Blog | Cryptocurrency

Methods of Making Profit from Crypto

Create a plan for investing in the volatile world of Meme Coin Crypto.

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Summary

  • Discover how much investment you are willing to risk.

  • Know when and how to take profits.

  • Learn different methods to invest in meme coin.

  • Know when to take the profits.


Have you been told that you aren’t risking enough, or taking enough risk in Meme Coin Crypto to make a great profit? Are you apprehensive in taking such large risks? Read on for thoughts on risk, meme coin crypto and how to know what is right for you.

An insightful article was written by Lim Yu Qian in May of this year that revealed just how much one person would have to have invested in certain meme tokens to earn a million dollars. Using Coingecko’s research, Lim shows that the average investor needed to spend nearly $68,000 on a meme token in order to increase their chance or likelihood of making $1,000,000 in profit. Here’s what would need to happen:

  • Get into the meme coin at its earliest stages of release
  • Invest at least $68k
  • Hope that the meme coin gains VIRAL popularity for a high profit exit

This market in particular is very volatile. It’s that volatility that provides the prospect of such high profits. An investor with the right risk management profile may be able to handle a $68k (or more) investment into something so volatile, but many investors, especially those starting out, do not have that profile and ability. Moreover, many are put off by that level of investing and risk.

If investing nearly $70k in a ‘what-if’ meme coin doesn’t suit your risk level, then simply put, do not risk it. But there are other ways to get some profit out of meme tokens.

For example, a colleague recently invested $100 dollars into a new meme token. While this amount would most likely never create a huge profit, the risk was small enough to take and could potentially create some profit.

If the meme coin did well, then great! If it failed, then the loss of $100 was minor enough to take.

The coin did better than anticipated and that $100 dollar investment was cashed out for $500: a $400 profit!

She shared her small success within the crypto community and the disappointment was evident. If only she’d invested more and held on to it for much longer!

Shortly after, the coin lowered further in value. She had made a decent profit of $400, gotten out when she felt it was right, and did not risk more than she was comfortable with losing.

If she’d waited to cash out even longer, her profits would’ve shrunk significantly.

One of the primary issues people have investing in Crypto is an unrealistic expectation of their return on investment and uncertainty when and how to take profits.

For some, taking smaller risks and knowing when and how to get out for a profit is the right path forward in the meme coin investment arena.

Here are a few ideas from our colleague on how that might look. Remember, nothing is one-size fits all and you should always do your own research and plan before making investments. For educational purposes, here’s what a lower risk meme token investment plan might look like:

  • High Risk Tokens: $100-250
  • Medium Risk Tokens: $450-550
  • Tokens You Strongly Believe In: $1000

In this way, someone is investing small, lower risk amounts into the high-risk meme coins, and a bit more in the medium risk ones. For some investors, there may be a token or two that they really want more of and they’re fairly confident it’s a good investment. Those are invested in more strongly.

Other methods that work for some include:

  • Dollar Cost Averaging: $100 a month into tokens you want more of. (Some people do this for things like Bitcoin.)
  • Staking: Stake the tokens you hold and take profits when needed.
  • Yield Farming: In 2021, this was more profitable. It is far more high-risk now. You can stick to only single-asset yield farms and avoid pairs due to impermanent loss.

A Bitcoin Millionaire offered some advice on how and when to take profit. He said, ‘You should always take profit when your initial investment amount is earned back, plus extra.’ Here is how that advice breaks down and the methods behind them:

  • Sell on the Doubles (plus Extra): For example, if you invest $1,000 and it becomes worth $2,500, sell (and take as profit) $1,500 worth of it. Keep the initial $1,000 invested (the plus extra is due to gas fees on networks). In this way, you have gained back your principal sum invested and you can leave the rest to either rise to the top or fall to reach a stop-loss.
  • Take Profit on 2/3rds and Keep the Rest Invested: For example: you have $1,000 invested and the tokens shoot up to $4,000. 2/3rds of $4,,000 equals $2666.67. Take out $2,600 and leave the rest invested.
  • Take Profit, Buy Back in After the Fall: Another method is taking your profit, wait for the dip and reinvest your initial amount from before. The idea here is not to reinvest all of your profits, but rather the small amount you invested to begin with, but now at a much lower entry point. You’ve already taken the profits once. If the tokens get back up to a high or higher price, then you can take profits again.

The crypto industry is rapidly changing. There are wins and losses, highs, and lows. Creating a plan and using methods that fit your financial abilities and needs will help you stay consistent in your investments. The best and only real advice is to invest in yourself! Research new protocols and tokens, including digital currencies backed by physical commodities.

Original publish date: August 09, 2023

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