Can I make money if I invest in Avalanche today? Will I lose money if I invest in Avalanche? These top the barrage of queries flooding our inboxes today.
The answer to both questions is yes. Your chances of making money if you invest in Avalanche today are quite high. In fact, the altcoin’s earliest investors who either HODL or sold as the Ethereum killer hit its current all-time high in November 2021 have already earned a fortune from the altcoin. In the same breath, we must acknowledge that there is an equal chance of losing a significant portion or all the money invested in Avalanche.
As is the case with virtually any other investment, making money with Avalanche revolves around maximizing income-generating practices while keeping all others that can lose you money under control.
But you have to know these practices before you can leverage or tame them.
In this article, we will be introducing you to the most common and most practical ways of making money with Avalanche. We will also detail just how much you can make by applying either method. We will also tell you of the most common cash traps that lost past and present Avalanche investors’ money and how you can avoid them.
Ways To Make Money With Avalanche (AVAX)
For starters, Avalanche is not intended to serve as an investment product. Neither are most other cryptocurrencies. However, in addition to serving as utility tokens for their respective blockchains and networks, altcoins like Avalanche have been massively taken up as speculative investment products. These speculators then make money by predicting and betting on the altcoin’s next price action.
Here are the three most common ways through which you can make money with AVAX:
Investing/Buy and Hold
Also known as HODLing in the crypto circles, investing involves buying AVAX tokens today and holding on to them for years. It is the most common and the most beginner-friendly method of making money with Avalanche - and virtually any other cryptocurrency. But before buying and holding AVAX, you need to vet the altcoin and its potential use case in the world and conclude its value will perpetually rise.
How much money can you make investing in Avalanche? Well, if you had invested $1000 during the AVAX ICO in July 2020 when it was selling for $0.5, you would have $170,000 today. Similarly, if you invested in AVAX in early 2021 when it was trading around $3, you would be $28,300 richer today. Moving forward, forecasters at Gov Capital are confident that AVAX’s value can grow by 2940% in the next 5 years. Assuming this prediction is accurate and you invest $1000 in Avalanche today, you will make $29,400 in the next 5 years.
Trading is an equally popular method of making money with Avalanche today. It is a form of short-term investing that involves buying crypto assets and holding on to them for a short period before eventually selling them. Here, you make money by taking advantage of the coin’s volatility. But unlike investing, trading isn’t as beginner-friendly. To make money trading Avalanche, you will need to be highly experienced, possess significant trading capital, and have access to advanced trading and market analysis tools.
How much money can you make trading Avalanche? We will start by assuming you are an experienced crypto trader with access to capital and the most advanced trading and research tools. If you are agile enough and have perfected the art of timing the best entry and exit points, you can comfortably earn 5% off your AVAX trades per week. If you are consistent with these earnings, you will have grown your initial trading capital by more than 250% by the end of the year.
Staking and lending
Staking involves locking your funds in the Avalanche network, which allows you to participate in securing the network through transaction verification. In return, you earn rewards in the form of more AVAX tokens. It, too, is one of the most beginner-friendly methods of making money with Avalanche.
You could also stake these Avalanche tokens on third-party DeFi protocols, where you earn interest for the staked coins. Ordinarily, these are lending dApps that advance AVAX token loans to Avalanche traders and investors securely while charging them an interest that they then share with you.
How much money can you make staking Avalanche? Well, if you are staking the altcoins on the Avalanche network, the rewards current stand at an average of 9.75% p.a. If you, on the other hand, are staking the coins on such third-party platforms like Binance, OKEx, and NEXO, the average annual rewards start from 11%.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Ways To Lose Money With Avalanche
Avalanche is a high-risk crypto asset. In the slightly over a year that it has been around, many have lost money investing and trading its tokens. The upside of this is you can minimize possible losses or eliminate them altogether when investing in AVAX. And it all starts with learning about the different ways through which others have lost money with AVAX in the past.
Here are the four most common ways through which you can lose money with Avalanche today:
We have already mentioned that you need experience and access to advanced trading/analysis tools and trading capital before you can start making money trading Avalanche. You are said to be trading recklessly if you start buying and selling AVAX tokens with total disregard of these basic requirements. This may involve trading without enough experience, overlooking the importance of advanced trade/analysis tools, or not using the risk management tools availed by your trading platform.
How can you avoid losing money with Avalanche when trading? It is simple, you start by accumulating as much crypto trading experience as possible. You can get this by practice-trading on the free demo accounts provided by different crypto platforms. While here, you get to create and perfect a winning strategy. In addition to experience, you can also avoid losing money when trading Avalanche by using the different risk management tools provided by your trading platform and engaging advanced tools in your analysis and research.
Hacking has become a menace in crypto circles. In 2021, for instance, Chainlysis reports that a record $14 Billion worth of crypto was lost to cybercriminals. Much of this was stolen from crypto trading platforms and DeFi protocols after hackers breached their weak and often unaudited codes. Some of the hacked exchanges and DeFi protocols include BitMart, Badger, the Poly network, Liquid exchange, and Cream Finance. Between March and May 2021, cybercriminals are also reported to have hacked into and stolen funds from 6000+ Coinbase personal wallets.
How can you avoid losing money with Avalanche to hackers? Start by acquiring a reliable hardware wallet that stores your crypto assets offline. Secondly, get your Avalanche tokens off the exchange and other non-custodial platforms and store them offline. Lastly, and as a preventative measure, vet crypto trading platforms and wallets thoroughly before trusting them with your personal information and AVAX tokens.
Don't Miss: Avalanche Price Predictions
According to the Chainalysis reports, crypto scams accounted for much of the losses suffered in 2021. It also notes that the two scams that stood out in the year were the FINIKO Ponzi scheme that ripped its victims close to $100 Million and the rug pull scam by the Thodex exchange where its founder vanished with more than $2 Billion. Other scams that can lose you the capital invested in Avalanche include imposter websites and apps as well as malicious phishing links spread through social media and email, and even fake social media promotions.
How can you avoid losing money with Avalanche through scams? First, you need to appreciate that most scams appeal to their victims through the promise of above-average ROI. Therefore, taming your greed and understanding that crypto investing is not a get-rich-quick scheme will go a long way in helping you avoid most of these scams. You also need to vet each DeFi protocol or crypto investing program thoroughly before trusting it with your data or AVAX tokens.
Losing password and recovery seed
A common but less talked about risk through which you lose money invested in Avalanche has to be the loss of forgotten passwords and recovery phrases for non-custodial wallets. If you forget the password and lose the recovery seed for your hardware wallet, you will lose the AVAX tokens held therein.
How can you avoid losing money with Avalanche to forgotten passwords and passphrases? This is simple, use memorable but unique passwords for your digital wallets. Additionally, maintain backups for both the password and the recovery phrases for the wallet and store them securely.
Bottom Line: How To Make Or Lose Money With Avalanche
By now, you understand that Avalanche is as profitable as it is risky. Some of the most common ways of making money with the asset include mastering the art of active trading and combining investing with staking. On the other hand, the most common ways of losing money invested in Avalanche have to be losses through reckless trading, hacking, crypto scams, and losses to forgotten passwords and recovery seeds.
Nevertheless, we have mentioned that most of these losses are avoidable. You just need to stop trading recklessly, invest in a reliable hardware wallet, and vet trading platforms, wallets, and DeFi protocols thoroughly before trusting them with your personal information and Avalanche tokens.