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Query:

Response:

Calculated Shard: 68 (from laksa168)

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Query:

curl -X POST \
  'http://laksa068.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://corporatefinanceinstitute.com/resources/cryptocurrency/how-to-invest-in-cryptocurrency/\')), getAhrefsUnparsedNoserviceFromURL(\'https://corporatefinanceinstitute.com/resources/cryptocurrency/how-to-invest-in-cryptocurrency/\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/","crawl_time":1776124693,"first_indexed_time":1665793288,"http_code":200,"src_unparsed":"com,corporatefinanceinstitute!\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/ s443","src_root_hash":"407738686562150068","history_drop_reason":null,"meta_title":"How to Invest in Cryptocurrency - Overview, Strategies","meta_descriptions":["Cryptocurrency investing can be an incredibly lucrative venture but can also be quite risky, intimidating, and confusing."],"attrs_boilerpipe_text":"Published\nJune 2, 2022\nRead Time\n5\n                                                      minutes\nOver 2.8 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course.\nStart Free\nHow to Invest in Cryptocurrency\nCryptocurrency investing can be an incredibly lucrative venture but can also be quite risky, intimidating, and confusing.  \nFirstly, we should make the distinction between investing and trading – the biggest difference being the time horizon. With investing in any asset, it is a disciplined plan to meet specific financial goals over a longer period of time, usually five years or more. Investors may build a strategy in order to save for college, buy a house, or plan for retirement. \nTrading\n, on the other hand, is short-term and often more speculative in nature. It is not uncommon for traders to execute dozens of trades a day in order to take advantage of intra-day price fluctuations. However, trading is not any less disciplined as investing since successful traders carefully manage their exposures.\nHere, we will focus on investing in Cryptocurrencies. The most popular cryptocurrency investment method is to buy Bitcoin and Ether and different altcoins directly by buying the digital currency outright.  \nInvesting in cryptocurrency has become more advanced with the introduction of crypto derivatives, such as futures. We also have more and more exchange-traded funds (“ETFs”) that invest on behalf of investors in physical cryptocurrencies or futures.\nLastly, there is also an investment case for buying stocks in publicly-traded companies that focus on the industry, such as Centralized Cryptocurrency Exchanges (“CEXs”) and crypto-specific hardware manufacturers.\nKey Highlights\nInvesting in cryptocurrency can be lucrative but also risky.\nBefore investing in any cryptocurrency, it is useful to conduct proper due diligence and fundamental analysis.\nInvestors should decide how to participate in cryptocurrencies, either directly or through other buying the digital currency, or through futures, ETFs, or crypto-related companies.\nCryptocurrency Investing Strategies\nNormally, the first step in investing would be to look at asset allocation. Simply put, asset allocation means spreading out your investments across various instruments to provide diversified returns over the long run. The same applies to cryptocurrencies – you should decide on your risk tolerance, financial goals, and timeframe to decide how much of your investment portfolio can be allocated to cryptocurrencies.\nNext, a prudent investor would be to look at a fundamental analysis of their desired investment. Fundamental Analysis (“FA”) is the method of assessing the intrinsic value of a security and then comparing its current market price to help with investment decisions. \nWhile FA works well for traditional assets, like stocks and bonds, it doesn’t work as well for cryptocurrencies. However, there are some useful fundamentals to consider:\nWhitepaper, Team, and Goals\n– This type of research is important to understand the cryptocurrencies’ purpose, technology, and use case. Understanding the team also gives you a sense of the track record of the people responsible.\nNetwork Value-to-Transactions (NVT) Ratio\n– NVT provides a measure of a network’s value based on the value of transactions it processes. Cryptos with lower NVT ratios are considered undervalued, while those with higher ratios may be considered overvalued.\nPrice-to-Mining-Breakeven Ratio\n– This ratio attempts to look at the price of a digital coin versus the costs to produce it in a Proof-of-Work protocol. A digital coin with a lower breakeven ratio is more profitable.\nOn-Chain Metrics\n– These metrics try to provide a clearer picture of the activity for that\nblockchain\n. Metrics might include Transaction Count and Value, Active Accounts, and Hash Rate.\nWhen you are ready to invest, you will need to also consider how you want to invest. Popular cryptocurrency investing strategies include buying fractions of cryptocurrencies, volatility-based investment strategies,\ndollar cost average investing\n, buy and hold investing, profit-taking investing, and lump-sum investing. \nFurther, volatility-based investing is easier to achieve with cryptocurrency derivatives like cryptocurrency futures contracts, cryptocurrency put options, and cryptocurrency call options. Leverage can also be used to invest in cryptocurrency via margin accounts, which uses borrowed money to increase the exposure to an investment and amplifies both potential gains as well as losses.\nAdditionally, due to the volatile nature of cryptocurrency, you may want to consider risk management strategies, such as regularly taking profits when investing in cryptocurrency, using stop-loss limit orders, rebalancing your crypto holdings, and ensuring diversification.\nHow to Start Investing in Cryptocurrency\nIn order to start buying and selling cryptocurrencies, you can transact with\nCentralized Crypto Exchanges (“CEX”), Decentralized Exchanges (“DEX”), and via Crypto Brokers\n. Popular Crypto Exchanges are Binance, Coinbase Exchange, Kraken and KuCoin.\nExamples of DEXs include Uniswap, PancakeSwap, dYdX, and Kyber. There are also crypto brokers, such as Coinbase, Crypto.com, Gemini, and SoFi. Each of these channels has its own pros and cons that we cover in detail\nhere\n.\nIf you decide that you want to hold the cryptocurrency yourself, you may also need to decide the best type of wallet to use.\nCrypto wallets\nhelp store the precious private keys that allow you to prove your ownership of the digital asset, which is always stored on the blockchain.\nWe’ve also seen\nstandardized futures markets\npop up for Bitcoin and other more liquid cryptocurrencies, such as Ethereum. These futures markets allow institutional investors to trade contracts or agreements or buy and sell cryptocurrencies at a pre-agreed later date in a developed and transparent manner via established exchanges.\nIt allows investors to not only buy a future claim to a digital currency but also take a negative view of that cryptocurrency and sell it short. These futures are cash settled, and by going through an exchange, trades are conducted in an established and regulated marketplace.\nYou may also choose to invest in cryptocurrency via\nspecialized Exchange Traded Funds\n, called ETFs for short, that invest specifically in Bitcoin and other cryptos. An ETF is sort of like a mutual fund but is bought and sold over an exchange, so they have decent liquidity.\nETFs tend to be very lightly managed, instead of tracking the performance of an asset or an index and, as such, typically charge lower fees than a traditional mutual fund. ETFs try to mimic the performance of the underlying cryptocurrency.