Making cryptocurrency passive income crypto is one of the most difficult skills to achieve when it comes to cryptocurrency. Cryptocurrencies are still in their infancy, and their market is still highly volatile.
They have the potential to make you rich, but if you don’t know how to manage your risk, and if you don’t know when to sell and when to hold, it can be very challenging.
If you’re new to cryptocurrency and don’t know how to make it passive income, don’t worry. Passive income is derived from passive investments rather than active involvement with the market. You’re in the passive income game if you have a steady income stream that doesn’t require too much time or effort on your part.
In this guide, we’re going to share with you a few tips that will help you make passive income with cryptocurrency. But before we do that, let’s take a step back and discuss why we need passive income in the first place.
What Is Passive Income?
Passive income is a way of making money without having to be directly involved with the market. You can generate passive income in a few different ways, but the most popular method is through real estate.
In fact, many people refer to this as the “patron saint of cryptocurrency” because of how much passive income you can make through real estate.
Real estate is where most passive income is made, but it’s also one of the riskiest passive income crypto.
To make passive income with cryptocurrency, you need to find an asset that can be owned, leased, rented, managed, or otherwise controlled by a third party so that you have little to no control over it.
For example, real estate is a great passive income source because you can own it outright, lease it, or rent it to others.
One of the best examples of passive income is rental property. Renting is a great source of passive income because you don’t have to have any money invested.
Your rent checks come directly from the rental property, and you don’t have to do anything. You only need to own a house and find a tenant.
Now, let’s contrast that to real estate. When you buy a house, you typically put 20% down, and the bank keeps the rest. This is a huge amount of cash you have to put up front, and you have almost no control over the house after that. You could lose that 20% investment in a matter of months.
Since cryptocurrency has a high risk, and real estate has a low risk, you would expect cryptocurrency to be one of the best ways to make passive income with cryptocurrency. However, there is one aspect to cryptocurrency that makes it an even better passive investment: low risk.
Cryptocurrency is the ultimate low-risk investment that anyone can make. There is no market risk for cryptocurrency, no fluctuations in value, just a steady, consistent income.
Benefits of Passive Income
There are many benefits to passive income, but the main ones are:
Freedom – By not having to be involved with the market all the time, passive income gives you more freedom. You can spend more time with your family, travel more often, etc.
More Income – One of the reasons most people who try to make passive income fail is because they want to earn a lot of money right away.
When you have passive income, you can earn a little bit every month and not have to stress about it. You can take your time and gradually increase your income as time goes on.
More Time – Passive income gives you more time to focus on other things, like your family, your health, your business, etc.
Some passive income is best used for “fun money”, so that you can afford that new car, get that luxury vacation, upgrade to a nicer house, etc.
Passive income vs. Active Income
There’s a lot of confusion about the difference between passive income and active income because they both sound so good.
Let’s start with passive income. Passive income is when you own an asset and don’t use it yourself.
For example, if you own rental property, you’re generating passive income. The rent checks come regularly, and you’re not directly involved with the property.
Active income is when you own an asset and use it yourself. For example, if you own a hotel, then you use those rooms yourself. You don’t get a check from the hotel every month.
There are many ways to make passive income with cryptocurrency, but the most popular is real estate.
Another option would be to buy a cryptocurrency that has a low market cap and sell it at a profit to fund the purchase of an even lower market cap cryptocurrency (this is called “shorting”).
Either way, you’re generating passive income.
The reason many people confuse passive income with active income is because they may own cryptocurrencies, but they’re not actively managing their cryptocurrency.
When you actively manage your cryptocurrency, you’re constantly selling when the market dips and buying when the market rises.
In other words, active income means you’re trading cryptocurrencies all the time. This can be a very lucrative way to make money, but it’s also very risky. In general, cryptocurrency markets are very volatile, and this is why you don’t want to be trading all the time.
You’re far better off passively making cryptocurrency passive income and then using the excess to buy low-risk assets that won’t fluctuate in value as much as cryptocurrency.
How to Make Cryptocurrency Passive Income
There are two ways you can make cryptocurrency passive income: Buy low-risk assets and then sell them when the market dips. Short low-risk assets when the market dips.
We’re going to go through each of these options in more detail. Shorting low-risk assets
Buy Low-Risk Assets
This is one of the most common ways to make cryptocurrency passive income because it’s not that risky.
The risk of shorting a low-risk asset is that it will be shorted for too long, and the asset will lose all of its value.
In the cryptocurrency market, this is very unlikely to happen. Even if cryptocurrency dips, you can short it for a short time and still earn a profit.
The biggest risk of buying low-risk assets is that they may not be low-risk. You could buy a cryptocurrency that starts to rise in value, and then you’re stuck with a very high-risk investment that doesn’t make you much money.
Short Low-Risk Assets
Shorting a low-risk asset means you’re selling a cryptocurrency that has a low market cap and buying a cryptocurrency with a low market cap.
Since cryptocurrency has a low risk, you’re selling a very high-risk asset, and you’re buying a very low-risk asset.
For example, if you shorted cryptocurrency in the past, when it was much higher in price, you would have lost a lot of money. But now that cryptocurrency is much lower in price, you can buy low-risk assets and short cryptocurrency at the same time.
This is a very risky way to make cryptocurrency passive income because cryptocurrency is so volatile, and you have no idea which way it’s going to go next.
Cryptocurrency has the potential to be one of the best ways to make passive income in the world, but it’s still very early.
If you want to be safe and make the most passive income with cryptocurrency, you would be best to buy low-risk assets and then sell them when the market dips.
If you want to make the most money, you should short low-risk assets when the market dips. But it’s important to remember that both of these strategies are very risky.
And, of course, you also need to understand that cryptocurrency is still very volatile, and it’s very difficult to predict when it will go up or down.