How To Make Money With Bitcoin – Beginner’s Guide for 2021

Can you make money with Bitcoin? In April of this year, Bitcoin reached an all-time high of $64,863.10 taking its ROI to 35,342.95%. As high-profile investors like Elon Musk and PayPal start to side with this digital currency, many are wondering if there’s more to Bitcoin (BTC) than meets the eye. 

But just how do you make money with Bitcoin? Before you can even start investing or trading Bitcoin you will need to open an account with a regulated broker or a top-rated cryptocurrency exchange. So, let’s cover how to buy Bitcoin for as little as $25 and what trading strategies you could use. 

Make Money With Bitcoin – Quick Guide to Buying Bitcoin in 2021

Make Money with Bitcoin

With so many top-rated brokers and crypto exchanges out there, choosing the right one can be disorientating. With that said, we highly recommend the regulated broker eToro as it’s home to millions of traders and allows you to invest in Bitcoin with 0% commission and a typical spread of just 0.75%. 

  1. Open a live trading account with eToro – Head over to eToro’s official site and click on the button marked ‘Join Now’. Provide your details and choose a username and password.
  2. Verify your account – As part of the KYC process, you will need to upload proof of identity and address. Examples include a copy of your valid passport and a recent bank statement. 
  3. Deposit funds – The minimum deposit is just $50 and you can use a range of payment methods from bank transfers to e-wallets and debit cards. 
  4. Buy Bitcoin – Search for Bitcoin, click ‘Trade’, enter your stake amount and place your order. It’s that simple!

Where to Make Money With Bitcoin

With Bitcoin putting up unprecedented gains this year, many cryptocurrency enthusiasts and investors are optimistic about this digital asset’s outlook. Read on to see where you can gain exposure to the largest cryptocurrency on the market right now. 

1. eToro – Overall Best Regulated Broker to Make Money with Bitcoin with Low Fees and Tight Spreads

eToro is our number-one choice for making money with Bitcoin. Firstly, eToro is a fully regulated broker that holds licenses with several top-tier financialeToro logo authorities including the UK’s Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), and the Cyprus Securities and Exchange Commission (CySEC). Since its launch in 2006, eToro has grown to be one of the leading social trading platforms with a client base of over 20 million traders. 

eToro offers a wide range of financial products and markets from stocks and ETFs, to forex, CFDs and cryptocurrencies. As such, you can invest in 28 popular cryptocurrencies including Bitcoin, Ethereum, Ripple (XRP), Dogecoin, Litecoin, and Cardano (ADA) just to name a few. You can also trade popular crypto-cross pairs and crypto-to-crypto pairs such as BTC/GBP and ETH/BTC. 

Buy Bitcoin on eToro with as little as £25

Fees and Commissions

eToro only charges competitive spreads when you start cryptocurrency trading. This means that you do not have to pay a penny in commissions. Let’s take a closer look at the cost of buying Bitcoin on eToro. For example, here’s how much it would cost to open a BUY (Long) position:

Cost of Buying Bitcoin on eToro

When you purchase cryptocurrencies on eToro, you gain ownership of the underlying assets and can store them in the eToro Money crypto wallet. 

When it comes to the non-trading fees, there are no deposit fees or account fees. There is however, a small $5 withdrawal fee and a $10 inactivity fee after 12 months of no login activity. 

What about payment methods? 

In addition to no account fees, there are no deposit fees to worry about when funding your eToro account. Beginner retail traders will appreciate the low initial deposit requirement of only $50. Funding your eToro trading account is quick and simple, with a variety of convenient payment options available. The supported payment methods include Credit/debit cards, e-wallets (PayPal, Neteller, and Skrill), and bank transfers. 

Is eToro safe? 

eToro holds multiple licences and is regulated by several financial watchdogs including the UK’s Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), and the Australian Securities and Investment Commission (ASIC). 

UK-based investors are protected by the Financial Services Compensation Scheme (FSCS). This means that should the broker become insolvent you can expect to receive compensation of up to £85,000. 

