Stacking Sats – What Is It, and Why Is It Gaining Traction in the Crypto Space?

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Blockchain
Stacking Sats – What Is It, and Why Is It Gaining Traction in the Crypto Space?

Stacking Sats is purchasing small amounts of Bitcoin over a long period. This option of investing in Bitcoin is paying off and has been in practice since its early days. Sats is the short form of Satoshis, the smallest divisible unit for Bitcoin. The coin is divisible by up to eight decimal places.

The term “Stacking Sats” is not new to real Bitcoin enthusiasts. It has become common in the crypto space as the Bitcoin community uses it to invest in Bitcoin in bits. This method of investing is special since the coin has already hit very high prices, which makes investing in it daunting at times.

With the coin trading at over $40K and on a dip, it seems impossible for an average earner to build a decent investment. However, if you invest a steady amount of money at a regular rate, let’s say every Sunday for over a year, the investments end up swelling as BTC gains value while the amount invested stays low.

This method of investing in Bitcoin is one of the best; however, it works perfectly for investors with a long-term investment mindset. It also does not require a lot of capital to invest. Below is more information on how stacking sats work.

How Does Stacking Sats Work?

As explained earlier, Stacking Sats requires the accumulation of Bitcoins in a steady way but small quantities. Here is an excerpt from WashingtonIndependent on an example of an outcome of Stacking Sats

“If you bought $5 worth of bitcoin a year ago, on March 29, 2020, when bitcoin was trading at $6,245 and continued to buy $5 worth of bitcoin every Monday for the next year, your holdings would be 0.02030253 BTC, worth around $1,184, for a total investment of $260.”

What Are the Benefits of Stacking Sats?

Stacking Sats works similarly to dollar-cost averaging (DCA). DCA is a method of investing in stocks and cryptos where users invest small amounts of cash in their desired assets distributed equally over long periods. This investment method helps in hedging against the effects of market variations.

Here are the benefits of stacking sats:

  • Allows for accumulation of crypto holdings profitably and affordably since users are needed only to invest small amounts.
  • It works well with applications that give cashback in Bitcoin. Applications like Curve.com give its users cashback in BTC, which could help stack sats since the cashback are usually small amounts of money.
  • It helps to level small market variations, thus safeguarding investors against emotional trading.
  • It trains investors to build their portfolios progressively.

Tips on How to Stack Sats and Invest in Bitcoin

The crypto market is full of ups and downs. Therefore, it is best to figure out when to best time the markets. An investor is bound to make losses if they invest blindly in the crypto space. Therefore it is best to figure out when to enter, exit, and hold on market positions to make profits in the crypto space.

Here are some tips on how to time the markets and invest in Bitcoin, including stacking sats

Choose an investment strategy

When it comes to investing in the crypto space, the lack of proper investment strategies may lead to losses or limited profits. There are multiple ways of investing in the crypto space, and it is best to choose the one that fits the best in terms of flexibility and Return On Investment (ROI). 

HODL for the long term

Holding is one of the best strategies for investing in the crypto space. The Bitcoin community encourages people to buy and hold BTC for as long as possible. Through holding, the circulating supply of a coin reduces, making its demand go up, which causes a rise in its price. 

It works well with other strategies since you can’t buy cryptos and expect to always make huge profits in days or hours unless you are trading in derivatives markets. The Bitcoin community is urging people to learn how to hodl because many investors believe that the coin will gain value immensely in the future.

Day trading

The other method of investing in the crypto space is Day trading. Then that means making money off the market volatility. This can be done using advanced market analytics tools like Trading View charts.

Dollar-Cost Averaging (DCA)

 DCA is one of the best investment methods for the long term. Users invest small amounts of money in the desired asset on a long-term basis. It can be quite profitable since it levels out the small market variations. It is also the same concept that Stacking Sats work with. It allows an investor to accumulate wealth in bits and over a long time.

Use hybrid investment methods.

An investor can also apply a hybrid investment method to invest in Bitcoin and other assets. For instance, a user could use the lump-sum investment method and DCA. A lump-sum investment method is when a user invests a large amount of cash in an asset at once. 

After investing a large sum of cash in the asset, users could gradually use DCA to increase their investments. This kind of hybrid investment method could also be used alongside stacking sats.

Timing law enforcement auctions

At times, authorities confiscate crypto assets belonging to wrongdoers like mob members or drug cartels. They sell them as the FBI did with the Silk Road bitcoins. They sell the coins at an auction where the prices are mostly lower than what is available in the market. An investor could time such an auction and purchase the assets at a lower rate to maximize profit margins.

Follow whale trades

Cryptocurrency whales are traders who buy or sell cryptos in huge amounts. These investors are known to influence the markets largely since their trades affect the circulating supply of the coins, influencing the supply and demand dynamics of the coins in question.

