Don’t let the steep prices of Bitcoin and Ether scare you away from investing in cryptocurrency. Here are six alternative ways that you can start your cryptocurrency journey with S$1,000.
Retail investors today have every reason to rejoice. For one, the cost of investing is a mere fraction of what platforms would charge in the past. Secondly, rapid technological advancements have made investing much more streamlined and intuitive.
Finally, there’s the sheer number of assets that you can put your money in right now.
Take cryptocurrency for example. These digital coins may have had a shaky start, but the asset class now commands a market capitalisation of over S$3.1 trillion. It’s well-documented how many millionaires have been minted from the meteoric rise of Bitcoin and Ethereum.
Fortunately, that doesn’t mean that you’re late to the game. Far from it, actually.
The cryptocurrency space is a lot more diverse now, with thousands of coins being traded and utilised for specific purposes. Investing in cryptocurrency is more than just building up a large warchest and blowing it all on one Bitcoin or Ether.
If you have S$1,000 on hand, check out these six ways to get your cryptocurrency journey going.
Table of contents
1. Invest in an altcoin that’s on the rise
As mentioned above, there are thousands of cryptocurrencies being traded right now alongside Bitcoin and Ether. There are even cryptocurrencies pegged against fiat monies or commodities, dubbed stablecoins.
These cryptocurrencies aren’t exactly viable as an investment, but they are key to facilitating trades in the market.
Altcoin, a portmanteau of the words ‘alternative’ and ‘coin’, is one more option to add to the list. These are alternatives to Bitcoin and Ether, hence the name.
As you can see in the image above, prices of newer altcoins can move by hundreds or thousands of percentage points overnight.
To give these figures some perspective, it means that your S$1,000 investment can rack up a profit ranging between S$2,000 and S$5,000 in just 24 hours. It’s equivalent to the amount that some people in Singapore earn in an entire month.
On the flip side, altcoin prices can dip by as much as 100% over the same period of time. This can be attributed to altcoins simply being volatile assets or worse, the target of pump-and-dump schemes.
The latter is exactly why you should perform due diligence before investing in an altcoin, especially one that’s still an unknown quantity.
Fortunately, there are plenty of reliable altcoins out there with room to grow. Often, these have garnered a sizable market capitalisation, can be traded on most major cryptocurrency exchanges, and have a reliable development team behind them.
There are other factors too, but the aforementioned three are crucial to deciding which altcoin to invest S$1,000 in.
The following are serious contenders that have been actively traded for several years now:
|Cryptocurrency||Market Capitalisation (October 2021)||Trading Volume Over 24 Hours (October 2021)|
|Cardano (ADA)||S$96.1 billion||S$2.84 billion|
|XRP||S$73.6 billion||S$6.66 billion|
|Solana (SOL)||S$61.3 billion||S$2.21 billion|
|Polkadot (DOT)||S$46.7 billion||S$2.16 billion|
2. Play Axie Infinity
Move over, professional gamers. It’s now possible for regular folks to earn money while playing video games too. Axie Infinity is a blockchain video game that can be accessed on iOS, Android, Windows, or macOS devices.
If you’ve ever played Pokemon on Nintendo’s consoles before, you’ll take to the Sky Mavis-developed game like a fish to water.
Players are able to earn money in Axie Infinity through two methods:
1. Earning an in-game currency called Smooth Love Potion (SLP). Coincidentally, it’s a cryptocurrency that’s traded on major exchanges like Binance and FTX. There are a variety of ways to earn SLPs, such as completing daily quests and battling other players. Competent players with a good team of Axies can earn an average of 300 SLPs (~S$30) a day.
2. Breeding and selling Axies. These axolotl-esque creatures are bred using SLPs and can be sold for Ether on the Axie Infinity marketplace. This is the stage that most players would like to reach because one Axie can net you anywhere between US$100 and US$2,000. Selling one strong Axie might earn you enough to cover your monthly expenses.
Unfortunately, there’s a reason why this method has been listed as an investment. You’ll need to purchase a team of three Axies from the marketplace before you can start being the very best like no one ever was.
New Axies of all colours and shapes are listed every few seconds, so read up on the game’s mechanics first before committing to your purchase.
Thereafter, the onus is on you to make your S$1,000 investment worthwhile by playing the game and thoroughly understanding its nuances. Think of it as a more enjoyable way of doing your due diligence.
