For your convenience, I’ve ranked each of the following methods on a range of 1-5, using a combination of the 3 considerations above.
6 ways to make money in any crypto market
1) Interest Earning Platforms
You can earn about 3 – 12% interest easily. All you need to do is open an account deposit your crypto, and soon you will start earning interest on a daily basis.
This is a competitive area in the crypto space; hence you have many options and most platforms offers zero penalty for early withdrawal. Some even offer zero withdrawal fees. This means you’re able to deposit and withdraw without incurring any transaction fees!
As interest earning platforms are easily accessible and anyone can set up one, it offers a (relatively) low reward for the lower risk.
The main risks that you are taking on are:
- Fluctuations in the value of your coins, or
- the platform going bust.
And remember, any coins that you do not have control, you do not have access to them. For interest earning platforms, you’re holding your coins with the platforms which means that if it goes under, you are not likely to be able to retrieve your coins.
Here are three popular Interest Earning Platforms, we had written a comparison of the best ones here previously too.
- Nexo
Nexo has been in the business for many years and you can earn interest on a wide range of cryptocurrencies on their platform. When I first started, Nexo offered interest on about 20 coins, at the point of writing today, they now offer interest on 38 cryptocurrencies.
An interesting part about Nexo is that you can actually earn interest in their native coin, NEXO which boosts your interest rate even more. For example, if you deposit Ripple (XRP) into the platform, you could be earning 10% on your deposits. But if you choose to collect your rewards in NEXO coins, you could be earning at 12% instead.
- Celcius
Like NEXO, you can deposit your coins on Celcius and earn a higher interest by choose to get paid in Celsius’ coin, CEL.
I would say both platforms are pretty competitive and they’re pretty similar.
Risk of earning interest in native platform coins
Choosing to get paid out in the native platform’s coins gives you access to higher interest rates. However, you’ll have to bear in mind that their coins are vulnerable to market volatility as well.
If your original coin goes up by 10% while the value of the native coin goes down by 10%, your eventual yield may be lower. Always keep this in mind!
If you are holding more stable coins or the big two – Bitcoin and Ethereum, then the next platform might be more interesting for you.
Hodlnaut
Hodlnaut is a Singapore company, launched about four years ago in 2019. They have been around to provide interest earning accounts for their members since then.
They do not offer a wide range of coins, instead they focus on the big two (Bitcoin and Ethereum) as well as stablecoins like USDT, USDC and DAI. And I think that they may be offering more stable coins soon, if there is market for them.
Hodlnaut has collapse as part of the aftermath from the LUNA crash, the company has applied for Judicial Management.
How interest earning platforms work?
Generally, these interest earning platforms act like the bank in a way.
They get the liquidity from you as depositors, then they lend it out to leverage traders who are borrowing stablecoins to either short the market or to do a leverage trade on their positions.
Can you make money with interest earning platforms?
- Risk level: 2
- Reward: 2
- Difficulty of execution: 1
- Timeframe: as long as you wish
I rank interest earning platforms with a risk and reward level of 2 because I don’t think there’s a lot of research required, other than understanding how volatile your underlying coin is and how reliable the platform you choose will be.
They offer a yield of about 3 to 12% which are easy to unlock too because you just need to open an account and deposit your coins. You can deposit as long as you want, depending on how long you tend to keep the coins on the platform itself.
3% to 12% may sound quite high if you’re comparing it to traditional bank savings accounts, but in the crypto markets, this is considered the lower end of the spectrum.
The next few methods that I’m going to share could allow you to be earning between 50% to more than 100% interest, and they could help any investor grow their portfolios significantly.
2) Trading using Technical Analysis
To trade the crypto markets using technical analysis, you’ll require the skill to understand market movements based on the charts.
You’ll need to learn from experienced traders or learn from trainers. Although you can watch this being done on YouTube, or choose to learn this on your own, but it can be a bit painful because you have no one to guide you. And let’s say, if you make a mistake, you’re unsure how to correct them as well.
I would label Technical Analysis at a mid to high risk and reward level. I have seen traders who have made 2x, 3x based on a two-hour timeframe trade.
