Wondering if it is possible to invest in the crypto market with only $200? Is it worth investing in cryptocurrency with just $200? Or if investing $200 in crypto could make you rich? Keep reading to find out.
At the time of writing, the crypto market has a total market cap of $2.5 trillion ($1.3 trillion if you exclude BTC) according to CoinMarketCap. 12 years ago in 2009, that market didn’t exist. If you brought Bitcoin back then, you’d be pretty well off, to say the least. So, is it now too late to buy into the crypto market? No, not at all. We’re still in the early stages of adoption and $200 could still reap huge rewards in the years and decades to come.
Not all of us can invest heavily in the crypto market. We simply just don’t have the cash to do it. However, one of the best things about investing in crypto is that there are no barriers to enter the market. Typically, with stocks, for example, you need a certain amount of money to invest.
To get to the point, yes, $200 is enough to invest in the crypto market, but you need to make sure you invest that $200 wisely and you must be patient for it to generate meaningful returns.
In this quick guide, we’ll show you how to become an effective crypto investor with as little as $200.
How To Invest $200 In Crypto Market?
First things first, you don’t just have to focus on cheap cryptos — for example, Dogecoin (DOGE) or Shiba Inu (SHIB) — oftentimes these cryptos are some of the most volatile. Large-cap cryptocurrencies (cryptocurrencies with market caps above $10 billion), though usually more expensive, can offer more stability but this does mean the amount you can buy will be smaller.
You also don’t need to invest the entire $200 in one cryptocurrency. That could be seen as a mistake. A more effective investment would be to diversify that $200 by splitting it up into smaller chunks e.g., into four chunks of $50, and investing in four different cryptos. Diversifying that amount will be safer because if one of the assets you invest in declines in value, you will not lose your entire investment.
Next, you need to have goals. How much are you expecting to get back from each investment? According to SoFi Learn, the historical average stock market return is approximately 7% per year, which is seen as a good achievement for most investors.
And lastly, think about reinvestment. That $200 will (hopefully) earn you some good income and could be worth significantly more. You can compound your earnings by reinvesting what you have earned into different cryptocurrencies or enlarging positions.
But to be fully diversified, investing in cryptocurrency alone will not cut it. Stocks, forex, and other tradable assets should also be explored. Remember that at times the crypto market can tumble and if you’re only invested in crypto, all of your assets could be making losses.
You also have to think about protecting your position. Of the cryptos you invested in, some might not perform as well as you’d hoped. They may even be losing you money. And so, every so often, you need to look hard at what you have invested in and ask yourself if it is still worth it — if not, you need to cut your losses, get out of that position, and move on.
So, all in all, while investing $200 in crypto may sound like not much, there is still plenty to consider in the long run to make it effective.
How To Decide What Crypto To Invest In?
Today, there are approximately 12,000 cryptocurrencies. Deciding what crypto to invest in can be tricky and requires a good deal of research. Investing based on the hype alone would be rather foolish — you must know how cryptocurrencies work on a basic level.
If you intend to diversify your portfolio as discussed above, look into the different crypto types. Here are four key types of cryptocurrencies that it might be worth diversifying into.
Smart contract cryptos:
These cryptocurrencies’ primary feature is smart contracts and dApps.
Simpler cryptocurrencies technologically similar to Bitcoin for settling transactions.
Focusing on privacy, they don’t share the details of transactions.
Cryptos that provide a decentralised financial service, like an exchange or crypto lending.
Additionally, there are stablecoins, such as Tether (USDT), which are cryptocurrencies that are typically tied to the value of a fiat currency, like the US dollar, and memecoins, like Dogecoin and Shiba Inu mentioned above.
And there are of course cryptocurrencies that don’t fit into these categories or overlap two or more categories.
Does Investing $200 In Bitcoin Pay Off?
Yes, investing $200 in Bitcoin can pay off big time if you can hold on and not get carried away by all the hype. On the whole, even Bitcoin can be quite volatile, its price is climbing in the long term. While its position sank after reaching its ATH of $64,000 in May 2021, it didn’t return to the lows it started the year at.
Bitcoin is seen as a safer investment than most other cryptocurrencies. This is because of how popular it is. It is the most well-known cryptocurrency with the most investors and most institutional interest. According to Exploding Topics, as of 2021, approximately 106 million people own Bitcoin (of which 46 million are in the USA, 22% of adults).
To give you an example of why this is important, most recently news broke that the US Securities and Exchange Commission (SEC) will likely approve Bitcoin ETFs in the USA, which will open the floodgates to thousands of investors and likely bolster the price of BTC.