\nInvesting in cryptocurrency companies involved in the broader\nDecentralized Finance (DeFI)\nuniverse is another way of indirectly investing in cryptocurrencies, such as Bitcoin. As the underlying cryptocurrency does well, such companies, which may create new blockchain protocols, act as an intermediary (like CEXs) or even build specific products for mining, which can be very lucrative and profitable.\nCompanies that are publicly traded and focus on cryptocurrencies include Coinbase Global Inc., Marathon Digital Holdings Inc., and NVIDIA Corp.\nFor more sophisticated investors, there are\ndedicated hedge funds\nthat specialize in cryptocurrency, digital assets, and\/or DeFI investments that professionally manage money on behalf of investors. Such funds generally require larger minimum investments upwards of US$100,000.\nThe companies can invest in single digital coins, crypto start-ups, exchanges,\nInitial Coin Offerings\n, Initial Exchange Offerings, and other blockchain assets. In return for their professional management, they charge their end investors a hefty fee.\nLastly, one may also consider investing in cryptocurrency through a\nself-directed IRA\nor other similar registered retirement vehicles to achieve tax advantages. It can be especially advantageous with the large returns seen through cryptocurrency investing. Still, please consult with your tax or financial planner.\nThank you for reading CFI’s guide on How to Invest in Cryptocurrency. To keep learning and developing your knowledge, we highly recommend the additional resources below:\nIntroduction to Cryptocurrency Course\nCryptocurrency Exchanges\nEthereum\nInvestment Horizon\nCryptocurrency Intermediates: Bitcoin Explained\nSee all cryptocurrency resources","attrs_markdown":"[Corporate Finance Institute](https:\/\/corporatefinanceinstitute.com\/)\n\nMenu\n\n- [Certifications](https:\/\/corporatefinanceinstitute.com\/certifications\/)\n- [Courses](https:\/\/corporatefinanceinstitute.com\/collections\/)\n- [Resources](https:\/\/corporatefinanceinstitute.com\/resources\/)\n- [About](https:\/\/corporatefinanceinstitute.com\/about-cfi\/)\n- [Pricing](https:\/\/corporatefinanceinstitute.com\/pricing\/)\n- [Teams](https:\/\/corporatefinanceinstitute.com\/cfi-for-teams\/)\n\n[My Dashboard](https:\/\/learn.corporatefinanceinstitute.com\/dashboard)\n\n[Log In](https:\/\/learn.corporatefinanceinstitute.com\/auth\/login)\n\n[Start Free](https:\/\/learn.corporatefinanceinstitute.com\/auth\/registration)\n\n- [Certifications](https:\/\/corporatefinanceinstitute.com\/certifications\/)\n- [Specializations](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/)\n- [Courses](https:\/\/corporatefinanceinstitute.com\/collections\/)\n- [About CFI](https:\/\/corporatefinanceinstitute.com\/about-cfi\/)\n- [Pricing](https:\/\/corporatefinanceinstitute.com\/pricing\/)\n- [Resources](https:\/\/corporatefinanceinstitute.com\/resources\/)\n- [Pricing](https:\/\/corporatefinanceinstitute.com\/?page_id=207142)\n- [Why CFI Certifications?](https:\/\/corporatefinanceinstitute.com\/cfi-for-teams\/certified-professionals\/)\n\n[My Dashboard](https:\/\/learn.corporatefinanceinstitute.com\/dashboard)\n\n[Log In](https:\/\/learn.corporatefinanceinstitute.com\/auth\/login)\n\n[Start Free](https:\/\/learn.corporatefinanceinstitute.com\/auth\/registration)\n\n[Home](https:\/\/corporatefinanceinstitute.com\/ \"Go to Corporate Finance Institute.\")\n\n›\n\n[Resources](https:\/\/corporatefinanceinstitute.com\/resources\/ \"Go to Resources.\")\n\n›\n\n[Cryptocurrency](https:\/\/corporatefinanceinstitute.com\/topic\/cryptocurrency\/ \"Go to the Cryptocurrency Resource Type archives.\")\n\n›\n\nHow to Invest in Cryptocurrency\n\nTable of Contents\n\n- [How to Invest in Cryptocurrency](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/#how-to-invest-in-cryptocurrency)\n- [Related Readings](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/#related-readings)\n\n# How to Invest in Cryptocurrency\nWritten by  [CFI Team](https:\/\/corporatefinanceinstitute.com\/about-cfi\/)\n\nReviewed by   [Andrew Loo](https:\/\/corporatefinanceinstitute.com\/author\/andrew-loo\/)\n\nPublished June 2, 2022\n\nRead Time  5 minutes\n\nOver 2.8 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course.    [Start Free](https:\/\/learn.corporatefinanceinstitute.com\/auth\/registration)\n## **How to Invest in Cryptocurrency**\nCryptocurrency investing can be an incredibly lucrative venture but can also be quite risky, intimidating, and confusing.\n\nFirstly, we should make the distinction between investing and trading – the biggest difference being the time horizon. With investing in any asset, it is a disciplined plan to meet specific financial goals over a longer period of time, usually five years or more. Investors may build a strategy in order to save for college, buy a house, or plan for retirement.\n\nTrading, on the other hand, is short-term and often more speculative in nature. It is not uncommon for traders to execute dozens of trades a day in order to take advantage of intra-day price fluctuations. However, trading is not any less disciplined as investing since successful traders carefully manage their exposures.\n\nHere, we will focus on investing in Cryptocurrencies. The most popular cryptocurrency investment method is to buy Bitcoin and Ether and different altcoins directly by buying the digital currency outright.\n\nInvesting in cryptocurrency has become more advanced with the introduction of crypto derivatives, such as futures. We also have more and more exchange-traded funds (“ETFs”) that invest on behalf of investors in physical cryptocurrencies or futures.\n\nLastly, there is also an investment case for buying stocks in publicly-traded companies that focus on the industry, such as Centralized Cryptocurrency Exchanges (“CEXs”) and crypto-specific hardware manufacturers.\n\n![How to Invest in Cryptocurrency]()\n\n### **Key Highlights**\n- **Investing in cryptocurrency can be lucrative but also risky.**\n- **Before investing in any cryptocurrency, it is useful to conduct proper due diligence and fundamental analysis.**\n- **Investors should decide how to participate in cryptocurrencies, either directly or through other buying the digital currency, or through futures, ETFs, or crypto-related companies.**\n### **Cryptocurrency Investing Strategies**\nNormally, the first step in investing would be to look at asset allocation. Simply put, asset allocation means spreading out your investments across various instruments to provide diversified returns over the long run. The same applies to cryptocurrencies – you should decide on your risk tolerance, financial goals, and timeframe to decide how much of your investment portfolio can be allocated to cryptocurrencies.\n\nNext, a prudent investor would be to look at a fundamental analysis of their desired investment. Fundamental Analysis (“FA”) is the method of assessing the intrinsic value of a security and then comparing its current market price to help with investment decisions.\n\nWhile FA works well for traditional assets, like stocks and bonds, it doesn’t work as well for cryptocurrencies. However, there are some useful fundamentals to consider:\n\n- **Whitepaper, Team, and Goals** – This type of research is important to understand the cryptocurrencies’ purpose, technology, and use case. Understanding the team also gives you a sense of the track record of the people responsible.\n- **Network Value-to-Transactions (NVT) Ratio** – NVT provides a measure of a network’s value based on the value of transactions it processes. Cryptos with lower NVT ratios are considered undervalued, while those with higher ratios may be considered overvalued.\n- **Price-to-Mining-Breakeven Ratio** – This ratio attempts to look at the price of a digital coin versus the costs to produce it in a Proof-of-Work protocol. A digital coin with a lower breakeven ratio is more profitable.