Cryptocurrency, Investing Essentials

Crypto Investing vs Crypto Trading

Crypto Investing vs Crypto Trading

What is Crypto? What is its impact on the Financial World?

The rage surrounding the crypto space is undeniable. Marking its initial appearance around 2009, it has indeed had a significant impact on the financial market. Simply put, crypto is a decentralized network that steers away from the traditional form of investing i.e. the authoritative banking system. It involves blockchain technology to allow complete transparency. Crypto assets are typically traded between two parties without the involvement of a third party. Over the years, this digital currency has taken the world by storm to encourage many crypto enthusiasts. Without further ado, let’s learn more about crypto investing and its workings. 

What is Investing and How Does it Work? 

Investing has influenced human civilization for the most part. Generations have directed assets such as commodities, cash, stocks, bonds, and more towards investments. Over the years, crypto too has paved its way to the portfolio of ardent investors. Being the new asset class, the crypto market is fuelled with growth potential and experts do recommend this form of new-age investing. 

Developing a strong portfolio with a diversified mix of assets stands at the core of effective crypto investing. The portfolio can include different assets such as DeFi projects, Bitcoin, Metaverse coins, NFT tokens, and more. It essentially brings you to build a sophisticated portfolio. So how does crypto investing or crypto trading impact the asset profile? Read on to get an in-depth understanding. 

Additional Read: Which is the best crypto to invest in?

What is Crypto Trading and How Does it Work?

Crypto trading in general is not much different than crypto investing. While there are long-term strategies that an investor can experiment with, crypto trading inclines more towards the shorter or quicker route. One can pay close attention to the crypto market and invest in day trading for a quicker trading journey. However, crypto trading also introduced Dollar Cost Averaging. This method initially introduced a trading method that focuses on regular investing! Similar to how CoinDCX’s CIP works.

What is the Difference Between Crypto Investing vs Crypto Trading?

Crypto investing is the act of buying and holding crypto assets to derive higher appreciation in the future. The assets are held over longer tenures and the dip or rise in the current market value is usually not regarded. These investors are confident about their decision and are certain that the value of their assets will increase steadily over time. On the other hand, crypto trading involves a short-term strategy. It seeks refuge in the volatility of the crypto market to make the best of price fluctuations. Crypto trading, unlike crypto investing, demands more effort and stands to generate overnight profitability. 

Now that you know better about crypto investing and trading, you must understand that both techniques can be used from time to time. The strategies are intertwined but employ different routes to increase your investment value. The strategy that you pick completely depends upon your financial goals. 

Remember that while crypto investing and trading are intertwined, the two strategy terms cannot be used interchangeably. 

Differences Investing Trading
Investment period Long-Term Horizon Short-Term Horizon
Trade Frequency Rarely Frequently
Risk Profile Risk-Averse Risk-Taker
Type of Analysis Fundamental analysis Technical analysis

Additional Read: Best Penny Cryptos 2022

What are the Various Crypto Trading Strategies?

While the crypto space is achieving great feats due to the mass adoption of the asset class, there are also strategies that crypto experts go by for a better chance to trade safely while enjoying their trading journey!

  1. Day Trading: The most common crypto trading strategy; Day Trading involves taking positions and exiting on the same day. This mostly requires keeping constant tabs on the crypto market and enjoying instant profits from the assets.
  2. Range Trading: Market players often rely on the support and resistance levels given out by experienced analysts. ‘Resistance’ in crypto means the point up to which the price of a certain token may rise. In contrast, ‘Support’ is the opposite. It indicates a level below which a crypto price is not supposed to fall.
  3. High-Frequency Trading (HFT): This is an algorithmic trading strategy usually used by quant traders. This strategy is known for developing algorithms and trading bots that help traders quickly enter and exit a crypto asset.
  4. Dollar-Cost Averaging: As very commonly advised in any sort of investment strategy, it is better if investing has a set structure in place. Dollar-Cost Averaging basically means investing a small amount at regular intervals.
  5. Primary Research: One of the most valuable strategic options for trading is conducting primary research. This includes being updated with all the news flow regarding the crypto industry.

Additional Read: How to do crypto technical analysis

What are the Various Crypto Investing Strategies?