Fee Type Charge
Crypto Trading 0% Commission + tight spreads
Cost of buying ETH Typical spread of 1.90%
Account fee None
Deposit fee None
Withdrawal fee $5
Inactivity fee $10 after 12 months

Pros

  • Buy and Sell cryptos on a spread-only basis
  • Invest in cryptos with as little as $25 
  • Home to over 20 million traders worldwide
  • Fully regulated by FCA, CySEC and ASIC
  • No deposit fees 

Cons

  • USD is the only supported account base currency

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.

2. Coinbase – Top-rated Cryptocurrency Exchange With a Convenient Mobile App

Coinbase is one of the leading cryptocurrency exchanges, according to coinmarketcap.com, with a market capitalization of over $47 billion and an averageCoinbase logo daily trading volume greater than $1.4 billion. This leading crypto company (NASDAQ: COIN) generated $500 million in its blockbuster IPO (Initial Public Offering) on the NASDAQ exchange in April 2021, giving the company a market value of $8 billion.

Fees and Commissions

When you trade crypto assets on Coinbase, you’ll have to pay a standard commission of 1.49% per side. Coinbase also charges a fee when you convert one cryptocurrency to another. This 2% spread is slightly higher than the industry average when compared to other popular brokers and exchanges.

Buy Bitcoin on Coinbase

Payments

One of the main drawbacks of using Coinbase to buy Bitcoin is that it is rather expensive. For instance, while eToro charges a 0.5% conversion fee for non-USD deposits, Coinbase charges a commission of 3.99% on debit card transactions. Coinbase supports debit cards, cryptocurrencies, and bank transfers as payment methods. If you use bank transfers to fund your account you can avoid the 3.99 percent Coinbase fee on debit card deposits and transactions, but you will have to wait a couple of business days for the funds to be credited. 

Is Coinbase safe? 

In terms of regulations and security, Coinbase is registered with FinCEN as a Money Services Business, and is listed on the NASDAQ exchange and therefore discloses its financials publicly. Coinbase also holds an Authorized Payment license in the UK. 

Pros

  • User-friendly crypto exchange platform ideal for beginners
  • Straightforward account opening process
  • Wide range of payment methods i.e debit cards and bank transfers
  • No inactivity fees & no minimum deposits 
  • Registered with FinCEN as a Money Services Business 

Cons

  •  High debit card deposit fee of 3.99%

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.

3. Binance – Leading Crypto Exchange With Low Trading Commissions

Binance is one of the largest cryptocurrency exchanges in the world, with a daily trading volume of more than $13 billion. Based in theBinance Cayman Islands, this crypto exchange was established in 2017 and currently boasts a client base of more than 15 million traders.

Fees and Payments 

In contrast to most other exchanges, Binance’s trading fees are very competitive. For example, the spot trading fee is just 0.1%, and the instant buy/sell fee is just 0.5%. The Binance ecosystem’s native DeFi token is the BNB coin. Depending on your location, Binance offers both fiat and crypto deposits. Traders also have access to the following payment methods: cryptocurrencies, credit/debit cards, and bank transfers.

Buy Bitcoin on Binance

Is Binance safe? 

When it comes to storage, Binance offers its native convenient Bitcoin wallet. Despite being less secure than withdrawing your Bitcoins to a private third-party crypto wallet, Binance does provide several security features. For example, you can use two-factor authentication and you can whitelist your IP and unique crypto wallet address. 

Moreover, all client funds are held in cold wallets and you also have the Safe Asset Fund for Users (SAFU). The SAFU is an insurance pot that is funded through transaction fees and is designed to offer compensation when needed. The Binance ‘Trust Wallet’ can be downloaded as an app on your Apple or Android mobile device, and is very user-friendly and secure. 

Pros

  • Access Cryptos with High trading volume and liquidity 
  • Trade hundreds of crypto pairs 
  • Market-leading trading commission as low as 0.1% per side
  • User-friendly platform with high liquidity levels
  • Debit/Credit card, local bank transfer deposits accepted

Cons

  • High credit/debit card deposit fee of 2%

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.