And the best of all is that you can do leverage trade on most of these platforms. But do understand every time you do a leverage trade in crypto, you multiply your own risks as well as your own rewards. So, it may look nice and satisfying when you earn a lot (or see reports of high returns) but do understand the risk as well!
Platforms for technical analysis / traders
You can do it on most centralized crypto exchanges. Some platforms even open up trading accounts for traders and offer lower trading fees as compared to normal investors who just only do spot trades.
3) Options Trading
Like technical analysis, you’ll require a specific skill set to make options trading in crypto work for you. These are beyond the scope of this article.
Some of the options trading platforms out there:
- Deribit,
- Quedex,
- Delta.Exchange
Beware of low volume
Do take note when you’re on these platforms for options trading, always take note of the volume because you don’t want to get into a platform where they have high premiums that you can sell or collect. And yet there’s not enough volume to collect interest, or when you want to close your contracts.
The same is true for technical analysis. I’ll always recommend getting a high-volume exchange, so that you can actually trade and exit when you need to, based on the timeframe.
Can you make money with options trading or by trading?
- Risk level: 3 – 5
- Reward: 3 – 5
- Difficulty of execution: 4 – 5
- Timeframe: Flexible, based on your trading style
I lump them together because both options trading and trading require specific skill set but offer similar risk and rewards in my opinion.
I rate their risk and reward levels at 3 to 5, but the difficulty of execution is higher at 4 – 5 because you have to learn how to execute these trades properly and safely.
And if you’re using leverage, the risk and rewards is going to increase exponentially as well.
You have the flexibility to choose a timeframe suitable for your investing style. You can decide if you want to do a contract in a daily, weekly, or monthly for options. And you can decide on how long you want to enter and exit the market using technical analysis.
4) Staking
Staking is the process of taking a coin and ‘depositing’ it on a platform to earn the interest rates from the platform, passively. Staked coins are usually used to support transaction verifications on a blockchain, usually through Proof of Stake, so you’ll also be supporting the function of a blockchain as a staker.
You can unlock high interest rates of about 19% on platforms that are comparatively safe. One popular example is:
Anchor Protocol
Since the markets have cooled off, many people are staking their UST, a USD stablecoin onto the Anchor Protocol to earn about 19.5% interest.
If you were to put your USD into a fixed deposit, you could never earn this type of interest rates. So, how does this work?
Well, Anchor Protocol acts pretty much like a bank or a lenders’ platform. They take your money and then lend it out to leverage traders. They take a small cut and give you the rest. For example, they could be lending out to leverage traders at 21-22%, they pocket about 2- 3% and the rest goes to you.
This is what I mean by high yield staking. And then there are many platforms out there where you can actually stake your coins as well, this is just one popular example.
If you want to give it a try, you must always learn how to do it safely, do your own due diligence and find out more about the Anchor Protocol.
If you ask me if it’s safe, I can say that it’s fairly safe.
However, I’ve recently checked and there’s about USD8.5 billion being staked on the platform itself. That’s a lot of money on this platform and if someone actually runs away with this sum of money, there is going to be a lot of broken hearts and a lot of empty wallets.
5) Yield Farming
Yield farming is where you put up two different assets and provide liquidity on a platform and earn a certain yield from it.
Yield farming allows you to unlock high yields ranging from 700% on platforms that are comparatively safer (where I would put a lot of my money in – $10,000 to $20,000) to even higher yields of more than 1,000% returns on platforms that are riskier.
An analogy I like to use is that of a cake shop.
Imagine a liquidity pool as a cake shop that is always giving our 20 cakes a day to attract customers. In the beginning, say only 10 people know of this deal, so they manage to claim 2 full cakes per day. But free things everyone want, so soon more people find out about the free cakes and the next day, 20 people come to claim their free cakes. Each person walks away with 1 full cake. As more people come to claim free cakes, the daily share that each person can claim drops.
As more yield farmers join a liquidity pool, the yield gets split among more people and the emissions drops. Therefore, the APY is not fixed. It can range and fluctuate based on how many people are staked on the platform and how much money is being shared among the farmers in that pool itself.