\n- **On-Chain Metrics** – These metrics try to provide a clearer picture of the activity for that [blockchain](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/blockchain\/). Metrics might include Transaction Count and Value, Active Accounts, and Hash Rate.\n\nWhen you are ready to invest, you will need to also consider how you want to invest. Popular cryptocurrency investing strategies include buying fractions of cryptocurrencies, volatility-based investment strategies, [dollar cost average investing](https:\/\/corporatefinanceinstitute.com\/resources\/wealth-management\/dollar-cost-averaging-dca\/), buy and hold investing, profit-taking investing, and lump-sum investing.\n\nFurther, volatility-based investing is easier to achieve with cryptocurrency derivatives like cryptocurrency futures contracts, cryptocurrency put options, and cryptocurrency call options. Leverage can also be used to invest in cryptocurrency via margin accounts, which uses borrowed money to increase the exposure to an investment and amplifies both potential gains as well as losses.\n\nAdditionally, due to the volatile nature of cryptocurrency, you may want to consider risk management strategies, such as regularly taking profits when investing in cryptocurrency, using stop-loss limit orders, rebalancing your crypto holdings, and ensuring diversification.\n\n### **How to Start Investing in Cryptocurrency**\nIn order to start buying and selling cryptocurrencies, you can transact with **Centralized Crypto Exchanges (“CEX”), Decentralized Exchanges (“DEX”), and via Crypto Brokers**. Popular Crypto Exchanges are Binance, Coinbase Exchange, Kraken and KuCoin.\n\nExamples of DEXs include Uniswap, PancakeSwap, dYdX, and Kyber. There are also crypto brokers, such as Coinbase, Crypto.com, Gemini, and SoFi. Each of these channels has its own pros and cons that we cover in detail [here](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-buy-cryptocurrency\/).\n\nIf you decide that you want to hold the cryptocurrency yourself, you may also need to decide the best type of wallet to use. [Crypto wallets](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/cryptocurrency-wallet\/) help store the precious private keys that allow you to prove your ownership of the digital asset, which is always stored on the blockchain.\n\nWe’ve also seen **standardized futures markets** pop up for Bitcoin and other more liquid cryptocurrencies, such as Ethereum. These futures markets allow institutional investors to trade contracts or agreements or buy and sell cryptocurrencies at a pre-agreed later date in a developed and transparent manner via established exchanges.\n\nIt allows investors to not only buy a future claim to a digital currency but also take a negative view of that cryptocurrency and sell it short. These futures are cash settled, and by going through an exchange, trades are conducted in an established and regulated marketplace.\n\nYou may also choose to invest in cryptocurrency via **specialized Exchange Traded Funds**, called ETFs for short, that invest specifically in Bitcoin and other cryptos. An ETF is sort of like a mutual fund but is bought and sold over an exchange, so they have decent liquidity.\n\nETFs tend to be very lightly managed, instead of tracking the performance of an asset or an index and, as such, typically charge lower fees than a traditional mutual fund. ETFs try to mimic the performance of the underlying cryptocurrency.\n\nInvesting in cryptocurrency companies involved in the broader **Decentralized Finance (DeFI)** universe is another way of indirectly investing in cryptocurrencies, such as Bitcoin. As the underlying cryptocurrency does well, such companies, which may create new blockchain protocols, act as an intermediary (like CEXs) or even build specific products for mining, which can be very lucrative and profitable.\n\nCompanies that are publicly traded and focus on cryptocurrencies include Coinbase Global Inc., Marathon Digital Holdings Inc., and NVIDIA Corp.\n\nFor more sophisticated investors, there are **dedicated hedge funds** that specialize in cryptocurrency, digital assets, and\/or DeFI investments that professionally manage money on behalf of investors. Such funds generally require larger minimum investments upwards of US\\$100,000.\n\nThe companies can invest in single digital coins, crypto start-ups, exchanges, [Initial Coin Offerings](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/initial-coin-offering-ico\/), Initial Exchange Offerings, and other blockchain assets. In return for their professional management, they charge their end investors a hefty fee.\n\nLastly, one may also consider investing in cryptocurrency through a **self-directed IRA** or other similar registered retirement vehicles to achieve tax advantages. It can be especially advantageous with the large returns seen through cryptocurrency investing. Still, please consult with your tax or financial planner.\n\n## Related Readings\nThank you for reading CFI’s guide on How to Invest in Cryptocurrency. To keep learning and developing your knowledge, we highly recommend the additional resources below:\n\n- [Introduction to Cryptocurrency Course](https:\/\/corporatefinanceinstitute.com\/course\/introduction-to-cryptocurrency\/)\n- [Cryptocurrency Exchanges](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/cryptocurrency-exchanges\/)\n- [Ethereum](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/ethereum\/)\n- [Investment Horizon](https:\/\/corporatefinanceinstitute.com\/resources\/career-map\/sell-side\/capital-markets\/investment-horizon\/)\n- [Cryptocurrency Intermediates: Bitcoin Explained](https:\/\/corporatefinanceinstitute.com\/course\/bitcoin-explained\/)\n- **[See all cryptocurrency resources](https:\/\/corporatefinanceinstitute.com\/topic\/cryptocurrency\/)**\n\n- Share this article\n- [![Share on LinkedIn]()](http:\/\/www.linkedin.com\/shareArticle?mini=true&url=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Fcryptocurrency%2Fhow-to-invest-in-cryptocurrency%2F&summary=How+to+Invest+in+Cryptocurrency \"Share on LinkedIn\")\n- [![Share on Facebook]()](https:\/\/www.facebook.com\/sharer\/sharer.php?u=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Fcryptocurrency%2Fhow-to-invest-in-cryptocurrency%2F \"Share on Facebook\")\n- [![Share on Twitter]()](https:\/\/twitter.com\/intent\/tweet?text=How+to+Invest+in+Cryptocurrency&url=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Fcryptocurrency%2Fhow-to-invest-in-cryptocurrency%2F \"Share on Twitter\")\n- [![Share on WhatsApp]()](https:\/\/wa.me\/?text=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Fcryptocurrency%2Fhow-to-invest-in-cryptocurrency%2F&summary=How+to+Invest+in+Cryptocurrency \"Share on WhatsApp\")\n- [![Copy link]()](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/ \"Copy link\")\n\n- [About CFI](https:\/\/corporatefinanceinstitute.com\/about-cfi\/)\n  - 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[Log in](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/)\n\n×\n\n### Supercharge your skills with Premium Templates\nTake your learning and productivity to the next level with our Premium Templates.\n\nUpgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.\n\n[Discover Paid Memberships](https:\/\/corporatefinanceinstitute.com\/pricing\/)\n\nAlready have a Self-Study or Full-Immersion membership? [Log in](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/)\n\n×\n\n### Access Exclusive Templates\nGain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.\n\n[Discover Full-Immersion Membership](https:\/\/corporatefinanceinstitute.com\/pricing\/)\n\nAlready have a Full-Immersion membership? [Log in](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-invest-in-cryptocurrency\/)","attrs_readable_markdown":"Published June 2, 2022\n\nRead Time  5 minutes\n\nOver 2.8 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course.    [Start Free](https:\/\/learn.corporatefinanceinstitute.com\/auth\/registration)\n## **How to Invest in Cryptocurrency**\nCryptocurrency investing can be an incredibly lucrative venture but can also be quite risky, intimidating, and confusing.\n\nFirstly, we should make the distinction between investing and trading – the biggest difference being the time horizon. With investing in any asset, it is a disciplined plan to meet specific financial goals over a longer period of time, usually five years or more. Investors may build a strategy in order to save for college, buy a house, or plan for retirement.\n\nTrading, on the other hand, is short-term and often more speculative in nature. It is not uncommon for traders to execute dozens of trades a day in order to take advantage of intra-day price fluctuations. However, trading is not any less disciplined as investing since successful traders carefully manage their exposures.\n\nHere, we will focus on investing in Cryptocurrencies. The most popular cryptocurrency investment method is to buy Bitcoin and Ether and different altcoins directly by buying the digital currency outright.\n\nInvesting in cryptocurrency has become more advanced with the introduction of crypto derivatives, such as futures. We also have more and more exchange-traded funds (“ETFs”) that invest on behalf of investors in physical cryptocurrencies or futures.\n\nLastly, there is also an investment case for buying stocks in publicly-traded companies that focus on the industry, such as Centralized Cryptocurrency Exchanges (“CEXs”) and crypto-specific hardware manufacturers.\n\n![How to Invest in Cryptocurrency](https:\/\/cdn.corporatefinanceinstitute.com\/assets\/how-to-invest-cryptocurrency.jpg)\n\n### **Key Highlights**\n- **Investing in cryptocurrency can be lucrative but also risky.**\n- **Before investing in any cryptocurrency, it is useful to conduct proper due diligence and fundamental analysis.**\n- **Investors should decide how to participate in cryptocurrencies, either directly or through other buying the digital currency, or through futures, ETFs, or crypto-related companies.**\n### **Cryptocurrency Investing Strategies**\nNormally, the first step in investing would be to look at asset allocation. Simply put, asset allocation means spreading out your investments across various instruments to provide diversified returns over the long run. The same applies to cryptocurrencies – you should decide on your risk tolerance, financial goals, and timeframe to decide how much of your investment portfolio can be allocated to cryptocurrencies.\n\nNext, a prudent investor would be to look at a fundamental analysis of their desired investment. Fundamental Analysis (“FA”) is the method of assessing the intrinsic value of a security and then comparing its current market price to help with investment decisions.\n\nWhile FA works well for traditional assets, like stocks and bonds, it doesn’t work as well for cryptocurrencies. However, there are some useful fundamentals to consider:\n\n- **Whitepaper, Team, and Goals** – This type of research is important to understand the cryptocurrencies’ purpose, technology, and use case. Understanding the team also gives you a sense of the track record of the people responsible.\n- **Network Value-to-Transactions (NVT) Ratio** – NVT provides a measure of a network’s value based on the value of transactions it processes. Cryptos with lower NVT ratios are considered undervalued, while those with higher ratios may be considered overvalued.\n- **Price-to-Mining-Breakeven Ratio** – This ratio attempts to look at the price of a digital coin versus the costs to produce it in a Proof-of-Work protocol. A digital coin with a lower breakeven ratio is more profitable.\n- **On-Chain Metrics** – These metrics try to provide a clearer picture of the activity for that [blockchain](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/blockchain\/). Metrics might include Transaction Count and Value, Active Accounts, and Hash Rate.\n\nWhen you are ready to invest, you will need to also consider how you want to invest. Popular cryptocurrency investing strategies include buying fractions of cryptocurrencies, volatility-based investment strategies, [dollar cost average investing](https:\/\/corporatefinanceinstitute.com\/resources\/wealth-management\/dollar-cost-averaging-dca\/), buy and hold investing, profit-taking investing, and lump-sum investing.\n\nFurther, volatility-based investing is easier to achieve with cryptocurrency derivatives like cryptocurrency futures contracts, cryptocurrency put options, and cryptocurrency call options. Leverage can also be used to invest in cryptocurrency via margin accounts, which uses borrowed money to increase the exposure to an investment and amplifies both potential gains as well as losses.\n\nAdditionally, due to the volatile nature of cryptocurrency, you may want to consider risk management strategies, such as regularly taking profits when investing in cryptocurrency, using stop-loss limit orders, rebalancing your crypto holdings, and ensuring diversification.\n\n### **How to Start Investing in Cryptocurrency**\nIn order to start buying and selling cryptocurrencies, you can transact with **Centralized Crypto Exchanges (“CEX”), Decentralized Exchanges (“DEX”), and via Crypto Brokers**. Popular Crypto Exchanges are Binance, Coinbase Exchange, Kraken and KuCoin.\n\nExamples of DEXs include Uniswap, PancakeSwap, dYdX, and Kyber. There are also crypto brokers, such as Coinbase, Crypto.com, Gemini, and SoFi. Each of these channels has its own pros and cons that we cover in detail [here](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/how-to-buy-cryptocurrency\/).\n\nIf you decide that you want to hold the cryptocurrency yourself, you may also need to decide the best type of wallet to use. [Crypto wallets](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/cryptocurrency-wallet\/) help store the precious private keys that allow you to prove your ownership of the digital asset, which is always stored on the blockchain.\n\nWe’ve also seen **standardized futures markets** pop up for Bitcoin and other more liquid cryptocurrencies, such as Ethereum. These futures markets allow institutional investors to trade contracts or agreements or buy and sell cryptocurrencies at a pre-agreed later date in a developed and transparent manner via established exchanges.\n\nIt allows investors to not only buy a future claim to a digital currency but also take a negative view of that cryptocurrency and sell it short. These futures are cash settled, and by going through an exchange, trades are conducted in an established and regulated marketplace.\n\nYou may also choose to invest in cryptocurrency via **specialized Exchange Traded Funds**, called ETFs for short, that invest specifically in Bitcoin and other cryptos. An ETF is sort of like a mutual fund but is bought and sold over an exchange, so they have decent liquidity.\n\nETFs tend to be very lightly managed, instead of tracking the performance of an asset or an index and, as such, typically charge lower fees than a traditional mutual fund. ETFs try to mimic the performance of the underlying cryptocurrency.\n\nInvesting in cryptocurrency companies involved in the broader **Decentralized Finance (DeFI)** universe is another way of indirectly investing in cryptocurrencies, such as Bitcoin. As the underlying cryptocurrency does well, such companies, which may create new blockchain protocols, act as an intermediary (like CEXs) or even build specific products for mining, which can be very lucrative and profitable.\n\nCompanies that are publicly traded and focus on cryptocurrencies include Coinbase Global Inc., Marathon Digital Holdings Inc., and NVIDIA Corp.\n\nFor more sophisticated investors, there are **dedicated hedge funds** that specialize in cryptocurrency, digital assets, and\/or DeFI investments that professionally manage money on behalf of investors. Such funds generally require larger minimum investments upwards of US\\$100,000.