It might feel like a part-time job at first, but a lot less time is needed to eke out SLPs once you’ve perfected your squad and turn your focus to breeding Axies instead.
3. Invest in a blockchain ETF
If you’re more comfortable investing in traditional asset classes, blockchain ETFs might be up your alley. If you’re wondering what blockchain is, it’s essentially the technology that powers cryptocurrency.
In fact, it’s being adopted by an increasing number of organisations around the world, including Singapore Airlines, financial services firm Visa, and even diamond corporation De Beers.
For the uninitiated, there’s no need to select individual stocks, bonds, or commodities when you invest in an ETF. Purchase units of your preferred ETF on your online brokerage and you’re automatically investing in a basket of assets.
This diversifies your portfolio and lowers the risk that you take on.
And despite the grandiose names of several blockchain ETFs you see in the table above, they’re relatively safe investments.
That’s because each one invests in shares of publicly-listed companies that have either embraced blockchain technology or are operating in the cryptocurrency industry.
For example, the Bitwise Crypto Industry Innovators ETF’s holdings include cryptocurrency exchange Coinbase and enterprise analytics firm MicroStrategy Incorporated. To highlight how diversified ETFs are, this particular one contains stocks from more than 20 companies.
It’s understandable if you’re hesitant to invest in cryptocurrency directly. After all, prices are still highly volatile due to how young this asset class is.
If you have a lower risk appetite, blockchain ETFs are your best bet, especially if your one-time deposit of S$1,000 can turn into a recurring investment instead.
4. Stake, yield farm, or liquidity mine
It was certainly interesting to see the interest rates of high-yield savings accounts getting sliced to ribbons across 2020 and the first quarter of 2021. Fortunately, the world of cryptocurrency is a lot more positive, with platforms dangling interest rates multifold of what a bank is able to offer.
How you generate interest on your cryptocurrency holdings would be through staking, yield farming, or liquidity mining.
If you’re wondering what these mean, here’s a quick summary:
|Staking||Yield Farming||Liquidity Mining|
|Akin to a fixed deposit account. You’ll need to lock up your cryptocurrency holdings for a period of time.||Akin to P2P lending. You loan out your cryptocurrency holdings in order to earn interest.||A subset of yield farming, but you also receive tokens that are native to the platform you choose.|
Of the three methods mentioned, staking would be the best if you’re risk-averse or biding your time until a trading opportunity presents itself.
Reputable cryptocurrency exchanges like Binance, FTX, and Huobi Global allow you to stake a variety of coins on their platform, including stalwarts such as Bitcoin and Ether.
All you need to do would be to convert your S$1,000 investment capital to your preferred cryptocurrency and stake it right after.
Cryptocurrency staking is a lot more flexible than a traditional fixed deposit because the tenures offered are often a week or two, especially if the annual percentage yield (APY) is high. Even longer tenures are pegged at two to three months, unlike a bank’s fixed deposit account.
Thereafter, you can make a withdrawal and pounce on a good trade right away.
Yield farming and liquidity mining are more complex because they require you to loan out your holdings. Should the platform turn out to be a scam, you’re out of luck. Ditto for liquidity mining, where you run the risk of the platform’s token getting devalued after you receive it.
The loss might not be permanent, but it’s almost impossible to predict what will happen in the cryptocurrency space.
5. Invest in a cryptocurrency company’s stocks
If you’re a seasoned investor with a higher risk appetite, you’ll appreciate this option. Unlike blockchain ETFs, individual shares allow for much greater upside, especially when it comes to growth stocks.
Furthermore, you won’t have to spend hours learning about the intricacies of a whole new asset class when you choose to invest in a cryptocurrency company’s stocks instead.
Although companies that dabble heavily in cryptocurrency are far and few between right now, that number is set to grow as the industry and asset itself matures. The following are three cryptocurrency companies that you can consider investing S$1,000 in:
1. Coinbase Global (Nasdaq: COIN)
Coinbase has the distinction of being the first publicly-listed cryptocurrency exchange, crossing the finish line ahead of its competitors Binance, KuCoin, and more.
The company was founded in 2012 and its users are now able to take on cryptocurrency loans and utilise an upcoming cryptocurrency debit card, apart from just trading the digital asset.
Ever since it was publicly listed on the Nasdaq exchange in April 2021, Coinbase’s stock prices have not been encouraging. In October 2021, it’s trading at approximately 27% lower than its opening share price of US$381.
However, its financials appear encouraging, with total revenue multiplying by more than nine times since 2019. Likewise for figures concerning gross profit.