Why do crazy yields of >1,000% exist?
You have to understand that the high yields are only possible because of the higher risks involved. And, you have to understand the financial terms and technology behind yield farming these platforms.
Some of these platforms may be scams. They may be honeypot scams and rug pulls and you may never know who the developers behind such platforms are.
So, unless you have very high trust and you have done your own research, you are experimented with a little bit of money, making sure that you are getting the gains and you know what you are doing, then you can earn the crazy interest on cryptocurrencies.
Key concepts to understand in Yield Farming
- Yield Farming Pairs
Yield farming is usually done in pairs of two assets:
As you can see here, some of these pairs offer very high interest like 8,000%, but those are very exotic pairs, or are coins that are not very well known.
For example, in the image above you can see that the HDRN and USDC pairing offers 1,751% but the total value locked on the platform is only about $90,000, which is just a very small amount sharing that emissions pie.
- Impermanent loss
You also have to understand impermanent loss, because when both sides of the coin start to increase or decrease in value, you have to be able to calculate whether are you earning or are you making a profit or are you making a loss? This will allow you to know when its time to move your funds.
Can you make money with Staking or Yield Farming?
- Risk level: 4 – 6
- Reward: 4 – 6
- Difficulty of execution: 4 – 5
- Timeframe: Days to Months
I’ll talk about staking and yield farming’s risk and rewards together, however I’ve explained their differences above.
Both high yield farming and staking are very rewarding, but they come with their own apparent risk. You’ll never fully know when you’re getting a scam or rug pulled by developers, and you’ll need to be comfortable with this risk.
In my experience, 9 out of 10 DeFi projects out there are usually cash grabs. What they do is they tempt greedy people to stake or put their coins on the platform in order to earn the high incentive APY. At any point in time, these platforms can disappear and all your coins will be lost.
I rate these platforms at a risk and reward level of 4 to 6 because I want you to understand that there is a very high risk. You could lose all your money when you are staking on these platforms.
That said, if you know what you’re doing, and you understand the risk, you are able to earn very high rewards as well. Remember, I talk about the number of cakes that you can get per day. Imagine if you’re early to a bakery that giving out 20 cakes, and there’s only 5 people claiming them. It means that you are getting four full cakes a day.
Some of the capital that moves around yield farms are what we call “mercenary capital”. They will only go to platforms to earn high interests, quickly pull out when the interest becomes lower and move onto the next one. So, they always be jumping around different farms and their timeframe can range from days to months.
Personally, I have managed my own “mercenary capital” too where I put about $10,000 in a new platform, earn about 500% per annum then took profit of about $1,000-$1,200 before pulling out. I was happy with about 10% profits because I knew that the platform was a bit risky and I cannot trust the developers. I then moved on to another platform that was more stable.
From my example above, you could probably tell that it can be quite difficult to handle and excel in yield farming, unless you have the know-how:
- know how to keep abreast of the industry,
- know how to read data from etherscan,
- how to talk to developers who are coming out with new DeFi platforms,
- how to get into these communities,
- know which tools to use and
- how to use tools such as Metamask, ether wallets, hardware wallets,
- how to keep your crypto secured,
- and many more.
You have to understand all these things. And if you do not know any of this, it is going to be very difficult to participate in yield farming or staking safely, which is why the risk and reward rating on these methods are higher.
6) Cryptocurrency Mining
Mining is one of the earliest, if not the first way to earn crypto in any market conditions.
We started off cryptocurrency mining with proof of work which Bitcoin is powered by. But there have been developments which require less hardware and energy resources: Proof of stake.
The choice to use Proof of Work or Proof of Stake mining depends on the developers and how they code the system. For example, Bitcoin will still remain as proof of work, but they are considering to move over to Proof of Stake. Whereas for Ethereum which started off as Proof of Work, is going to shift everyone over to Proof of Stake within 2022. They had announced this shift in late December 2021, and they have given the miners six months to transit over to the new model.
How to make money from Proof of Work cryptocurrency mining?
Proof of work is slowly getting unfavourable because of the hardware costs, electricity costs as well as geographical and political challenges that Proof of Work miners have to face.
