Make Money While You Sleep with Crypto

(But can you trust the technology behind it?) How to set up a crypto portfolio for autopilot earnings.

PS Sorry… there’s a few issues with the audio this week (still getting used to the editing software 🤔)

Bored Ape NFT (AI-generated)

Last week, I took you through the necessary foundational content to help you get grounded, and I hope you are more excited about the prospects of investing in Cryptocurrencies.

If you missed the post, no worries—it’s available here. TLDR for last week’s post is that I want you to remember that despite crypto's bad reputation, you can make some healthy returns, and you don’t have to invest hugely to earn double or even triple digital returns on your money.

For example, Solana, a crypto coin, is up 738.3% since last year!

PS. Solana had a market cap of 6.4B USD in June 2023. For context, as of now, there are approximately 2,800 companies listed on the NASDAQ. Out of these, around 1,500 companies have a market cap of $6.4 billion or more. This reflects the robust nature of the Solana and companies listed on the NASDAQ alike (Investopedia).

What this means to you is that if you had invested USD 1,000 in Solana in June 2023, considering its market capitalisation, your investment would have grown to an impressive USD 8,386.23 today. Not bad, right?

This leads me to today’s post. I’ve some action-oriented content for today's post for those ready to start investing.

I’ll reveal:

1. How $USD1,000 10 years ago would have made you over $42,200, and that it’s not too late to invest;

2. Which coin’s value has increased by over 15,000% in the same time frame;

3. One of the safest ways to start earning annualised returns > 15%!

Bonus: Included is a major announcement about the imminent release of another highly anticipated with the potential for huge returns over the medium to long term.

To get started first, we’ll cover the following topics so you’re further armed to research and discover your next exciting crypto investment opportunity. By understanding these topics, you’ll know what to look for and be wary of when evaluating various crypto projects:

• How Does Blockchain Apply to Cryptocurrencies?

• What Problems Do Cryptocurrencies Attempt to Address?

• Advantages, Disadvantages, and Risks of Crypto Investing

• Introducing Bitcoin and Ethereum

• Investment Strategies

• Guide on How to Get Started Investing

Disclaimer

As per last week…

The following content in this newsletter is for educational and entertainment purposes only and should not be considered financial advice. Always do your own research and consult with a financial advisor before making investment decisions.

How Does Blockchain Apply to Cryptocurrencies?

It's crucial to grasp this if you're considering dipping your toes into the world of cryptocurrencies; what you should be looking for are coins or projects with significant market capitalisation, substantial investment, and real-world applications.

Why?

These factors typically indicate a cryptocurrency with a solid potential for long-term growth.

These coins will likely be used, making them a potentially smart investment choice.

Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) are great examples of mature ‘real-world application currencies’ that operate on the blockchain.

Transactions are recorded on the public ledger, which provides transparency and security. Anyone can view it from etherscan.io, for instance.

As of now, Ethereum processes over 1 million transactions per day. Its market cap is in the billions and has several real-world applications, which we’ll cover briefly soon.

In summary, the O.G.s of cryptocurrencies like BTC and ETH reduce the investment risk profile as they:

1. Have huge market capitalisations (i.e. total worth).

2. Have millions of investors and

3. BTC and ETH are designed to solve financial transactions and systems.

In other words, BTC and ETH have essential and universal use cases, solving many of the problems created by traditional currencies and central banking systems.

What Problems Do Cryptocurrencies Attempt to Address?

In the finance world, cryptocurrencies aim to tackle several issues within the current finance and banking systems:

• Decentralisation: Reducing reliance on central banks and financial institutions.

• Lower Transaction Fees: Minimising costs by eliminating intermediaries.

• Faster Transactions: Enabling near-instant transfers.

• Financial Inclusion: Providing access to financial services for those in regions with limited banking infrastructure.

• Security and Transparency: Enhancing trust through cryptographic security and transparent ledgers.

Cryptocurrencies aim to tackle several big economic problems. For example, in places like the U.S., U.K., and Australia, the government and central banks control inflation by manipulating money supply.

This manipulation can mess up the economy and lower the currency's value over time. However, cryptocurrencies like Bitcoin, which have a limited supply, can act as a shield against this inflation, keeping their value even when other currencies like AUD and USD are losing value.