\n\nThe companies can invest in single digital coins, crypto start-ups, exchanges, [Initial Coin Offerings](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/initial-coin-offering-ico\/), Initial Exchange Offerings, and other blockchain assets. In return for their professional management, they charge their end investors a hefty fee.\n\nLastly, one may also consider investing in cryptocurrency through a **self-directed IRA** or other similar registered retirement vehicles to achieve tax advantages. It can be especially advantageous with the large returns seen through cryptocurrency investing. Still, please consult with your tax or financial planner.\n\nThank you for reading CFI’s guide on How to Invest in Cryptocurrency. To keep learning and developing your knowledge, we highly recommend the additional resources below:\n\n- [Introduction to Cryptocurrency Course](https:\/\/corporatefinanceinstitute.com\/course\/introduction-to-cryptocurrency\/)\n- [Cryptocurrency Exchanges](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/cryptocurrency-exchanges\/)\n- [Ethereum](https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/ethereum\/)\n- [Investment Horizon](https:\/\/corporatefinanceinstitute.com\/resources\/career-map\/sell-side\/capital-markets\/investment-horizon\/)\n- [Cryptocurrency Intermediates: Bitcoin Explained](https:\/\/corporatefinanceinstitute.com\/course\/bitcoin-explained\/)\n- **[See all cryptocurrency resources](https:\/\/corporatefinanceinstitute.com\/topic\/cryptocurrency\/)**","meta_canonical":null}

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Boilerpipe Text	Published June 2, 2022 Read Time 5 minutes Over 2.8 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. Start Free How to Invest in Cryptocurrency Cryptocurrency investing can be an incredibly lucrative venture but can also be quite risky, intimidating, and confusing. Firstly, we should make the distinction between investing and trading – the biggest difference being the time horizon. With investing in any asset, it is a disciplined plan to meet specific financial goals over a longer period of time, usually five years or more. Investors may build a strategy in order to save for college, buy a house, or plan for retirement. Trading , on the other hand, is short-term and often more speculative in nature. It is not uncommon for traders to execute dozens of trades a day in order to take advantage of intra-day price fluctuations. However, trading is not any less disciplined as investing since successful traders carefully manage their exposures. Here, we will focus on investing in Cryptocurrencies. The most popular cryptocurrency investment method is to buy Bitcoin and Ether and different altcoins directly by buying the digital currency outright. Investing in cryptocurrency has become more advanced with the introduction of crypto derivatives, such as futures. We also have more and more exchange-traded funds (“ETFs”) that invest on behalf of investors in physical cryptocurrencies or futures. Lastly, there is also an investment case for buying stocks in publicly-traded companies that focus on the industry, such as Centralized Cryptocurrency Exchanges (“CEXs”) and crypto-specific hardware manufacturers. Key Highlights Investing in cryptocurrency can be lucrative but also risky. Before investing in any cryptocurrency, it is useful to conduct proper due diligence and fundamental analysis. Investors should decide how to participate in cryptocurrencies, either directly or through other buying the digital currency, or through futures, ETFs, or crypto-related companies. Cryptocurrency Investing Strategies Normally, the first step in investing would be to look at asset allocation. Simply put, asset allocation means spreading out your investments across various instruments to provide diversified returns over the long run. The same applies to cryptocurrencies – you should decide on your risk tolerance, financial goals, and timeframe to decide how much of your investment portfolio can be allocated to cryptocurrencies. Next, a prudent investor would be to look at a fundamental analysis of their desired investment. Fundamental Analysis (“FA”) is the method of assessing the intrinsic value of a security and then comparing its current market price to help with investment decisions. While FA works well for traditional assets, like stocks and bonds, it doesn’t work as well for cryptocurrencies. However, there are some useful fundamentals to consider: Whitepaper, Team, and Goals – This type of research is important to understand the cryptocurrencies’ purpose, technology, and use case. Understanding the team also gives you a sense of the track record of the people responsible. Network Value-to-Transactions (NVT) Ratio – NVT provides a measure of a network’s value based on the value of transactions it processes. Cryptos with lower NVT ratios are considered undervalued, while those with higher ratios may be considered overvalued. Price-to-Mining-Breakeven Ratio – This ratio attempts to look at the price of a digital coin versus the costs to produce it in a Proof-of-Work protocol. A digital coin with a lower breakeven ratio is more profitable. On-Chain Metrics – These metrics try to provide a clearer picture of the activity for that blockchain . Metrics might include Transaction Count and Value, Active Accounts, and Hash Rate. When you are ready to invest, you will need to also consider how you want to invest. Popular cryptocurrency investing strategies include buying fractions of cryptocurrencies, volatility-based investment strategies, dollar cost average investing , buy and hold investing, profit-taking investing, and lump-sum investing. Further, volatility-based investing is easier to achieve with cryptocurrency derivatives like cryptocurrency futures contracts, cryptocurrency put options, and cryptocurrency call options. Leverage can also be used to invest in cryptocurrency via margin accounts, which uses borrowed money to increase the exposure to an investment and amplifies both potential gains as well as losses. Additionally, due to the volatile nature of cryptocurrency, you may want to consider risk management strategies, such as regularly taking profits when investing in cryptocurrency, using stop-loss limit orders, rebalancing your crypto holdings, and ensuring diversification. How to Start Investing in Cryptocurrency In order to start buying and selling cryptocurrencies, you can transact with Centralized Crypto Exchanges (“CEX”), Decentralized Exchanges (“DEX”), and via Crypto Brokers . Popular Crypto Exchanges are Binance, Coinbase Exchange, Kraken and KuCoin. Examples of DEXs include Uniswap, PancakeSwap, dYdX, and Kyber. There are also crypto brokers, such as Coinbase, Crypto.com, Gemini, and SoFi. Each of these channels has its own pros and cons that we cover in detail here . If you decide that you want to hold the cryptocurrency yourself, you may also need to decide the best type of wallet to use. Crypto wallets help store the precious private keys that allow you to prove your ownership of the digital asset, which is always stored on the blockchain. We’ve also seen standardized futures markets pop up for Bitcoin and other more liquid cryptocurrencies, such as Ethereum. These futures markets allow institutional investors to trade contracts or agreements or buy and sell cryptocurrencies at a pre-agreed later date in a developed and transparent manner via established exchanges. It allows investors to not only buy a future claim to a digital currency but also take a negative view of that cryptocurrency and sell it short. These futures are cash settled, and by going through an exchange, trades are conducted in an established and regulated marketplace. You may also choose to invest in cryptocurrency via specialized Exchange Traded Funds , called ETFs