The volatile nature of cryptos makes it imperative to have a strong investing strategy. As an amateur or seasoned crypto investor, you must evaluate and choose an appropriate crypto strategy basis your financial goals. While crypto trading may work for your investment guru, it may not work for you owing to the inability to put as much effort into market tracking. Long-term investing on the other hand may be an issue owing to the fulfillment of short-term financial goals. Basis your investment goals, you may use the following expert-recommended strategies, 

  1. HODL – An acronym for ‘Hold on for Dear Life’, HODL was a strategy that came into existence when a crypto investor casually recommended holding an asset forever. The idea behind sticking with this strategy is that the crypto value will continue to rise irrespective of market movement. 
  2. Market-Cap Weighted Portfolio – Do not feel weighed down by how complex this strategy sounds. It simply involves rebalancing the holdings in the portfolio periodically. Through rebalancing, the assets with a higher value are sold, while the lower value assets are purchased at a lower cost. This strategy generates greater appreciation over time. 
  3. Crypto Investment Plan – You have certainly heard of systematic investment plans for mutual funds, but have you come across a crypto investment plan? The CIP strategy by CoinDCX lets you deposit a fixed amount towards your crypto portfolio through a convenient process that promotes discipline. You simply have to deposit an INR amount into your CoinDCX Wallet before choosing a sum that you would like to invest in Bitcoin. This strategy is simple and lets you make the best of the crypto market. 

Top Crypto Tokens by Market Capitalization

The term Market Capitalization refers to the metric used to keep track of the market value of a crypto coin. As of 30th  March 2022, the top crypto tokens to look out for include, 

Coin Name Market Capitalization Circulating Supply
Bitcoin (BTC) $897,861,538,846 18,998,025 BTC
Ethereum (ETH) $408,048,138,304 120,171,483 ETH
Tether (USDT) $81,705,458,151 81,671,735,986 USDT
BNB (BNB) $72,133,445,977 165,116,761 BNB
USD Coin (USDC) $51,939,358,120 51,929,732,819 USDC
Ripple (XRP) $41,516,840,103 48,121,609,012 XRP
Cardano (ADA) $40,213,367,343 33,726,595,771 ADA

Source: CoinMarketCap

Additional Read: Crypto Investing Strategy

Where to Start Investing or Trading in Crypto

The crypto market is volatile but also very exciting with the potential for big future gains. As you tread with the powered intention to drive potential returns with crypto, CoinDCX is your go-to app. It lets you invest or trade in crypto within a safe and simple environment. To begin, simply, 

  • Download the CoinDCX App and sign up for free
  • Deposit an INR amount into your CoinDCX Wallet
  • Trade or invest to purchase the crypto asset of your choice

Simple? Get started on your crypto journey with CoinDCX today and fortify your financial goals!


Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. In case you have any queries, write to [email protected].

The above information represent the independent views of Primestack Pte. Ltd, Neblio Technologies Pvt. Ltd, and/or their affiliate entities and are for informational & educational purposes only. The content, information or data provided above is not an offer, or solicitation of an offer, to invest in, or to buy or sell any interest or shares, virtual digital assets/ crypto products or securities, or to participate in any investment or trading strategy. Any statement or communication made above shall not be treated as a legal, financial, investment or tax advice by the reader. The calculations, data, risk-return formulations, performance or market capitalization indicators captured above are based on the independent data sourcing including collation of public information and/or analysis performed by analysts, advisors or employees of Primestack Pte. Ltd/ Neblio Technologies Pvt. Ltd and/or their affiliate companies and/or any third party. Past performance is not indicative of any future results. The reader(s) are hereby advised to consult their financial/ legal/ tax advisor(s) before making any investment.


 

Share this Story

Check Also

Cardano (ADA) vs Polkadot (DOT): Detailed Comparative Analysis of ADA vs DOT

Cardano and Polkadot, here are some significant differences that separate the two blockchains; Infrastructure, scalability and sustainability, & more. Read to know more about ADA vs DOT

GET ALL LATEST UPDATES ON YOUR EMAIL





    Categories

    Invest in Bitcoin, Ethereum, & other 200+ crypto assets.
    Download the app now, register & start with as low as Rs.100
    ios download link
    android download link
    qr code for download