My Crypto Passive Income Strategy Has Changed

Throughout the last two years, I was heavily involved in lending out Bitcoin and other crypto to earn a passive income. It was one of the key methods that quickly allowed me to increase my portfolio size. It was great money, but I always knew the risks that came along with it. Because of that, I was always closely watching the crypto market and these specific services for any signs of FUD or danger.

I used nearly all of the biggest services in the industry. Starting with BlockFi, then moving to Celsius. After that, I used Ledn, and then also Nexo. I also experiment with exchange lending on places like KuCoin and recently had been using FTX. Thankfully, I saw the signs of danger and was able to withdraw everything. I was very lucky. However, lending crypto to 3rd parties is no longer a viable option to earn a passive income. For one, most of the companies in this field have become insolvent. Secondly, the reward does not match the risk. I am not willing to lose hundreds of thousands of dollars for a 2–4% interest rate.

This brings me to a crossroads, my largest passive income avenue has officially come to an end. It was something that I depended on to build up my portfolio and was essential to reach the portfolio goals that I had set for myself. I have been doing quite a bit of self-reflection since this whole FTX fiasco took place. Thinking about how if dominoes had fallen just a little differently or quicker, I could have lost a significant portion of my crypto portfolio. Also thinking about the future. Since lending was such a huge cog in my crypto-earning wheel, how would I replace it and move forward?

Throughout my thinking process, I came to two conclusions.

Treasured Asset

The first is that not all assets need to be earning passive income yield on them. Bitcoin and crypto are some of the most volatile assets on Earth. Most people reading this article will probably agree with how they believe that they have a great chance to be the future of finance, the web and so much more. They very honestly could be life-changing assets.

While we all want to maximize our earnings and portfolios today. However, if Bitcoin would ever reach those large price predictions of several millions of dollars. Then the small interest we are earning today by lending just isn’t worth the risk. Simply put, our only focus should be buying as much as we possibly can, and doing everything possible to protect.

If you can do that, it will end up being one of the smartest things that you’ve ever done.

All is not lost, Other Opportunities

While earning passive income with my Bitcoin may have come to an end for the foreseeable future, all is not lost on the crypto passive income front. There are still other options available such as staking. Most of the large proof-of-stake chains now offer staking as a way to earn a passive income and help to keep the network secure. Projects such as Ethereum, Polkadot, Solana, and the list goes on.

Since I am already a big fan of Ethereum, I will most likely begin devoting more capital towards Ethereum to earn passively. The current interest rate for Ethereum is around 6–8%, which is a great opportunity. However, staking on Ethereum does come with risk. While it is safer than lending out your crypto to a service like Celsius or BlockFi. With that said, currently, once you stake your ETH there is no way to withdraw them. They are locked into the protocol until the next Ethereum update implements staking withdrawals. This could be a few months away, maybe years, and also could never happen. That is the risk you take when deciding to stake Ethereum.

I also want to stress that I will not buy crypto coins just for the sake of earning passive income. After all, one blockchain may offer 20% or higher interest for staking. But 20% doesn’t mean much if the project isn’t great and trends toward zero. 20% of zero, is zero. Instead, I will focus on projects that I believe are high quality. Projects that are the blue chips in the market and are striving to achieve something significant.

One thing is for certain, the cryptocurrency market will continue to involve. What is true today, may not be true tomorrow. While my goal today is to keep my BTC as safe as possible, interesting opportunities to earn with it could present themselves in the future. However, for the time being, I will be focusing on keeping my Bitcoin in self-custody. Also, I am taking advantage of these low prices and adding more to my Ethereum staking. While there is a risk, I feel confident that withdrawals will be implemented in the future. I was silly enough to begin staking ETH long before the merge even took place. With that said, people can become addicted to the idea of earning a yield with their crypto. Sometimes we don’t need to take the risk and are better off keeping those assets safe.

How about you? What are your thoughts on the current crypto passive income market?

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As always, thank you for reading!