What is Cryptocurrency Investing in NZ?
Cryptocurrency investing is the act of buying crypto in NZ with the intention of achieving a profit. Popular cryptos Kiwis invest in include Bitcoin, Ethereum, Dogecoin and beyond.
It is estimated one in five kiwis plan to, or have already invested into cryptocurrency in NZ.
With Bitcoin becoming the best performing asset of the 2010‘s, it’s evident to us that this is the way of the future and that crypto’s meteoric gains are only just getting started. 🚀
If you are new to crypto, we recommend starting with our what is cryptocurrency guide before diving straight in. 👍
How to Invest in Cryptocurrency in NZ
You can then sell it in the future when it’s price is higher, thus securing gains on your original investment. Stonks. 📈
In this guide we’ll explore the range of investing strategies you have at your disposal; with our primary objective being to provide you with the key information to enhance your wealth and maximize your crypto gains.
Make sure to remember us when you’re crypto rich, and enjoy our guide below! 🤠
Setting Up a Crypto Wallet
Your cryptocurrency wallet is essentially your ‘bank account for crypto’; anyone in NZ can create and own a cryptocurrency wallet.
- Cryptocurrency NZ has a step-by-step NZ crypto wallets guide to teach you everything you need to know, including a guide showing you how to set one up.
- We recommend looking at using Exodus as your first wallet, feel free to visit our NZ Exodus wallet guide here.
How to Buy Crypto in NZ
Currently in New Zealand there are only two ways to purchase cryptocurrencies, through a centralised exchange, or through peer-to-peer transactions (P2P).
- To learn more about how to buy through a centralised exchange, visit our guide on how to buy cryptocurrency in New Zealand.
- For more information about P2P trading and the NZ Crypto Marketplace, visit our portal and guide here.
Crypto Investing Tips
- Have a plan – Whether it be if you’re investing long or short term, having a certain gain or loss you must achieve before you exit, or a list of items you plan to spend your millions on. With no plan of attack, it can be easy to get caught up in watching your investments fluctuate. If your emotions override your decision making, you are likely to lose money.
- Consider only investing in projects you actually believe have real value. This will introduce you to the spectrum of technical vs fundamental analysis and investing. Gold standards for these include BTC & ETH.
- Don’t sweat the small stuff – It’s virtually guaranteed you’ll make mistakes, so make sure you learn from them and use them to your future advantage. Everyone starts off as an absolute crypto rookie.
- Buy Low Sell High, not the other way around. Probably the most commonly occurring mistake in all time crypto history. Don’t be that guy. 🤡
- You cannot “buy the dips” if you have all your money to invest already invested.
- Bitcoin is the mother ship, but consider diversifying into alts. “You diversify to mitigate risk, and go all in to maximize gain”. Walk this fine line based on your unique preferences, circumstances and risk tolerance.
- Remember to zoom out before making big moves – i.e converting all your BTC to Doge for the shits. Will you be happy with this decision when BTC is priced at 1M per coin?
- Aspire to have Diamond Hands 💎👐 – This refers to someone with high risk tolerance to stomach through the high volatility of their assets. Don’t fold under pressure, buckle up.
- Store your crypto in your own wallet! See our NZ Cryptocurrency Wallets Guide here.
- Take it easy on Shitcoins, when in doubt follow our NZ Shitcoin Investing Guide here.
Popular Crypto Investing Strategies
Short Term vs Long Term Investing
Crypto investing can prove profitable in both the short and long term. it’s helpful to make a plan detailing your investment life cycle, exit strategies, personal risk tolerance, and diversification preferences. 👍
Having a plan before investing is valuable as it empowers you with an extra element of control over your cryptocurrency investments.
What your personal plan looks like will vary depending on your goals amongst other previously mentioned factors.
Short Term Investing
Short term investing in the cryptocurrency realm is the buying of crypto with the intention of cashing out within 3 months or less (this could be weeks, days, or even minutes), at a higher price than what you it purchased at.
There’s many short term investment strategies out there, all with key variations depending on time frames, technical analysis abilities, profit or loss acceptances, excel spreadsheet skills, among other factors; however the one factor they all have in common is the goal of achieving a profit over the short term.
Popular short term investing strategies include:
- Dollar Cost Averaging (DCA) strategy
- Golden cross / Death cross strategy
- RSI divergence Strategy
Long Term Investing
Long term holding is the most popular way to materialize crypto profits in in NZ, due to promising price forecasts in the long term, combined with the ease of holding crypto safely.
Here at Cryptocurrency NZ, long term holding is our primary investment strategy; accumulate and hold long term while crypto adoption takes off and the rest of the world realises the value in doing so.