How to Make Money With Bitcoin – eToro Tutorial

In this section of our Make Money with Bitcoin beginner’s guide, we’ll show you how to buy Bitcoin with eToro in a few easy-to-follow steps. 

Step 1: Open a Brokerage Account at eToro

First and foremost, head over to the eToro website and register for a live trading account. This takes just a few minutes and is fully digital. 

eToro open an account

Once you’ve clicked on the ‘Join Now’ button, provide your details and choose a username and password for your account. 

Step 2: Verification

In keeping with standard practices for all regulated brokers, you will need to go through the KYC process. The Know Your Customer process is a regulation set by the financial authorities, such as the FCA, designed to combat money laundering and identity theft. 

To verify your account, you will need to provide both proof of identity and proof of address. This can easily be done by uploading copies of your passport and a recent bank statement. 

Step 3: Deposit funds 

Funding your eToro live trading account is simple and easy. With heaps of payment options at your fingertips, you can deposit funds instantly with a debit or credit card, and e-wallets including PayPal and Neteller just to name a few. You can also use bank wire transfers but these typically take between four and seven working days to process.

Step 4: Search for Bitcoin (BTC)

Use the search bar at the top of the trading terminal to search for Bitcoin. From the list of relevant results click on the ‘Trade’ button. 

search for Bitcoin on eToro

Step 5: Buy Bitcoin

An order form, like the one shown in the image below, should then appear. From here all you need to do is enter the amount of BTC you want to purchase. The minimum amount you can invest is $25. 

Open Trade on Bitcoin with eToro

If you want to buy cryptocurrency CFDs, simply use leverage to maximize your purchasing power. However, with contracts for difference, you will be speculating on the price movements of the digital asset and will therefore not take ownership of the underlying asset. 

Finally, click on the ‘Open Trade’ button at the bottom of the order ticket to complete your commission-free Bitcoin investment. To monitor your investment, you can do this anytime by navigating to the ‘Portfolio’ section of the eToro dashboard. 

How to make money with Bitcoin – Strategize & Research

What trading strategies are the experts using? If you’re new to cryptocurrency trading then this guide is for you. Bitcoin remained under the radar until 2017. 

After the BTC Bubble burst, Bitcoin became a household name with beginner and expert investors all trying to get their hands on a slice of this digital asset.

Bitcoin price prediction – what are market analysts saying? 

According to Mike McGlone, Bloomberg’s Intelligence senior commodity strategist, Bitcoin has the potential to reach the $100,000 mark. The consensus amongst most market analysts and expert traders is that Bitcoin could stage a strong rally throughout the third and fourth quarter of 2021. 

eToro ProCharts Bitcoin candlestick chart with RSI divergence indicator

At the time of writing, the current price of Bitcoin is $48,707.87 with a 24-hour trading volume of more than $32 billion. Bitcoin’s current price and market value give it a market cap of $915,569,740,511.30 and a market dominance of 43.8%.  

Can you make money with Bitcoin?

Now that you have a clear understanding of how to buy Bitcoin, let’s explore how you can make money with the number-one cryptocurrency right now. We’ve identified some of the best strategies that you can start using today. 

Coinmarketcap BTC chart

Image source: coinmarketcap.com

Choose a trading strategy that suits your needs and is likely to help you hit your financial objectives. It’s a well-known fact that if you had invested $10,000 in Amazon stock (NASDAQ: AMZN) during its 1997 IPO, your investment would be worth more than $10 million nowadays. But what does this have to do with making money with Bitcoin? The key here is that you need to invest and take action while the iron is still hot. By investing early, you’ll have the edge over the masses and secure your position in the digital ecosystem of the future. 

While most market analysts would argue that there is no “ideal” trading strategy, there are several methods that are perfect for beginner investors. 