for short, that invest specifically in Bitcoin and other cryptos. An ETF is sort of like a mutual fund but is bought and sold over an exchange, so they have decent liquidity. ETFs tend to be very lightly managed, instead of tracking the performance of an asset or an index and, as such, typically charge lower fees than a traditional mutual fund. ETFs try to mimic the performance of the underlying cryptocurrency. Investing in cryptocurrency companies involved in the broader Decentralized Finance (DeFI) universe is another way of indirectly investing in cryptocurrencies, such as Bitcoin. As the underlying cryptocurrency does well, such companies, which may create new blockchain protocols, act as an intermediary (like CEXs) or even build specific products for mining, which can be very lucrative and profitable. Companies that are publicly traded and focus on cryptocurrencies include Coinbase Global Inc., Marathon Digital Holdings Inc., and NVIDIA Corp. For more sophisticated investors, there are dedicated hedge funds that specialize in cryptocurrency, digital assets, and/or DeFI investments that professionally manage money on behalf of investors. Such funds generally require larger minimum investments upwards of US$100,000. The companies can invest in single digital coins, crypto start-ups, exchanges, Initial Coin Offerings , Initial Exchange Offerings, and other blockchain assets. In return for their professional management, they charge their end investors a hefty fee. Lastly, one may also consider investing in cryptocurrency through a self-directed IRA or other similar registered retirement vehicles to achieve tax advantages. It can be especially advantageous with the large returns seen through cryptocurrency investing. Still, please consult with your tax or financial planner. Thank you for reading CFI’s guide on How to Invest in Cryptocurrency. To keep learning and developing your knowledge, we highly recommend the additional resources below: Introduction to Cryptocurrency Course Cryptocurrency Exchanges Ethereum Investment Horizon Cryptocurrency Intermediates: Bitcoin Explained See all cryptocurrency resources
Markdown	[Corporate Finance Institute](https://corporatefinanceinstitute.com/) Menu - [Certifications](https://corporatefinanceinstitute.com/certifications/) - [Courses](https://corporatefinanceinstitute.com/collections/) - [Resources](https://corporatefinanceinstitute.com/resources/) - [About](https://corporatefinanceinstitute.com/about-cfi/) - [Pricing](https://corporatefinanceinstitute.com/pricing/) - [Teams](https://corporatefinanceinstitute.com/cfi-for-teams/) [My Dashboard](https://learn.corporatefinanceinstitute.com/dashboard) [Log In](https://learn.corporatefinanceinstitute.com/auth/login) [Start Free](https://learn.corporatefinanceinstitute.com/auth/registration) - [Certifications](https://corporatefinanceinstitute.com/certifications/) - [Specializations](https://corporatefinanceinstitute.com/resources/cryptocurrency/how-to-invest-in-cryptocurrency/) - [Courses](https://corporatefinanceinstitute.com/collections/) - [About CFI](https://corporatefinanceinstitute.com/about-cfi/) - [Pricing](https://corporatefinanceinstitute.com/pricing/) - [Resources](https://corporatefinanceinstitute.com/resources/) - [Pricing](https://corporatefinanceinstitute.com/?page_id=207142) - [Why CFI Certifications?](https://corporatefinanceinstitute.com/cfi-for-teams/certified-professionals/) [My Dashboard](https://learn.corporatefinanceinstitute.com/dashboard) [Log In](https://learn.corporatefinanceinstitute.com/auth/login) [Start Free](https://learn.corporatefinanceinstitute.com/auth/registration) [Home](https://corporatefinanceinstitute.com/ "Go to Corporate Finance Institute.") › [Resources](https://corporatefinanceinstitute.com/resources/ "Go to Resources.") › [Cryptocurrency](https://corporatefinanceinstitute.com/topic/cryptocurrency/ "Go to the Cryptocurrency Resource Type archives.") › How to Invest in Cryptocurrency Table of Contents - [How to Invest in Cryptocurrency](https://corporatefinanceinstitute.com/resources/cryptocurrency/how-to-invest-in-cryptocurrency/#how-to-invest-in-cryptocurrency) - [Related Readings](https://corporatefinanceinstitute.com/resources/cryptocurrency/how-to-invest-in-cryptocurrency/#related-readings) # How to Invest in Cryptocurrency Written by [CFI Team](https://corporatefinanceinstitute.com/about-cfi/) Reviewed by [Andrew Loo](https://corporatefinanceinstitute.com/author/andrew-loo/) Published June 2, 2022 Read Time 5 minutes Over 2.8 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. [Start Free](https://learn.corporatefinanceinstitute.com/auth/registration) ## How to Invest in Cryptocurrency Cryptocurrency investing can be an incredibly lucrative venture but can also be quite risky, intimidating, and confusing. Firstly, we should make the distinction between investing and trading – the biggest difference being the time horizon. With investing in any asset, it is a disciplined plan to meet specific financial goals over a longer period of time, usually five years or more. Investors may build a strategy in order to save for college, buy a house, or plan for retirement. Trading, on the other hand, is short-term and often more speculative in nature. It is not uncommon for traders to execute dozens of trades a day in order to take advantage of intra-day price fluctuations. However, trading is not any less disciplined as investing since successful traders carefully manage their exposures. Here, we will focus on investing in Cryptocurrencies. The most popular cryptocurrency investment method is to buy Bitcoin and Ether and different altcoins directly by buying the digital currency outright. Investing in cryptocurrency has become more advanced with the introduction of crypto derivatives, such as futures. We also have more and more exchange-traded funds (“ETFs”) that invest on behalf of investors in physical cryptocurrencies or futures. Lastly, there is also an investment case for buying stocks in publicly-traded companies that focus on the industry, such as Centralized Cryptocurrency Exchanges (“CEXs”) and crypto-specific hardware manufacturers. ![How to Invest in Cryptocurrency]() ### Key Highlights - Investing in cryptocurrency can be lucrative but also risky. - Before investing in any cryptocurrency, it is useful to conduct proper due diligence and fundamental analysis. - Investors should decide how to participate in cryptocurrencies, either directly or through other buying the digital currency, or through futures, ETFs, or crypto-related companies. ### Cryptocurrency Investing Strategies Normally, the first step in investing would be to look at asset allocation. Simply put, asset allocation means spreading out your investments across various instruments to provide diversified returns over the long run. The same applies to cryptocurrencies – you should decide on your risk tolerance, financial goals, and timeframe to decide how much of your investment portfolio can be allocated to cryptocurrencies. Next, a prudent investor would be to look at a fundamental analysis of their desired investment. Fundamental Analysis (“FA”) is the method of assessing the intrinsic value of a security and then comparing its current market price to help with investment decisions. While FA works well for traditional assets, like stocks and bonds, it doesn’t work as well for cryptocurrencies. However, there are some useful fundamentals to consider: - Whitepaper, Team, and Goals – This type of research is important to understand the cryptocurrencies’ purpose, technology, and use case. Understanding the team also gives you a sense of the track record of the people responsible. - Network Value-to-Transactions (NVT) Ratio – NVT provides a measure of a network’s value based on the value of transactions it processes. Cryptos with lower NVT ratios are considered undervalued, while those with higher