Other cryptos just don’t have that level of interest even if they have a higher ROI (return on investment). Sure, there is still news every so often that “BTC lost $5,000 in an hour”, etc., but these stories matter little if you are a long-term investor.
Typically, investors dedicate a significant portion of their crypto portfolio to BTC, sometimes more than half. For example, billionaire Mark Cuban’s crypto portfolio is supposedly 60% BTC, 30% ETH, and a further 10% in other altcoins.
And so, if you only have $200 to invest in cryptocurrency, owning some Bitcoin could be a good idea. But perhaps it would be wiser not to invest the entire $200 in BTC.
How Much Do You Have To Invest In Crypto To Make Money?
This depends on how much money you have to invest and how long you are willing to wait to see returns. For a smaller amount of money, such as $200, you will need to wait longer to see a major profit. So, this is not a question of how much money you need to invest but how much time do you have?
Some investments make money faster than others. This can be for a variety of reasons. Looking at the charts, if you bought $200 worth of Bitcoin when it was at $29,000 in July 2021, by mid-October 2021, you would have doubled your investment. Pretty good for three months!
Wise Bitcoin investors haven’t touched their BTC in years. According to a 2020 article by NewsBTC, at the time the supply of BTC that had not moved in more than a year hit an all-time high. Bitcoin.com elaborates further, explaining that the amount of BTC that has not moved equates to 60% of the supply, or 11 million BTC (more than half of the supply that will ever exist).
But returning to the idea that a specific amount of money is required: no one knows the perfect amount of money to invest. It is a highly debatable topic.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Alternative Ways Of Investing In Cryptocurrency
You don’t just have to go to a crypto exchange and buy the underlying asset to invest in cryptocurrencies. As the crypto market continues to grow, clever folks on Wall Street and other parts of the world look for new ways to bring investors into cryptocurrency who might be too cautious of the risks.
How To Invest In Crypto ICOs?
Investing in ICOs (initial coin offerings) can be one of the most profitable ways to invest in cryptocurrency while still maintaining ownership of the underlying asset.
In an ICO, new cryptos can be sold at ultra-low prices, and, if the crypto is popular on launch, can skyrocket in price when it’s released to the market. At which point, many early investors sell off their crypto investments to profit from the quick price rise.
Investing in ICOs requires a lot of research. Only then can you tell apart the serious ICOs from the mundane and — most especially — the scams. Not only do you need some technical knowledge, but you also need to be able to gauge the hype around the crypto.
A key area you must look into is how the new crypto will be distributed among users. Typically, this should be explained. Not all tokens will be for public sale — some will also be reserved for developers and other investments that the project will make at a later stage.
ICO investors will want to pay close attention to the percentages of the distribution. Ideally, a cryptocurrency should be well-distributed among users and not centralised among the creators.
BitTorrent token allocation. Source: icodrops.com
The above is an example of how BitTorrent (BTT) tokens were allocated. 6% were to be dedicated to public sale and 2% to private sale. However, much more significantly, 20% was planned to go to the TRON Foundation, 19.9% for the BitTorrent ecosystem, and a further 19% was to go to the team.
This means that a significant amount of BTT would be kept out of the public’s hands, which can be a major turnoff for some crypto investors as it could imply that it is too centralised. This could be a major concern if any of these groups decided to sell off a large chunk of their tokens.
In most cases, $200 is certainly enough to invest in an ICO. Reflecting on the Filecoin (FIL) ICO, 1 FIL token equalled $5, according to ICO Drops. Today, 1 FIL equals $63 per coin. This means that for every FIL coin you bought, you would have made $58.
Lastly, some cryptocurrencies, before they start their ICO, perform ‘airdrops’. As Investopedia explains, cryptocurrency airdrops are essentially a marketing stunt where tokens are sent to people for free who have active wallets (or sometimes for a service, like tweeting about the new token).
While it sounds harmless to receive crypto for free, it has been pointed out by experts that airdrops can be used in pump and dump schemes, which could be a total waste of investors’ time.
How To Invest In A Crypto Fund?
Unfortunately, investing in a crypto fund can be very difficult to get into. If you only have $200 to invest in crypto, most likely you will not be able to qualify for a crypto fund. For a start, many of the top crypto funds require investors to have a certain amount of funds available.
Grayscale is one of the largest cryptocurrency investment platforms and offers a range of funds high profile investors can take part in. One of their largest funds is the Grayscale Bitcoin Trust (GBTC) but it is not always open to investors and, more importantly, requires a minimum investment of $50,000, a 2% yearly fee and is only available to ‘accredited investors’, Investopedia explains.
Despite the above, there are, of course, many benefits to investing in a Bitcoin fund if you can afford it. For example, investing in Grayscale’s Bitcoin Trust will make doing your taxes easier and shield you from the volatility of the price of BTC.