Dollar Cost Averaging
Dollar cost averaging (DCA) is a crypto investment strategy where instead of investing 100% of your capital in one action off the bat, (a strategy which most beginners naturally practice), you split your investment into say 10 parts, and invest it over a specified period averaging out your buy in price. An example of DCA goes as follows;
You have $10,000 NZD to spend and you want to DCA over 10 weeks instead of going all in on one lump sum. You split your $10k into 10 partials of $1,000 NZD, and invest every Friday at the same time for 10 weeks in a row, thus averaging out your buy in price.
Dollar cost averaging is a conservative, long-term investing strategy which can be customized to your preferences. Factors in your control include the amount you’re investing or if you DCA on a daily, weekly, or monthly basis. 🕒
Although the video uses the example of stocks, the principles are the same and still apply to cryptocurrency investing.
Key benefits of the dollar cost averaging strategy:
- Blind automation gives you a more optimal purchase price compared to trying to time the market and buying with a lump sum.
- The strategy is stress and hassle free in comparison to actively trading and being stuck to your screen all day.
- It takes a lot of the emotion out of cryptocurrency investing, as you’re not waiting for dips or trying to time the market.
Staking and Yield Farming
Now that you’re a proud crypto owner, did you know you can use it to earn you even more?
I introduce you to staking & farming; an advanced feature of decentralized finance where you store your cryptocurrency in a wallet that earns you interest for just having it sit there.
Note: If you’re new to crypto, you don’t need to understand the following. It’s bonus info. 🙂
Deticated staking & farming guide coming soon to a dank website near you.
Staking is the act of putting your crypto into an external service to earn interest, such as the act of participating in the validation of transactions on a proof of stake blockchain (PoS).
Similar to that of a crypto miner’s role on a proof of work blockchain (PoW), stakers lock up their funds in a decentralized network and receive a reward in exchange for providing capital; therefore ensuring the integrity, security, and continuity of the network.
Staking is an advanced topic in the crypto realm, comparative to loaning out your money and charging interest. This is not an area we would recommend rookies dive into off the bat. ⚠️
On a practical level, staking means holding your coins in a suitable wallet, one that supports staking. We recommend using the Exodus Wallet, although there are many alternatives.
Yield farming is any efforts you make to put your crypto to work, in efforts to maximise the possible returns on those assets. This includes staking, liquidity farming and beyond. 👨🌾
Farming could entail moving coins around between different staking pools, or swapping cryptocurrencies to other ones that are currently generating more yield.
There are many aspects to farming. The decentralised finance (DeFi) side of crypto can be extremely confusing (even to seasoned crypto users), so don’t be discouraged if you find it difficult to comprehend. 👍
(Deticated guide coming soon)
Liquidity mining is a type of yield farming where you put assets into a liquidity pool and earn additional tokens, on top of the regularly expected yield.
When someone makes an exchange through UniSwap, they are charged a 0.3% fee for that service, most of this fee is then proportionally paid out to you, the liquidity provider, based on your contribution to the liquidity reserves.
In essence, liquidity miners receive an incentive in the form of more coins, for providing liquidity, in addition to the gains they might receive from the tokens increasing in value.
Leverage trading is an advanced investing strategy that involves using borrowed funds, to increase the potential returns of an investment. This strategy is high risk, and no place to start for newbies.
You’ve likely heard references of “100x leverage trading” if you’ve been in crypto for a while.
In this strategy you (the farmer) can deposit your coins as collateral to a lending protocol, and borrow other coins. You then can use those borrowed coins as further collateral, enabling you to borrow even more coins. By repeating this process, you can leverage your initial capital a few times over and generate even greater returns on your initial capital.
Yield Farming Risk
Yield farming can enable users to achieve extremely high profits, however the risk is also extremely high.
Some of the risks yield farmers face include impermanent loss, liquidation risk, smart contract risk, composability risk, and scam risk; just to name a few.
It is not unheard of for users participating in yield farming to end up worse off than if they had simply held tokens in their wallets.
We strongly recommend anyone looking to take part in yield farming to do lots of research before doing so.
We hope this guide has provided you with value in one way or another. 🙂
Cryptocurrency NZ intends to gradually upgrade this guide and include other information in aims to empower the average Kiwi to make better financial decisions, such as the one of deciding to invest in crypto in NZ.
If you have any suggestions or feedback for this guide or are keen to help out, we’re always looking for general legends to join our conquest. 🙂
Good luck on your cryptocurrency investing NZ journey. 🚀