By There are many very serious and well-tested strategies to increase your Bitcoin in the cryptocurrency markets. The primary method is to actively trade using Bitcoin as your base currency. That means that rather than worrying about Bitcoin price against USD or other fiat currencies, you would enter and exit positions with the sole intention of increasing overall Bitcoin. We will give you a few examples of how to do this and a few strategies that work in both “Bull” (upward trending) and “Bear” (downward trending) markets.
Strategy 1
The first strategy is to actively trade for increased Bitcoin. This is done by using the volatility in the markets against the BTC pairing.
For example, with the ETH/BTC pair found on most exchanges, if you were to have 1 Bitcoin and the current rate of Ether to Bitcoin was 0.1, it would mean that you could trade a single Bitcoin for 10 ETH. If Ether was to rise in value to 0.11 Bitcoin, then you would trade back those 10 Ethers for Bitcoin and get 1.1 Bitcoin. This would mean you made a profit of 10% in terms of overall Bitcoin and you have increased your Bitcoins by 0.1. These types of fluctuations are not just reserved to ETH and all alt coins are currently traded with Bitcoin as its base pair. This is similar to the US dollar being the base pair of Forex markets.
So, if you were to buy a coin that is going up, trading back to Bitcoin when you wanted to take profits, this would essentially increase your overall Bitcoin holdings. This is actually the most commonly used strategy for increasing Bitcoin. This strategy, however, can also be very difficult to time and if the coin you choose to hold was to lose value, you could also lose your Bitcoin as well.
Strategy 2
The second strategy is to convert BTC to fiat and back again, using market volatility in just the Bitcoin market. This is done by selling Bitcoin at a high and buying it back at a low.
For example, in the chart below, if you were to have sold your Bitcoin at the market peaks, buying back in at the market valleys or dips, you would essentially be increasing your Bitcoin exponentially on each trade. In the simplest case, if you had 1 Bitcoin and were to have sold just prior, or just after, the peak around in mid-December 2017, you could have sold your Bitcoin for 18,000 USD (approx). If you had waited until the lowest point in early February 2017, you could have bought back in at $6000 USD per Bitcoin.
That would mean your 1BTC could have potentially been converted to cash and then converted to back, increasing your total BTC holdings from 1 to 3 BTC or 300% more BTC.
This strategy is commonly referred to as “going to cash” and is a great way to take profits at the top of a bull run and buy back in at the bottom of a bear market. This, however, is very difficult to time and most traders will agree that getting as close as possible should be the goal. It is like threading a needle while riding in a car to actually get the exact bottom or top. Most traders will sell and buy in smaller blocks all the way up and all the way down to lock in profits and increase BTC.
Strategy 3
Another strategy is to become a market maker. This is actually much less common and is only done by bigger investors that are maintaining long-term holdings of Bitcoin. With this strategy, you basically lend your bitcoin to traders on an exchange who use it for their leverage or short positions. Leverage is when a trader takes his one BTC and leverages it using more.
For example, if you have 1 BTC and you leverage it 5x, you are borrowing 4 BTC from market makers. If the position of Bitcoin goes up, you make 4x extra as you are trading a bigger volume. If it goes down, however, you lose just as much. So, if you lend your BTC as a market maker and the market went up you would get a percentage of the profits that trader made in his leveraged position as he used your capital. If it went down, he would be forced to sell as soon as he had only your BTC left. So, at a 5x leverage, if the market went down 20%, you would get your BTC back and he would lose his.
With short positions, it is a little bit different. You lend your BTC as a market maker to a trader who is betting the market will go down. The trader sells your BTC at the current market rate in order to buy it back cheaper when the market falls. He then gives you back your BTC plus a little extra for the loan. Market maker fees are extremely small, but they do add up, especially if the trader is good and makes a bigger profit. This is a great way for someone to generate passive income from their BTC long-term holdings risk-free, as they will not be on the hook for any losses but get to enjoy the benefits of the trader’s wins.
On the other side of this coin is the person who uses short positions and/or leverage to increase their BTC holding exponentially. This is a very risky practice and should not be used unless you are a professional trader, with a deep market knowledge. Basically, you would borrow a market makers BTC and add it to your own, trading using one of the strategies used above. If it works you get a return proportionally bigger based on the amount of leverage you borrowed.
For example, if you had 1 BTC and you leveraged it 5x, you could effectively trade the full 5 BTC in any of the above-mentioned strategies. If, for example, you had sold all five BTC at $18,000 and bought back in at $6000, like in the chart above, you would have 15 BTC. You would then return the 4 BTC plus the agreed upon market maker fee to the person you borrowed the 4 BTC from and would be left with 11 BTC minus the fees. This means essentially you turned 1 BTC into 10.8 or 10.9 BTC or increased your BTC over 1000%. This is very risky though because if the market went against you and dropped just 20%, you would have lost 100% of your capital.
More Ways to Make Money
These are just a few of the most common strategies to increase your BTC. You can also attempt investing your Bitcoin in cloud mining or other similar investments. But generally speaking, they are riskier than trading and less profitable unless the value of BTC skyrockets in a short period of time, as ROI is generally high – around 80% of the contract length.
Most of these strategies, however, we would not recommend to a newbie or trader without professional market experience. Most people simply don’t have the knowledge to avoid trading in bad positions. Unfortunately, most people in the sector will disagree, and that is because they have enjoyed a bull run through most of 2017. When a market is increasing at the rate we witnessed last year, it is much easier for a novice trader to make money or increase their Bitcoin. When the market is retracting, however, novices tend to lose more than if they just hold on to their coins. These strategies do however work for professional traders and investors, like CoinBeat’s own staff analysts.
We hope this answered your question. In short, the best way to increase your Bitcoin is to trade actively and increase it exponentially. The only guaranteed way to not increase your Bitcoins is to hodl, as your BTC total won’t change, though your value in terms of USD will.
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