The cryptocurrency space has more opportunities than you can count for people looking for a good investment and a way to grow their wealth. There are two main approaches when it comes to looking at making money off cryptocurrency, investing and trading. Both methods involve purchasing digital assets, the main difference is what you do with them once you have them.
In todays blog we are going to look at the argument of investing vs trading cryptocurrency and try and figure out which one would be the best for you.
Crypto Analyst offers insights for both investors and traders. Join up today and plan your cryptocurrency future with the experts!
Is investing in cryptocurrency for me?
Let me make one thing clear from the start, if you are choosing to invest in cryptocurrency rather than trade, you are going to be looking at a long-term strategy. You will be looking to purchase various digital assets and hold them for an extended period of time. Most investors believe in the overall growth potential of cryptocurrency and aim to make a profit on their investment at its value increases over time.
What are the advantages of investing in cryptocurrency?
– Less time commitment: Investing means the user doesn’t need to be constantly in touch with the prices and the markets for the smallest waves and changes.
– Long-term gains: Plenty of cryptocurrencies have experienced massive growth over longer periods of time. The two most obvious examples of this would be Bitcoin and Ethereum.
– Less user stress: Since investors do not have to be concerned with the day-to-day changes in pricing of a cryptocurrency, they tend to experience less emotional “ups and downs” compared to traders.
– Passive income: Some long-term investors may choose to stake their assets, allowing them to earn a passive income while holding onto their assets.
What are the risks of investing in cryptocurrency?
– Market Volatility: Crypto prices are well known for being highly volatile and unpredictable. Long-term investors in the crypto space need to be prepared for price swings of their assets.
– Regulation: Governments around the world are trying to understand and find a way to work with cryptocurrency. While there has been plenty of positive news around this, this might not always be the case and assets being held could be affected in the future.
– Security: Holding any amount of assets for a long period of time presents a security risk. Investors need to be aware of the risk of scams and hackers.
– Temptation: Some investors may be tempted to sell off or swap their current assets depending on the newest and hottest trends around the crypto world.
Is trading cryptocurrency for me?
If investing in cryptocurrency isn’t for you, then maybe you would be more interested in trading. Trading cryptocurrency involves frequent buying and selling of various digital assets to maximise the chances of making a profit on short-term price movements of whatever asset you are holding. Traders have to rely on technical analysis, market rends and good timing to make profitable trades.
What are the advantages of trading cryptocurrency?
– High potential profits: Traders who are skilled in the art of trading are able to make significant profits in a short period, potentially trading the same assets multiple times a day to make a profit.
– Market rise and falls: Traders can profit from both an increase in prices and a fall in prices, allowing them to carry on trading, regardless of the current market or economic circumstances.
– Fast reactions: Unlike investors, traders are able to act faster on breaking news. This proves to be greatly valuable if a trader hears news of a hack or attack on a particular cryptocurrency and is able to sell their position before the price really starts to drop.
What are the risks of trading cryptocurrency?
– High Volatility: Cryptocurrency prices can change drastically, within a few moments. While investors don’t have to worry about this as much, traders can lose a lot of money very quickly if they are not paying attention to the markets.
– Emotional Trades: Trading in cryptocurrency involves have a strategy and sticking to it. When you are constantly reviewing current prices, including the drops in a currency it is easy to make a trade based on emotion, or reacting to a potential loss.
– Time-consuming: To become a successful cryptocurrency trader, you are required to spend a lot of time checking the markets for prices and the latest trends.
Crypto Analyst‘s Final Thoughts.
Investing and trading both have their own set of ups and downs. Which one to pick depends on how much time you have to offer, how patient you are and whether you believe in the long-term potential of cryptocurrency.
Whether you are choosing to invest or trade in cryptocurrency, always remember to do your own research, stick to your decided strategy and never invest more than you can afford to lose. The key to becoming successful in the crypto space is continued learning and adaptability. Without that, you are going to make the same mistakes over and over again.