The enthusiasm surrounding the cryptocurrency market is evident. It first appeared in 2009 and had a huge impact on the financial sector. Simply said, cryptocurrency is a decentralized network that deviates from traditional forms of investment, such as the authoritative banking system. It makes use of blockchain technology to ensure complete transparency.
Typically, crypto assets are traded between two people without the intervention of a third party. This digital currency has grabbed the world by storm throughout the years, inspiring many crypto enthusiasts.
So, without further ado, let us understand more about cryptocurrency investing and trading and how it works.
What is Crypto investing and how does it work?
When considering investing in cryptocurrencies, you may consider purchasing and holding one or more crypto coins. Buying bitcoin directly is arguably the most common way to add crypto exposure to your portfolio.
There are a few ways for Crypto investing:
- Buy cryptocurrency directly: You have the option of purchasing and storing one or more cryptocurrencies directly.
- Invest in bitcoin companies: You can invest in businesses that have a partial or whole focus on cryptocurrency.
- Invest in cryptocurrency-focused funds: If you don’t want to pick and choose amongst individual cryptocurrency companies, you may instead invest in a cryptocurrency-focused fund.
- Become a crypto miner or validator: Mining cryptocurrency or acting as a validator in a crypto network is maybe the most straightforward way to invest in it.
Let’s take a look at some crypto investing strategies:
- Hold on for Dear Life: It is a strategy that arose when a crypto investor jokingly suggested holding an asset forever. The assumption behind keeping with this method is that the value of cryptocurrency will continue to climb regardless of market volatility.
- Market-Cap Weighted Portfolio: Don’t be put off by how complicated this method appears. It merely entails rebalancing the portfolio’s assets regularly. During rebalancing, higher-value assets are sold, while lower-value assets are purchased at a lower cost. Over time, this method builds more appreciation.
What is Crypto trading and how does it work?
In general, cryptocurrency trading is similar to cryptocurrency investing. While there are long-term techniques that an investor might try, crypto trading tends to favor the shorter or faster route. For a faster trading journey, one might pay close attention to the crypto market and invest in day trading.
Let’s take a look at some crypto trading strategies:
- Day Trading: The most prevalent crypto trading method, Day Trading entails entering and exiting positions on the same day. It entails keeping a close eye on the crypto market and reaping instant earnings from the assets.
- Range Trading: Market participants frequently rely on the support and resistance levels provided by experts.
- High-Frequency Trading (HFT): This is an algorithmic trading approach that quant traders typically employ. This method is well-known for creating algorithms and trading bots to assist traders in fast entering and exiting a crypto asset.
- Scalping: It is one of the more brisk trading tactics. Scalpers trade little price fluctuations for small profits, but they execute so many trades that the modest profits (ideally) pile up over time.
Difference between Crypto investing and Crypto Trading
- Investment Period: Investors are typically long-term thinkers who are unconcerned about short-term price swings. In other words, an investor will bet on a coin’s long-term potential while investing after it, to sell it (and profit) in a few years. Traders, on the other hand, are looking in the short term with an emphasis on price movements. They are interested in the hourly and daily price swings of the cryptocurrency market, buying and selling coins to make short-term profits.
- Risk Profile: Cryptocurrency investors are more ‘risk-averse’ than traders because they are more at ease leaving their investments alone and are unconcerned with daily price volatility. Over time, an asset’s volatility smoothes out, making it less risky. Traders, on the other hand, are ‘risk-takers,’ because regular trading entails a significantly higher level of risk. This is due to the extraordinary volatility of short-term cryptocurrency pricing, which can provide traders with opportunities to make large sums of money but can also be fatal if they are on the wrong side of the bet.
- Technical analysis: Fundamentals are an important component in determining a coin’s feasibility and potential since investors make long-term bets on its worth. It should be noted that fundamental analysis for cryptocurrencies is drastically different from stock analysis because no cryptocurrency firm has publicly available financial accounts. Technical analysis is the major weapon employed by traders since they are more concerned with anticipating price direction and market positioning. Technical analysis is the prediction of future prices based on the analysis of historical price data utilising various price indicators and charting tools.
- Trade frequency: This relates to the frequency with which deals are executed. The frequency of trades is closely related to the investment period; the longer the time horizon for an investment, the less frequency of trades there will be. Traders, on the other hand, trade more frequently. Traders would conduct numerous trades because they are constantly looking for ways to profit from market opportunities. Though trading has a larger chance of producing more income, it is a highly risky enterprise that necessitates active and regular monitoring of market circumstances.
Carret: Best Places to Trade and Invest in Crypto Assets
The cryptocurrency market is turbulent, but it is also thrilling, with the potential for large future gains. As you go with the powered intention of generating possible gains with cryptocurrency. Carret should be your default app. It enables you to invest or trade in cryptocurrency within a secure crypto wallet and a safe and simple environment.
Carret’s secure trading platform provides world-class security measures to safeguard your investments and privacy. We have one of the lowest fees of any crypto platform in the country. Whether you are a seasoned coiner or a crypto-newbie, our user-friendly crypto investing and trading android app and ios app are clutter-free and simple to use.
Begin your crypto journey with Carret today and strengthen your financial goals with up to 17% returns!