HODL  

When retail investors consider buying into Bitcoin, they picture the huge gains they could make when selling the crypto for USD as the market price goes through the roof. This buying and holding strategy has been coined as HODL. HODL acts as an acronym for ‘Hold On For Dear Life’ and was started as a trading strategy to stop impulsive selling in the already volatile crypto market. HODL is a term that usually crops up in cryptocurrency forums and social media platforms. It’s a popular strategy that many commodity investors use, and it works as a hedge against volatile market movements. 

HODL crypto trading strategy

Crypto enthusiasts that buy and hold for the long term label themselves as HODL’ers. However, Bitcoin is not yet a store of value, whereas other safe-haven assets like gold and the US dollar have a long history as tradable assets. 

Crypto Market Crash – What happened?

Furthermore, some people are shocked when the market price surpasses the $60,000 mark, and then suddenly plummets by over 50% overnight. This happened as recently as the 19th of May, also dubbed the crypto market crash day, when China hit back at cryptocurrencies and Tesla’s CEO and founder, Elon Musk, scrapped plans to accept Bitcoin as payments for his electric vehicles. Consequently, from highs of around $42,909.4 on May 18th, the market price dropped to $37,002.44 overnight. This represents a 24-hour decline of -13.76612%. 

BTC price chart by TradingView

Image source: TradingView.com

Then Bitcoin rode a sustained bearish wave before landing at $29,807.35 on Jul 20, 2021. It has since staged a strong rally and is currently hovering around the $50,000 mark. Therefore, for those who adopted the HODL strategy and did not sell their share of Bitcoin during the extreme market volatility, they’re seeing positive gains after a four-month rollercoaster of ups and downs. And with most market analysts forecasting Bitcoin to soon reach $100,000, buying and holding this popular digital money could prove to be a good long-term investment. 

eToro is the best copy trading broker to buy Bitcoin using a bank transfer, debit or credit card, and e-wallets like PayPal and Neteller. Click here to visit the eToro website and find out more.

DCA – Dollar Cost Averaging 

Dollar cost averaging is a trending and time-tested crypto trading strategy that works best as a long-term investment method. The DCA concept is straightforward. Rather than investing all your capital in a cryptocurrency at once, you divide your investing funds into smaller chunks, select a certain time and day of the week and only purchase at those times. 

What is Dollar Cost Averaging?

Let’s say you have $20,000 and have decided to invest in Bitcoin. Rather than using the entire amount of money at once, you opt for the DCA strategy and divide the $20,000 into 40 lots of $500. Then you pick a certain day of the week and time of day to purchase Bitcoin – for example Tuesday at 10:00 AM GMT. During the next 40 weeks you regularly buy $500 worth of BTC every Tuesday at the specified time until you have invested the full $20,000. 

So what effect does DCA have? 

Investing relatively smaller amounts of money at regular intervals in the long term helps to minimize the effect of market volatility. Market volatility occurs every time the price movements start rising and falling dramatically in a short amount of time. In other words, using the DCA strategy typically allows investors to purchase more BTC than if they had invested the entire amount in one go.   

What is a dcaBTC calculator?

dcaBTC is a dedicated DCA calculator that helps demonstrate the effectiveness of using dollar cost averaging to invest in Bitcoin over the long term. 

DCABTC

Image source: dcabtc.com

According to dcabtc.com, had you purchased $50 of Bitcoin every week for six years starting in 2016, a total investment of $15,700 would have turned into $524,390. 

Another great reason why the DCA strategy is great for beginner crypto traders is that the entire process can be fully automated using a range of trading bots. Using a trading bot means that you’ll just have to deposit funds and set the trading parameters. The trading bot then does all the work for you, hence why it’s called a passive trading method. 

If you decide to take a DIY approach to the DCA trading strategy you can optimize your results by following one expert tip: only invest in the underlying asset at the set times when the market price is in the red zone. When prices are in red it simply means that the asset is trading lower than it was yesterday. 

RSI divergence trading strategy

The RSI divergence trading strategy is more technical than the other strategies we’ve looked at so far, but it can be an effective tool for timing trend reversals before they occur. Trend reversals happen when market prices start shifting from an uptrend to a downtrend or vice versa. 