Long gone are the days when any college student can mine for Bitcoin in their dorms for free. Every day, there is new Bitcoin being release and at the point of writing there are about 900 new Bitcoins per day. If you can get at least 30 Bitcoin per month, at a price of $40,000, that is close to about 120,000 USD!
With these tantalising rewards in sight, cryptocurrency mining has evolved into a highly competitive field with big corporations pulling in big guns to fight for Bitcoin rewards.
Today, you need to have a high hash power rate because the higher hash power rate, the faster you’re able to verify transactions. If you’re the first one to solve the problem aka the hash, then you’ll be rewarded with Bitcoin and the more Bitcoin transactions you can verify, the more Bitcoin you can collect.
The latest machine (Antminer) to mine Bitcoin costs between from $10,000 to $17,000.
That’s just one machine, today the major cryptocurrency miners run mining farms (see image below).
Farms like these can be set up anywhere be it in Finland, Sweden, Kazakhstan, US, Japan and even Singapore. All you need is electricity to power the machines, ventilation to cool the machines and stable internet connection.
For retail investors like you and I, owning farms like these is almost impossible because you need to have millions of dollars in capital and the right network to be able to set up and run such farms cost efficiently.
My suggestion for people looking to enter cryptocurrency mining (on Proof of Work), is to invest in listed companies that operate the Bitcoin mining farms instead. In this case, whatever profits they earn, you are earning as well.
How to make money from Proof of Stake cryptocurrency mining?
Proof of stake runs on the master nodes or nodes that is situated on a server, and these servers can be sitting in a data centre connected to the internet.
The cost and energy required tends to be lower with key costs including server subscription as well as the capital required to buy the minimum number of coins to set up a master node. Some networks have a minimum timeframe (6 months to 5 years) that you’ll have to commit too as well.
And with that, you put yourself at the mercy of the coins’ value because you could be earning a very high interest rate, but if the coins values keep on dropping, then your overall ROI may not make sense.
Also, it is not as simple as it sounds. If you wish to make money from proof of stake mining, you‘ll need to know how to program on the network.
This chart is from stakingrewards.com, and you can see some of the high yields for master node staking:
Some are offering up to 140%, and each of them have different lockup periods. Let’s use DeFiChain’s DFI coin as an example:
To run a master node, you need a minimum of 20,000 coins and the price on DFI coin at the point of writing is $3.72. This means that before you even buy a server to host your master node online for 24/7, you’ll require a capital of $74,400 to buy the DFI coins.
Don’t get me wrong, you can still earn a decent rate. The rewards for master node stakers on DFI coins is between 35% to 60%, which is pretty good. And in this case, there is no lockup period too.
Can you make money with Cryptocurrency Mining?
- Risk level: 3 – 5
- Reward: 3 – 5
- Difficulty of execution: 3 – 5
- Timeframe: 6 months to 2 years
I rate cryptocurrency mining’s risks and rewards between 3 to 5. You’ll need to constantly keep up with hardware improvements, know how to do your own research to identify the best coin for staking, understand why the coin’s value would fluctuate and if it makes sense for you to stake it as well as put up a high capital outlay.
Timeframe for cryptocurrency mining is between 6 months to two years. If you’re mining for a shorter time period, you may not be able to recover your initial costs.
Many ways to profit regardless of how the crypto markets are performing
I shared 6 ways to make money in any crypto market and there are many more ways to profit in the current crypto space. For example, I have not mentioned about NFTs and how you could interest by lending NFT.
However, you have to understand your own risk appetite and how to maximize the rewards and get from the capital.
And as I mentioned at the start, crypto whales usually use more than one to profit from the crypto market. Personally, I use interest earning platforms, options trading, yield farming and staking. I’ve tried a bit of a crypto mining previously but didn’t like having so much capital locked up in a single asset.
Over to you. I hope the above have been useful and that you can apply them to grow your own cryptocurrency portfolio. If you’re new to cryptocurrency, I would like to invite you to my free webinar where I’ll be sharing the basics that’ll help aspiring crypto investors to get started safely and profitably.
