What is the difference between trading and investing in Bitcoin?
Last Updated on April 6, 2021
Bitcoin is the first, largest, and most famous digital currency in the world. It launched in 2009 and its value reached its peak at nearly $20,000 in 2017. Then, it again surprised the world with its record highs in 2020 and the beginning of 2021 and recorded an all-time high near $62,000.
Confuse trading and investing in Bitcoin
Here is a summary of the main differences between investing in cryptocurrencies and trading:
Trading (short term)
Cryptocurrency trading is the process of buying and selling over a short period of time. Here are some key points about trading cryptocurrencies:
Cryptocurrency trading involves short-term profits, based on rigorous technical analysis and short-term trends.
It requires gaining the necessary experience to trade effectively with more knowledge, research, and learning – as trading is more than just buying the cryptocurrency and keeping it for longer periods of time.
You will be unsuccessful for a long period of time, and you will need to learn how to deal with that emotionally. Limiting your losses is an important part of becoming a successful trader, for example:
The current price in the trade doesn’t matter as much as the investment, since traders focus on the gains in short-term trades, not the general valuation of the cryptocurrency and the concern about whether it might be over or undervalued.
Long-term investment in cryptocurrency requires buying bitcoin or another digital currency and then storing it in a secure digital storage wallet (like putting money in your bank securely). Here are some key points about investing in cryptocurrencies:
Long-term investment in cryptocurrencies involves making a buying decision based on long-term fundamentals and trends. The goal is to eventually sell your cryptocurrency at a price much higher than the price you bought it at.
While price volatility can and will happen, the real long-term investor will skip the downturns as well as the upturns, aiming to make the biggest long-term profit.
You will need to do research to find the best storage wallet. The cold storage wallet keeps your cryptocurrency completely offline, which makes it a safer storage method than a hot wallet that keeps your digital currency online. Digital wallets have become easy-to-access items and you can buy it safely online at non exorbitant prices.
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