For instance, if huge traders buy a certain coin. The coins will have a smaller supply since the whales buy them in huge numbers. An investor could time the behavior of these traders and enter the markets with them to enjoy the hiked-up prices of their favorite coins. 

Also, the whales may start dumping given coins which call for selling the coins since they may cause a price collapse of the coin in question. The investor could repurchase the coin after its price collapses to increase the profit margin. 

Ways to Stack Sats During Dips and Bear Markets

The crypto market is full of bears and dips. Although the market is still bullish, it happens that some bears and dips take control for a few weeks or months. Due to that reason, investors ought to find ways to invest in the coins safely.

Here is how an investor can stack sats during bear markets and dips:

Set up automated Bitcoin investing schedules with exchanges and investment platforms.

Most exchanges allow for the investment in different coins in an automated way. They only need users to connect their bank cards or store fiat on-chain and then set a regular investment plan for a coin. This could work in investing in Bitcoin through Stacking Sats. For instance, an investor could accept the investment of $10 in BTC every two weeks. 

Such an arrangement could work well since it allows the investor to accumulate the coin in small proportions that are easily affordable. It also will teach the investor how to deal with long-term investments in assets.

Use applications that offer Cashback rewards in sats

Some shopping and payment applications offer cashback in Bitcoin. Such applications include:

  • Curve.com’s Curve Card
  •  Lolli
  • CoinMama
  • Binance
  • BlockFi Bitcoin Rewards Credit Card
  • Foldapp
  • Pei
  • Coinseed
  • Donut

Set up a lightning node

You could set up a lightning node and charge users for connecting to your channels. However, the amount got from the nodes is smaller than what cashback applications or DCA offer. However, the confidence from knowing that you are helping in improving the scalability of the largest cryptocurrency could be interesting enough to start a lightning node.

Platforms That Allow Stacking of Sats

Stacking sats seems a good strategy to invest in Bitcoin, but what platforms could be best to use. Here is a close look into some platforms that allow for the stacking of sats:

  • Curve.com’s Curve Card

Curve.com is a UK-based payments company that consolidates different bank cards, shopping cards, and loyalty cards. A user only has to access their official application, fill in the registration requirements then link their cards upon completion of the registration card. Then the user will be free to use only the Curve Card for their spending needs. 

This platform gives cashback in Bitcoin, which could be a good way to stack sats. It gives up to 3% cashback, which is much higher than other banking cards.

  •  Lolli

Lolli is a shopping application that allows users to items online from their favorite stores. It pays cashback in Bitcoin. Stacking sats can be a good option because it gives small amounts of BTC every time a purchase is completed.

  • CoinMama

CoinMama is one of the most trusted places where one can purchase cryptos like Bitcoin. Investors can purchase their desired coins through different options, including bank cards. It also gives cashback in Bitcoin for some trades.

  • Binance

Binance is the world’s best crypto exchange in daily transaction volume. It handles trades worth over $16B each day, making it the busiest crypto platform. It offers cashback in Bitcoin for users who choose to trade cryptos using their Binance card. The rates of cash backs given by the app depend on the card level of the user.

  • BlockFi Bitcoin Rewards Credit Card

BlockFi allows users to enjoy cash backs of about 0.25% in all eligible trades, 1.5% in crypto for each purchase, and 2% cashback after spending $50K annually. Although the cashback is not big, it is a good way to stack sats for crypto enthusiasts.

  • Foldapp

FoldApp allows users to trade gift cards using their Fold Card, credit card, or lightning wallet. That instantly gives a user a cashback of up to 20% in Bitcoin. That makes it one of the best platforms to use in stacking sats.

  • Coinseed

Coinseed has the Crypto Back protocol that enables users to enjoy cashback in BTC. The platform allows users to link their cards and start shopping on major merchants like eBay, Walmart, and Amazon. Therefore, it is one of an investor’s best platforms to stack sats.

Final Thoughts

Stacking Sats is one of the best ways to invest in Bitcoin. Investors could borrow its investment concept to apply to other assets in the crypto space and the stock markets. It allows investors to progressively build their holdings of a given coin using small amounts of cash. It is good to train investors on investing in the crypto space with a long-term mindset.

This method of investing has been gaining popularity in the crypto space over the past few years. It has also influenced multiple e-commerce and fintech services providers to offer cashback in BTC for the Bitcoin community and other crypto enthusiasts to be attracted to them. Some of the popular platforms that offer cashback in BTC include Binance, Lolli, and Curve.com. 

This method of investing in Bitcoin can also be applied to other assets in the stock and crypto markets. For instance, a user could choose to invest $5 every Friday in ADA; by the end of the year, the amount accrued from the investment could be much higher than the invested amount. Although this is not stacking sats, it is stacking in ADA.

Although it is advisable to explore different investing methods and growing crypto holdings, it is best to be cautious. Some of the assets in the crypto space are highly speculative, and investing in them could result in huge losses. Therefore learn to DYOR to survive in the crypto and stock markets.