In some countries, hyperinflation can make the local currency almost worthless.

Here, cryptocurrencies can provide an alternative way to store value that doesn't depend on the local economy. Cryptocurrencies can also offer a way out of government control over currency. This is especially useful in countries where the government has a history of taking away personal assets or where the financial system isn't fully developed.

Cryptocurrencies can simplify the process of sending money across borders, making it cheaper and faster to send money to other countries.

Cryptocurrencies offer essential financial privacy that is absent in traditional banking, which is particularly crucial for those under authoritarian regimes or facing unfair targeting by financial institutions.

There are many other applications for crypto, but for us, the above is a great start.

Advantages, Disadvantages, and Risks of Crypto Investing

Below is a summary of the advantages, disadvantages and risks of investing in crypto. This is good to keep in mind as we go deeper into BTC and ETH next and places for you to start perhaps investing.

Advantages:

• Autonomy: Users have control over their finances without intermediaries.

• Accessibility: Easy access to financial transactions with an internet connection.

• Investment Opportunities: Access to new markets and financial services.

Disadvantages and Risks:

• Volatility: Prices can fluctuate dramatically.

• Lack of Regulation: Potential for fraud and security risks.

• No Investor Protection: Losses are not insured.

Introducing Bitcoin and Ethereum

Now that you have a foundational understanding of Blockchain and cryptocurrencies, we will focus on the two most prevalent today: Bitcoin (BTC) and Ethereum (ETH).

Also, if you don't feel ready yet to invest, I encourage you to do more research.

Gareth Soloway (Verified Investing https://verifiedinvesting.com/) and Coin Bureau (https://www.youtube.com/@CoinBureau) are excellent and reputable resources.

Of course, there are tons more and also tons of get-quick-rich scams.

Be forewarned!

I recommend spending your time with these two first and then branch because as you become more educated, you'll be able to protect yourself better from any would-be scams, as there are plenty out there in the Wild West of Cryptoland.

Bitcoin and Ethereum have been around the longest, have the most active investors, and have the largest market capitalisations. Safety first!

Bitcoin (BTC)

Bitcoin, the first and most well-known cryptocurrency, launched in 2009. It operates on a decentralised network and is often called digital gold due to its limited supply.

As of Monday, June 27th, 2024, the BTC market price is 1 BTC = USD 65,548.50 = AUD 99,026.35.

Ethereum (ETH)

Ethereum, launched in 2015, goes beyond a simple currency.

It allows developers to build decentralised applications (DApps) on its Blockchain, making it a vital player in the DeFi (decentralised finance) world.

I don't want you to worry too much about DApps and DeFi now; know that Ethereum enables secure financial transactions using blockchain technology. This technology records and verifies transactions transparently and tamper-proof across a decentralised network.

As of Monday, June 24th, 2024, the ETH market price is 1 ETH = USD 3,429.09 = AUD 5,180.87.

The above BTC and ETH prices are pretty damn impressive!

Hold on, they’re too expensive for me to purchase…

While you might think they’re out of reach, a massive advantage of Crypto (unlike equities/shares traded on the stock market) is that you can buy fractionally. You could invest as little as 10 bucks on a decentralised exchange and get ~0.0018 ETH in return (at the time of writing).

Yes, affordable!

Further Considerations

It would also be remiss of me not to cover the volatility of BTC, ETH, and Crypto in general. For example, the price of BTC and ETH in USD in late 2022 and 2023 were:

Bitcoin (BTC) Price:

• November 1, 2022, $20,483.68 USD

• November 1, 2023, $34,502.72 USD

Ethereum (ETH) Price:

• November 1, 2022, $1,574.35 USD

• November 1, 2023, $1,812.26 USD

Additionally, take a look at the chart below for BTC since its inception. It looks more like a rollercoaster than a stock/currency chart.

I share this to both scare and excite you.

Volatility can be a killer in trading - especially in Crypto.

One day, you might be up 30%, and the next, you might be down by 50% or, even worse, wholly liquidated!

As you'll soon learn, though, there are ways to manage risk, especially over the longer term and in the short term, by being smart about your trade setups and using alternative investing strategies.

For those of you who are more versed in volatility or price action, as the gurus call it, volatility can be your friend. You can make money both ways as the market goes up (termed Long) and down (termed Short).