RSI is an acronym for ‘Relative Strength Index’ which is a technical indicator used in charts to measure price trends by calculating the mean gains and losses recorded over the last 14 days. The RSI line fluctuates between 0 and 100 and is typically used to identify when an asset is oversold or overbought. 

RSI indicator on eToro ProCharts

A typical threshold between 30 and 70 is used to highlight uptrends and downtrends. When the indicator line rises above 70 the asset is regarded as overbought and the price is expected to dip. Alternatively, when the RSI line drops below 30, the asset is deemed oversold which then prompts analysts to forecast an imminent uptrend. 

When is the best time to look for divergences? 

While the RSI divergence indicator can be used as a straightforward Bitcoin trading strategy, it isn’t always 100% accurate. After all, predicting the future with total accuracy is impossible. For example, there are occasions when the RSI indicator shows an asset is oversold, which is commonly a strong sell signal, and then the market price continues to rise further. 

The best time frames to pinpoint divergences are usually found within a four-hour or 24-hour window. These time frames usually reveal more noticeable movements in the mid to long-term trends. 

Take a passive approach to crypto investing with Copy Trading 

Some of the best trading platforms facilitate copy trading. This means that you can copy the trading strategies of other experienced, professional investors with the click of a button. eToro is the leading copy trading platform offering its native CopyTrader and CopyPortfolios. With these features you can invest in a professionally managed themed portfolio, or up to 100 individual seasoned traders. 

eToro CopyTrader

All you need to do to start copy trading is to create an account on eToro and search for the best social traders. When you’ve identified a trader you’d want to copy, allocate a percentage of your funds for copying him/her and let the copy trading begin. 

Let’s look at a few key factors you should consider before copy trading other eToro investors: the minimum investment when copy trading is $200 and you can copy up to 100 expert traders simultaneously. 

What are eToro’s CopyPortfolios?

A CopyPortfolio is a basket of financial assets combined in a single investment portfolio that follows a preset market strategy or focuses on a particular market segment. eToro’s financial experts create each CopyPortfolio, with the support of an AI algorithm programmed to maximize profits and minimize high risks. 

Should you buy Bitcoin?

On March 12th, 2020, Bitcoin price was $4,970.79. At the time of writing BTC’s market price is $46,999.68, which is an increase of 845.517% in the space of just over 17 months. 

With Bitcoin and other cryptocurrencies such as Ethereum and MATIC putting up unprecedented gains even through the coronavirus pandemic, many market analysts have weighed in on Bitcoin’s outlook. 

Should you buy Bitcoin?

Some analysts are asking the following questions: Does Bitcoin have the potential to become a practical currency strong enough to overthrow the US Dollar? Or is it just a speculative investment? Some sceptics are also raising concerns that Ethereum and other altcoins could eventually overtake Bitcoin.

Another argument against buying Bitcoin is that it is highly unlikely that central banks and governments will allow their fiat currencies to take second place to a decentralized digital asset. If central governments want to take drastic measures they could increase the taxes on cryptocurrency trading which could lead to the price of Bitcoin falling to all-time lows. 

How to make money with Bitcoin – Expert Verdict

Despite being a highly speculative and volatile investment, you can make money with Bitcoin. If you’re looking to invest in Bitcoin right now we recommend you open an account with eToro and use one of the trading strategies mentioned above. 

All in all, opening an account, depositing funds and buying Bitcoin with eToro takes a matter of minutes. Furthermore, you can manage your investment portfolio from the eToro mobile trading app, ensuring that you never miss out on unique trading opportunities. 

eToro – Overall Best Broker to Make Money with Bitcoin Right Now 

eToro logo

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

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About Dassos Troullides PRO INVESTOR

Dassos Troullides is an experienced finance writer who specializes in CFD, stock, and crypto trading. In particular, Dassos is skilled at breaking down complex financial topics to help new and advanced investors make better trading decisions. Dassos also writes for TradingPlatforms.com, BuyShares.co.uk, LearnBonds.com, InsideBitcoins.com and ForexCrunch.com