ratios may be considered overvalued. - Price-to-Mining-Breakeven Ratio – This ratio attempts to look at the price of a digital coin versus the costs to produce it in a Proof-of-Work protocol. A digital coin with a lower breakeven ratio is more profitable. - On-Chain Metrics – These metrics try to provide a clearer picture of the activity for that [blockchain](https://corporatefinanceinstitute.com/resources/cryptocurrency/blockchain/). Metrics might include Transaction Count and Value, Active Accounts, and Hash Rate. When you are ready to invest, you will need to also consider how you want to invest. Popular cryptocurrency investing strategies include buying fractions of cryptocurrencies, volatility-based investment strategies, [dollar cost average investing](https://corporatefinanceinstitute.com/resources/wealth-management/dollar-cost-averaging-dca/), buy and hold investing, profit-taking investing, and lump-sum investing. Further, volatility-based investing is easier to achieve with cryptocurrency derivatives like cryptocurrency futures contracts, cryptocurrency put options, and cryptocurrency call options. Leverage can also be used to invest in cryptocurrency via margin accounts, which uses borrowed money to increase the exposure to an investment and amplifies both potential gains as well as losses. Additionally, due to the volatile nature of cryptocurrency, you may want to consider risk management strategies, such as regularly taking profits when investing in cryptocurrency, using stop-loss limit orders, rebalancing your crypto holdings, and ensuring diversification. ### How to Start Investing in Cryptocurrency In order to start buying and selling cryptocurrencies, you can transact with Centralized Crypto Exchanges (“CEX”), Decentralized Exchanges (“DEX”), and via Crypto Brokers. Popular Crypto Exchanges are Binance, Coinbase Exchange, Kraken and KuCoin. Examples of DEXs include Uniswap, PancakeSwap, dYdX, and Kyber. There are also crypto brokers, such as Coinbase, Crypto.com, Gemini, and SoFi. Each of these channels has its own pros and cons that we cover in detail [here](https://corporatefinanceinstitute.com/resources/cryptocurrency/how-to-buy-cryptocurrency/). If you decide that you want to hold the cryptocurrency yourself, you may also need to decide the best type of wallet to use. [Crypto wallets](https://corporatefinanceinstitute.com/resources/cryptocurrency/cryptocurrency-wallet/) help store the precious private keys that allow you to prove your ownership of the digital asset, which is always stored on the blockchain. We’ve also seen standardized futures markets pop up for Bitcoin and other more liquid cryptocurrencies, such as Ethereum. These futures markets allow institutional investors to trade contracts or agreements or buy and sell cryptocurrencies at a pre-agreed later date in a developed and transparent manner via established exchanges. It allows investors to not only buy a future claim to a digital currency but also take a negative view of that cryptocurrency and sell it short. These futures are cash settled, and by going through an exchange, trades are conducted in an established and regulated marketplace. You may also choose to invest in cryptocurrency via specialized Exchange Traded Funds, called ETFs for short, that invest specifically in Bitcoin and other cryptos. An ETF is sort of like a mutual fund but is bought and sold over an exchange, so they have decent liquidity. ETFs tend to be very lightly managed, instead of tracking the performance of an asset or an index and, as such, typically charge lower fees than a traditional mutual fund. ETFs try to mimic the performance of the underlying cryptocurrency. Investing in cryptocurrency companies involved in the broader Decentralized Finance (DeFI) universe is another way of indirectly investing in cryptocurrencies, such as Bitcoin. As the underlying cryptocurrency does well, such companies, which may create new blockchain protocols, act as an intermediary (like CEXs) or even build specific products for mining, which can be very lucrative and profitable. Companies that are publicly traded and focus on cryptocurrencies include Coinbase Global Inc., Marathon Digital Holdings Inc., and NVIDIA Corp. For more sophisticated investors, there are dedicated hedge funds that specialize in cryptocurrency, digital assets, and/or DeFI investments that professionally manage money on behalf of investors. Such funds generally require larger minimum investments upwards of US\$100,000. The companies can invest in single digital coins, crypto start-ups, exchanges, [Initial Coin Offerings](https://corporatefinanceinstitute.com/resources/cryptocurrency/initial-coin-offering-ico/), Initial Exchange Offerings, and other blockchain assets. In return for their professional management, they charge their end investors a hefty fee. Lastly, one may also consider investing in cryptocurrency through a self-directed IRA or other similar registered retirement vehicles to achieve tax advantages. It can be especially advantageous with the large returns seen through cryptocurrency investing. Still, please consult with your tax or financial planner. ## Related Readings Thank you for reading CFI’s guide on How to Invest in Cryptocurrency. To keep learning and developing your knowledge, we highly recommend the additional resources below: - [Introduction to Cryptocurrency Course](https://corporatefinanceinstitute.com/course/introduction-to-cryptocurrency/) - [Cryptocurrency Exchanges](https://corporatefinanceinstitute.com/resources/cryptocurrency/cryptocurrency-exchanges/) - [Ethereum](https://corporatefinanceinstitute.com/resources/cryptocurrency/ethereum/) - [Investment Horizon](https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/investment-horizon/) - [Cryptocurrency Intermediates: Bitcoin Explained](https://corporatefinanceinstitute.com/course/bitcoin-explained/) - [See all cryptocurrency resources](https://corporatefinanceinstitute.com/topic/cryptocurrency/) - Share this article - [![Share on LinkedIn]()](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Fcryptocurrency%2Fhow-to-invest-in-cryptocurrency%2F&summary=How+to+Invest+in+Cryptocurrency "Share on LinkedIn") - 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Readable Markdown	Published June 2, 2022 Read Time 5 minutes Over 2.8 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. [Start Free](https://learn.corporatefinanceinstitute.com/auth/registration) ## How to Invest in Cryptocurrency Cryptocurrency investing can be an incredibly lucrative venture but can also be quite risky, intimidating, and confusing. Firstly, we should make the distinction between investing and trading – the biggest difference being the time horizon. With investing in any asset, it is a disciplined plan to meet specific financial goals over a longer period of time, usually five years or more. Investors may build a strategy in order to save for college, buy a house, or plan for retirement. Trading, on the other hand, is short-term and often more speculative in nature. It is not uncommon for traders to execute dozens of trades a day in order to take advantage of intra-day price fluctuations. However, trading is not any less disciplined as investing since successful traders carefully manage their exposures. Here, we will focus on investing in Cryptocurrencies. The most popular cryptocurrency investment method is to buy Bitcoin and Ether and different altcoins directly by buying the digital currency outright. Investing in cryptocurrency has become more advanced with the introduction of crypto derivatives, such as futures. We also have more and more exchange-traded funds (“ETFs”) that invest on behalf of investors in physical cryptocurrencies or futures. Lastly, there is also an investment case for buying stocks in publicly-traded companies that focus on the industry, such as Centralized Cryptocurrency Exchanges (“CEXs”) and crypto-specific hardware manufacturers. ![How to Invest in Cryptocurrency](https://cdn.corporatefinanceinstitute.com/assets/how-to-invest-cryptocurrency.jpg) ### Key Highlights - Investing in cryptocurrency can be lucrative but also risky. - Before investing in any cryptocurrency, it is useful to conduct proper due diligence and fundamental analysis. - Investors should decide how to participate in cryptocurrencies, either directly or through other buying the digital currency, or through futures, ETFs, or crypto-related companies. ### Cryptocurrency Investing Strategies Normally, the first step in investing would be to look at asset allocation. Simply put, asset allocation means spreading out your investments across various instruments to provide diversified returns over the long run. The same applies to cryptocurrencies – you should decide on your risk tolerance, financial goals, and timeframe to decide how much of your investment portfolio can be allocated to cryptocurrencies. Next, a prudent investor would be to look at a fundamental analysis of their desired investment. Fundamental Analysis (“FA”) is the method of assessing the intrinsic value of a security and then comparing its current market price to help with investment decisions. While FA works well for traditional assets, like stocks and bonds, it doesn’t work as well for cryptocurrencies. However, there are some useful fundamentals to consider: - Whitepaper, Team, and Goals – This type of research is important to understand the cryptocurrencies’ purpose, technology, and use case. Understanding the team also gives you a sense of the track record of the people responsible. - Network Value-to-Transactions (NVT) Ratio – NVT provides a measure of a network’s value based on the value of transactions it processes. Cryptos with lower NVT ratios are considered undervalued, while those with higher ratios may be considered overvalued. - Price-to-Mining-Breakeven Ratio – This ratio attempts to look at the price of a digital coin versus the costs to produce it in a Proof-of-Work protocol. A digital coin with a lower breakeven ratio is more profitable. - On-Chain Metrics – These metrics try to provide a clearer picture of the activity for that [blockchain](https://corporatefinanceinstitute.com/resources/cryptocurrency/blockchain/). Metrics might include Transaction Count and Value, Active Accounts, and Hash Rate. When you are ready to invest, you will need to also consider how you want to invest. Popular cryptocurrency investing strategies include buying fractions of cryptocurrencies, volatility-based investment strategies, [dollar cost average investing](https://corporatefinanceinstitute.com/resources/wealth-management/dollar-cost-averaging-dca/), buy and hold investing, profit-taking investing, and lump-sum investing. Further, volatility-based investing is easier to achieve with cryptocurrency derivatives like cryptocurrency futures contracts, cryptocurrency put options, and cryptocurrency call options. Leverage can also be used to invest in cryptocurrency via margin accounts, which uses borrowed money to increase the exposure to an investment and amplifies both potential gains as well as losses. Additionally, due to the volatile nature of cryptocurrency, you may want to consider risk management strategies, such as regularly taking profits when investing in cryptocurrency, using stop-loss limit orders, rebalancing your crypto holdings, and ensuring diversification. ### How to Start Investing in Cryptocurrency In order to start buying and selling cryptocurrencies, you can transact with Centralized Crypto Exchanges (“CEX”), Decentralized Exchanges (“DEX”), and via Crypto Brokers. Popular Crypto Exchanges are Binance, Coinbase Exchange, Kraken and KuCoin. Examples of DEXs include Uniswap, PancakeSwap, dYdX, and Kyber. There are also crypto brokers, such as Coinbase, Crypto.com, Gemini, and SoFi. Each of these channels has its own pros and cons that we cover in detail [here](https://corporatefinanceinstitute.com/resources/cryptocurrency/how-to-buy-cryptocurrency/). If you decide that you want to hold the cryptocurrency yourself, you may also need to decide the best type of wallet to use. [Crypto wallets](https://corporatefinanceinstitute.com/resources/cryptocurrency/cryptocurrency-wallet/) help store the precious private keys that allow you to prove your ownership of the digital asset, which is always stored on the blockchain. We’ve also seen standardized futures markets pop up for Bitcoin and other more liquid cryptocurrencies, such as Ethereum. These futures markets allow institutional investors to trade contracts or agreements or buy and sell cryptocurrencies at a pre-agreed later date in a developed and transparent manner via established exchanges. It allows investors to not only buy a future claim to a digital currency but also take a negative view of that cryptocurrency and sell it short. These futures are cash settled, and by going through an exchange, trades are conducted in an established and regulated marketplace. You may also choose to invest in cryptocurrency via specialized Exchange Traded Funds, called ETFs for short, that invest specifically in Bitcoin and other cryptos. An ETF is sort of like a mutual fund but is bought and sold over an exchange, so they have decent liquidity. ETFs tend to be very lightly managed, instead of tracking the performance of an asset or an index and, as such, typically charge lower fees than a traditional mutual fund. ETFs try to mimic the performance of the underlying cryptocurrency. Investing in cryptocurrency companies involved in the broader Decentralized Finance (DeFI) universe is another way of indirectly investing in cryptocurrencies, such as Bitcoin. As the underlying cryptocurrency does well, such companies, which may create new blockchain protocols, act as an intermediary (like CEXs) or even build specific products for mining, which can be very lucrative and profitable. Companies that are publicly traded and focus on cryptocurrencies include Coinbase Global Inc., Marathon Digital Holdings Inc., and NVIDIA Corp. For more sophisticated investors, there are dedicated hedge funds that specialize in cryptocurrency, digital assets, and/or DeFI investments that professionally manage money on behalf of investors. Such funds generally require larger minimum investments upwards of US\$100,000. The companies can invest in single digital coins, crypto start-ups, exchanges, [Initial Coin Offerings](https://corporatefinanceinstitute.com/resources/cryptocurrency/initial-coin-offering-ico/), Initial Exchange Offerings, and other blockchain assets. In return for their professional management, they charge their end investors a hefty fee. Lastly, one may also consider investing in cryptocurrency through a self-directed IRA or other similar registered retirement vehicles to achieve tax advantages. It can be especially advantageous with the large returns seen through cryptocurrency investing. Still, please consult with your tax or financial planner. Thank you for reading CFI’s guide on How to Invest in Cryptocurrency. To keep learning and developing your knowledge, we highly recommend the additional resources below: - [Introduction to Cryptocurrency Course](https://corporatefinanceinstitute.com/course/introduction-to-cryptocurrency/) - [Cryptocurrency Exchanges](https://corporatefinanceinstitute.com/resources/cryptocurrency/cryptocurrency-exchanges/) - [Ethereum](https://corporatefinanceinstitute.com/resources/cryptocurrency/ethereum/) - [Investment Horizon](https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/investment-horizon/) - [Cryptocurrency Intermediates: Bitcoin Explained](https://corporatefinanceinstitute.com/course/bitcoin-explained/) - [See all cryptocurrency resources](https://corporatefinanceinstitute.com/topic/cryptocurrency/)
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