The company’s operating cash flow has improved immensely as well, with US$9.7 billion being reported across a trailing twelve month period (October 2020 to October 2021). Its operating cash flow was a negative US$8.05 million just two years earlier.
Although there are still regulatory concerns with regards to anything and everything cryptocurrency, you can expect Coinbase’s share prices to bounce back.
2. PayPal (Nasdaq: PYPL)
Yes, PayPal is a payment processing firm rather than a cryptocurrency company. However, it was the first organisation to secure a conditional cryptocurrency license from the New York State Department of Financial Services back in October 2020.
It then allowed PayPal users in the USA to purchase, hold, and sell Bitcoin, Ether, Litecoin, and Bitcoin Cash.
At a more practical level, users can make online purchases using their cryptocurrency holdings. These are automatically converted to the relevant fiat at no cost, so you don’t need to worry about performing any calculations manually.
Buying, selling, holding, and utilising your cryptocurrency holdings are definitely simple functions, but PayPal’s license and wide acceptance across the USA are strong indicators of its credibility. Don’t be surprised if it started rolling these features out worldwide in the near future.
Fundamentally, PayPal appears to be a strong contender to invest in as well. Firstly, it’s a component of the NASDAQ-100 and S&P 500 indexes. Furthermore, it has been experiencing consistent growth, with total revenue increasing by US$2-3 billion annually.
Finally, its total assets in 2020 clocked in at US$70.3 billion, a whopping US$30 billion increase since 2017.
3. CME Group (Nasdaq: CME)
American financial derivatives marketplace CME Group needs no introduction if you’re an advanced trader. It’s the company behind the COMEX, CME, CBOT, and NYMEX exchanges.
According to independent brand valuation and strategy consultancy Brand Finance, CME Group was the world’s most valuable exchange in 2019.
Therefore, allowing traders to access cryptocurrency products through its CME Direct trading platform was only a matter of time. Individuals can now trade derivatives like Bitcoin futures and options, micro Bitcoin futures and Ether futures.
Fortunately, there’s no need for you to jump into the deep end if you simply wish to tap on this market leader’s growth.
You can invest in the S&P 500 component’s shares using your preferred online brokerage and it pays dividends out on a quarterly basis to boot. Its financials are encouraging, with consistent year-on-year growth when it comes to its total revenue and gross profit.
Its total assets have increased tremendously too, thanks to the introduction of cryptocurrency derivatives.
6. Participate in an NFT project
Non-fungible tokens (NFTs) are the new hotness in the digital asset space, granting artists a new avenue to make a living. These digital certificates of authenticity have allowed digital art projects to thrive and it’s not unheard of for pieces to garner eye-watering resale prices within a matter of hours.
However, participating in an NFT project from the get-go may allow you to make the most out of your S$1,000 investment. That’s because you’re given the chance to participate in events like giveaways and presales before the NFT collection’s actual launch.
Every NFT project out there needs to gain traction via marketing, so why not hop on the bandwagon from the very beginning? This is especially relevant if you like the artist behind the project and/or if the artwork is appealing to you.
On the other hand, be wary of scams when you’re looking for NFT projects to participate in. In October 2021, an NFT project dubbed Evolved Apes turned out to be a heist. The team behind it ran off with close to 800 Ether, which is approximately S$3.8 million, and left investors high and dry.
That’s why due diligence is paramount, no matter what you’re investing in.
Alternatively, your S$1,000 could be all the investment capital you need if you’re a digital artist who’s looking to get an NFT project going. Unlike buying NFTs, selling them is a lot more affordable, although it’s going to take a fair bit of legwork to market your pieces.
As cryptocurrency continues to mature, the number of ways for you to invest in it will increase accordingly. The aforementioned methods have shown that there’s more to this asset class than just dumping thousands of dollars into Bitcoin or Ether.
Heck, you don’t even have to own any cryptocurrency in order to tap into its potential.
Although S$1,000 might not appear to be a substantial investment, especially when compared to the prices of leading cryptocurrencies, it’s still more than sufficient to get going.
What you do need a lot of would be patience and the drive to thoroughly perform research for your chosen investment, which is exactly what’s needed for any other asset out there.
As the saying goes: The best time to start investing is right now.
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By Ebel Tang
A geek culture enthusiast who’s also a little too invested in the wide world of whisky and watches. And no, he was not named after the Swiss timepiece brand.