How To Invest In Crypto Tech Royalties
‘Crypto tech royalties’ is a relatively new term originating from ‘tech royalties’ which is where you pay a tech company for their service. Teeka Tiwari explains tech royalties in the following way:
“Take a computer manufacturer, for example. It pays Microsoft a royalty for the right to use its Windows operating system on the computers it makes”.
When it comes to cryptocurrency, Tiwari believes that tech royalties are one of the best ways to make money. In short, he and Greg Wilson explain that by taking part in securing the network of a blockchain, typically through staking, you can passively earn income — what they label ‘crypto tech royalties’. To do this, you would need to invest in a proof-of-stake cryptocurrency.
How To Invest In Crypto With Just $200 With eToro
You can easily invest in crypto with $200 with eToro, which offers crypto trading on over 100 crypto to crypto and crypto to fiat pairs. Just follow these three steps.
Step 1. Head over to eToro’s website, click ‘Join Now’ in the top right corner, and fill out the registration form. Note that you will need to upload proof of ID and address — this is to prevent fraud and comply with anti-money laundering laws.
Step 2. Next, make your first-time deposit which will either be a minimum of $50 or $200 based on your location. Do note that in several countries the minimum deposit is significantly higher, so please check before you sign up!
Step 3. Once your account has been set up, on eToro’s platform go to ‘Trade Markets’ → ‘Crypto’ → choose the crypto you want to trade and choose your terms.
And that’s it!
eToro – The Best Cryptocurrency Platform
eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
If you remember anything from How To Invest In Crypto With Just $200? Make it these key points.
- It is possible to invest $200 in cryptocurrency. There are no financial barriers to enter the crypto market.
- Investing $200 in Bitcoin can still be profitable. Though it will likely be wiser to diversify that $200 and invest in multiple coins to lower your risk exposure.
- No one knows the exact amount you need to invest in crypto to make money. It’s more a question of how long are you willing to wait for your investment to become profitable?
- Investing in tech royalties and ICOs are two alternative ways to invest in crypto. Unfortunately, investing in crypto funds, like those offered by Grayscale, is out of reach for most retail investors.
How To Invest In Crypto With Just $200 — FAQs
Still have questions on how to invest in crypto with just $200? Perhaps these frequently asked questions will help.
Can Crypto Make You Rich?
Investing in crypto can make you rich if you make wise investments and can patiently outwait the negative hype that emerges whenever there is a price crash. Many crypto investors are in it for the long term and foresee widespread adoption of cryptocurrencies in the future.
They don’t care about stories where Bitcoin (or any other crypto for example) crashes and loses $1,000 in five minutes, because in the long term, many of the top cryptos are appreciating and these stories are short-lived.
That said, risk management is also vital, and you should learn to adjust your portfolio over time to reduce losses from poorly performing cryptos and take profits every so often.
Can 1 Bitcoin Make You A Millionaire?
Owning 1 Bitcoin could make you a millionaire in the future. Some people believe that we could see 1 BTC reach $1 million in the foreseeable future. Anthony Pompliano believes that we could see BTC reach $500,000 by the end of the decade and then go on to $1 million (but hasn’t specified when).
According to Investopedia, Bitcoin first started trading in 2010 at $0.0008 and reached $0.08 by July. Before this, in 2009, BTC was given away completely for free (through ‘Bitcoin faucets’). If you were lucky enough to know about BTC back then and got hold of some, you would have made some serious profits by 2021.
You also have to bear in mind that the supply of Bitcoin is gradually decreasing making the asset scarcer as demand increases. This means that owning a small amount of BTC is becoming more valuable.
But not everyone agrees. Some believe that you will not need to own a whole Bitcoin to become a millionaire in the future. According to a formula developed by Kyle Kemper, for example, owning 0.06624605 BTC alone will be enough to be considered effectively a millionaire in the future.
0.06624605 BTC at the time of writing this is $4,138.99.
How Much Should I Invest In Cryptocurrency As A Beginner?
You should not invest too much in cryptocurrency as a beginner. Only a reasonable amount that they can afford to invest. Most beginners start with BTC and as they get comfortable with it, move on to altcoins.
As a beginner, whatever you decide to invest, avoid the following pitfalls:
- Don’t use leverage! Not only is leverage incredibly risky and should be avoided by beginners, but the crypto market is far too volatile for leverage.
- Don’t trade with the same account that you invest with! Keep your investment portfolio away from any trading you wish to do.
- Don’t quit your day job. Beginners should have some income coming in to cover their daily expenses. Beginners shouldn’t be relying on their earnings from investing to live.