Example Investment Cases: Investing $1,000 in BTC and ETH

While researching this newsletter, I came across the tweet below. It is factually accurate, and my immediate reaction is then surely it's worth a few hundred bucks or a few thousand (if you're game) - to see what might unfold over the next few years:

Let's look at the growth of Bitcoin and Ethereum over the past five years, based on if you invested USD$1,000. To calculate the overall percentage gain and the annualised percentage gain if one invested USD 1,000 each in BTC and ETH exactly five years ago, we need the prices from 5 years ago and today.

Cryptocurrency Initial Investment Value After 5 Years

Bitcoin (BTC):

• $1,000 to $3,000, a 200% increase at 24.57% annualised.

Ethereum (ETH):

• $1,000 to $6,666.67, a 566.67% increase at 43.44% annualised.

And at 10 years:

Bitcoin (BTC):

• $1,000 to $42,200, a 120% increase at 46.87% annualised.

Ethereum (ETH):

• $1,000 to $151,470, a 15,047% increase at 72.41% annualised.

I referred to BTC and ETH in the post's introduction, and they have huge growth numbers.

Hopefully, these stats provide some additional comfort—gains aren’t guaranteed. Still, over the medium to long term, assets (like companies) with real-world applications tend to perform pretty well, providing investors with a return on investment.

Recent Development: BTC ETFs

Recently, Bitcoin Exchange Traded Funds (ETFs) were approved, a significant milestone in cryptocurrencies.

An ETF is an investment fund and exchange-traded product traded on a stock exchange. It is designed to track the price of an asset or a group of assets. A Bitcoin ETF, therefore, tracks the price of Bitcoin.

The approval of Bitcoin ETFs is a massive step towards accepting and legitimising Bitcoin as an asset class. BlackRock, the world's largest asset manager, has been involved in the approval process. The company's size and influence lend much credibility to Bitcoin, reinforcing the idea of Bitcoin as "digital gold."

Moreover, introducing Bitcoin ETFs makes investing in Bitcoin much more accessible for average investors.

Before, if you wanted to invest in Bitcoin, you had to navigate the often complex world of decentralised exchanges (DExs) and decentralised finance (DeFi). With Bitcoin ETFs, you can invest in Bitcoin like in any other stock through your regular brokerage account.

This marks a significant step in making Bitcoin and other cryptocurrencies part of the mainstream financial system, which might offer you further assurances or confidence to consider investing in BTC or ETH.

If you had invested in BlackRock's BTC ETF since the beginning of 2024, you would have more than doubled your returns. That's not bad at all!

BONUS ANNOUNCEMENT

ETH ETF to launch in June, July.

Get excited!

Similar to BTC ETF, Ethereum ETFs further legitimises cryptocurrencies, and ETFs open the floodgates for money inflow from retail investors = price growth! If you looking to get started, consideration of any of the ETH ETFs could represent a fantastic and straightforward starting point!!!

Low-Risk Investment Strategies

I’ll now review some common low-risk strategies you may want to consider:

1. Diversification: Spread investments across different cryptocurrencies and other assets.

There is nothing new in terms of advice here. Less than 5% of my portfolio is invested in Crypto. That's what I love about Crypto, though a small amount invested can have a considerable upside.

2. Dollar-Cost Averaging: Invest a fixed amount regularly, regardless of market conditions.

It is an excellent, safe, long-term investment strategy that smooths out your average investment price, especially given the volatile nature of coins. It's great for long-term HODLing (that's Crypto lingo for holding assets for the long term). We ran through two significant cases above for holding BTC and ETH for the past 5 and 10 years, respectively.

Be sure to take profits now and then.

3. Long-Term Holding: Focus on long-term growth rather than short-term gains.

As advertised, it is a great starting point for beginners.

4. Research and Stay Informed: Understand the market and stay updated on news and trends.

The lowest risk is not committing cash. I started this way and spent a few months getting comfortable. A great strategy is to open a 'paper account'—which means simulated investing in real time but not committing cash. Naturally, you don't realise any returns either; it's all on 'paper'.

Any of these and the ETH ETF launching soon would represent awesome opportunities for any newbie to get started and realise healthy double-digit returns beyond 15% annually.

More Advanced Medium-Risk Strategies

1. A.I. Bot Derivatives Trading: Using artificial intelligence (A.I.) to automate trading on the derivatives market. A.I. bots can execute trades at high speeds and volumes, potentially increasing profitability. However, they require careful monitoring to avoid excessive risk.

2. DeFi Liquidity Pairs: Investing in Decentralised Finance (DeFi) liquidity pairs involves providing liquidity to a decentralised exchange. In return, you earn fees from the trades that use your liquidity. However, this comes with the risk of impermanent loss, which can occur if the prices of the assets in your pair diverge significantly.

3. Staking: This involves participating in a proof-of-stake (PoS) blockchain network by holding and "staking" a cryptocurrency in a wallet to support network operations such as block validation, security, and governance. In return, you receive staking rewards. However, staking can be risky as it often involves locking up your tokens for a certain period, during which they may be subject to volatility and potential loss.

4. Liquidity Farming: Also known as yield farming, this strategy involves lending your cryptocurrencies on DeFi platforms. In return, you earn interest and tokens. However, this strategy has risks, including smart contract bugs and market volatility.

5. NFTs (Non-Fungible Tokens) are unique digital assets stored on a blockchain. Unlike cryptocurrencies such as Bitcoin or Ethereum, each NFT has its distinct value and cannot be exchanged like-for-like. This uniqueness and scarcity are what give NFTs value. These digital assets could be anything from digital art, music, and virtual real estate to virtual goods in video games. Investing in NFTs can be lucrative but also carries a level of risk as the market is highly volatile and speculative. Always conduct thorough research and consider the potential risks before investing in NFTs.

I've dabbled in 1 through 3 and 5 whilst staying in the green and would be happy to share more details or how-tos based on interest.

Let me know in the comments!

Guide on How to Get Started Investing

I was thinking of creating a step-by-step guide in Notion for those who want to learn more about getting started.

A high-level overview would include the below, along with some video walk-throughs, and would be available for paid and founding members at no extra cost.

1. Choosing a Reliable Exchange: Platforms like ByBit or Binance.

2. Creating an Account: Completing the registration and verification process.

3. Funding Your Account: Depositing funds using a bank transfer or credit card.

4. Purchasing Your First Cryptocurrencies: Buying Bitcoin, Ethereum, or other cryptocurrencies.

5. Storing Securely: Using hardware wallets for long-term storage or software wallets for smaller amounts.

Wrapping Up

We've come to the end of my (2-part) introduction to investing in Crypto.

What do you think?

Is this a side income you want to look into?

Are you excited enough to take action?

We've explored blockchain technology, cryptocurrencies, and their potential as a side income source.

Blockchain is decentralised and transparent, providing a secure platform for financial transactions.

Cryptocurrencies like Bitcoin and Ethereum use Blockchain, attempting to make the use of money more equitable and secure.

The benefits of investing in cryptocurrencies include autonomy, accessibility, and potential lucrative returns. However, it is essential to understand the volatility, potential for fraud, and lack of investor protection in this space.

Bitcoin and Ethereum, the most well-known cryptocurrencies, have grown in the past decade and demonstrated substantial price volatility.

Despite the risk, we have examined common low-risk strategies, such as diversification, dollar-cost averaging, long-term holding, and staying informed through continuous learning.

The BTC and ETH ETFs are the easiest way to start.

For those seeking to explore further, we discussed advanced strategies like A.I. bot derivatives trading, DeFi liquidity pairs, staking, liquidity farming, and investing in NFTs. Again, I'll look to your feedback.

If you want more info, please let me know in the comments… I’d be happy to cover them in future posts.

As a beginner, you can start by choosing a reliable exchange, creating an account, funding it, purchasing cryptocurrencies, and securely storing them.

Overall, it's important to remember that while the crypto space offers exciting opportunities, it's also a complex and rapidly changing environment. It's crucial to research, understand what you're investing in, and only invest what you can afford to lose.

Let me know in the comments if you're interested in more detailed guides on specific topics like:

• setting up a decentralised exchange,

• starting with a paper account,

• funding and purchasing,

• staking coins for double-digit returns or

• a beginner's guide to NFTs.

-Lindsay

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