Bitcasino World Cup Raffle Campaign - Win the VIP World Football Championship Experience

Day Trading Cryptocurrencies vs Long Term Investing – Main differences

The trading of cryptocurrencies has started to pick up again after this market’s disappointing performance in 2018. But would it really be correct to say that the market performance was disappointing? Yes, it was for those who bought Bitcoin at $19,000 in January 2018 and had to scramble out of the market at $3,200 in December of the same year. But for those who saw the coming storm and decided to short Bitcoin at $17,000 and exit at $3,000, it was an exciting time.

So it really depends on what side of the coin you were on. This basically showcases the difference between day trading cryptocurrencies and investing in cryptos for the long term.

Day Trading

Day trading involves trades done in both directions (long or short) and has a lifespan that does not exceed one trading day. The aim is to buy in a rising market or sell in a falling market.

Long Term Investing

The long-term investors are the “HODLers”: those who buy crypto and have to hold on for dear life while waiting for their chosen crypto asset to take off all the way to the moon. Some long-term investors believed some of the very optimistic projections in 2017 had Bitcoin hitting $50,000 a coin and even $100,000 a coin. Many who fell into the trap of imbibing the gospel of ever-rising Bitcoin prices did not realize that prices never move in a straight line but rise and ebb like the ocean waves. It is one thing to declare that Bitcoin would rise from $8,000 to $50,000. But what the gurus never mentioned was what was to happen in between these two price levels.

This is a question that long-term investors have to be concerned with. There is something known as time value for money. Simply put, would the returns on an invested sum of say $10,000 exceed returns on shorter-term investments made with the same amount of money and in the same time frame?

Crypto Day Trading vs. Long Term Investing: Which Should You Be Doing?

Comparing cryptocurrency day trading with long-term investment should not prove that one investment style is better than the other. Both can work well if the right motives, goals, and methodologies suited for each investment vehicle are adopted. Trying to aim for the moon using day trading will lead the trader to take excessive risks, ending badly. In the same vein, using a speculative mindset in long-term investing doesn’t usually end well. Remember the thousands of people (if not millions) who bought Bitcoin at such high prices believing that the price would hit $50,000? They did what they did with a speculative mindset, and they got burned…very badly.

How to Invest in Cryptos for the Long Term

Long-term crypto investment is a question of getting in at the right time, into the right crypto, and at the best possible price. Long term investing in cryptocurrencies works best under the following circumstances:

  1. If the trader wants to invest in cryptos but does not tolerate the cryptocurrency market’s hefty intraday volatility.
  2. Suppose the investment will be made in a cryptocurrency with real-life use cases, with the populace’s potential for mass adoption in the future. There are already several such cryptos in the list of the top 30 most capitalized cryptos, and many are not even up to 20 cents a coin in price!
  3. The investment should be made with the lowest risk possible. This will involve aiming to either invest in an ICO featuring a project with a real product or service already in the market or buying into an existing crypto project where prices are at their baseline levels. Many good cryptos already satisfy this condition and may not be as cheap as they currently are in the next two years. The best part is that you do not need to catch the exact market bottom.

If you wish to invest in cryptocurrencies for the long term, this may actually be the best time to do so: now that we are actually at the end of a bearish period. 2018 saw a steep crash in cryptocurrency prices, but more importantly, the crash also served to sieve out the good cryptos from the junk ones. We can expect good cryptos to perform creditably in the next few years. We can draw an analogy from the US stock market in 2008 (after the crash due to the global financial crisis). Many of the stocks that crashed during that time have all bounced back very strongly in the space of 10 years. An example is JP Morgan. The chart for this stock is shown below. It paints an accurate picture of how a stock with good intrinsic value but with a low price induced by a systemic dysfunction could rise from the ashes.

There were many other stocks like JP Morgan, that experienced such price recovery. Bitcoin, Ethereum, and Litecoin have already seen some of that recovery in the last month.

Day Trading Cryptocurrencies

This is the speculative arena of cryptocurrency investing. A day trader is looking to profit from short bursts of trending or non-trending price activity, either to the downside or upside. Unlike the long term “buy and hold” strategy, the day trading strategy can go long or go short. Short-term news is a critical factor for doing this profitably, and there is also a place for technical analysis, which determines entries and exits. Entries and exits have to be as precise as possible. The day trader only needs to trade crypto, which commands sufficient intraday volatility without necessarily having value to offer in real-life use cases.

Due to the high margin requirements for day trading of cryptos (50% margin or leverage of 1:2), the risk is high and underfunded accounts will not survive this environment.

Bitcoin live price
price change

Day trading of cryptos carries more risk but could also carry a lot of profit potential. It may also deliver better time value for money, as investment capital can be moved around quite a bit and not tied down in long-term plays.

Stay up to date with our latest articles

More posts

5 Best Crypto Coins for Online Casinos

Playing with crypto at an online casino is an increasingly popular pastime for many cryptocurrency holders or casual players. These web-based platforms function similarly to traditional web-based casinos. However, they allow you to deposit, gain, and withdraw crypto at numerous games, including Blackjack, Roulette, Poker, slots, etc. Some players have problems choosing the best cryptocurrency for an online crypto casino games. As you may know, the crypto market is prone to intense volatility and unexpected turns of events. This means…

What is Web 5? Jack Dorsey’s Alternative to Web 3

On June 10th, Jack Dorsey announced a new project being built by Block’s bitcoin-focused business unit, TBD. That project is known as “Web 5” – a so-called “extra decentralized web” that “puts you in control of your data and identity.” What could the Block Head have in mind with this new creation? Also, what happened to Web 3? A Decentralized Data Storage Solution When Jack Dorsey announced Web 5 over Twitter, he said it would be Block’s “most important contribution…

Top 5 Crypto Portfolio Trackers To Use in 2022

An active cryptocurrency trader cannot do without the support of a crypto portfolio tracker. Not if they want to be successful at trading or investing. A crypto portfolio tracker is an app enabling you to monitor the amount and value of your crypto assets across all wallets, exchanges, platforms, and blockchain networks in real-time. It allows you to track historic transactions, live crypto prices, gains, and losses. Above all, it prevents you from mismanaging your portfolio while getting the best…

Five Gold-Backed Crypto to Consider in the Current Inflationary Economy

Many traders are optimistic about the blockchain's development potential and recognize that volatility is inevitable with new technology. Some are asking how to invest in digital assets while maintaining some degree of stability. A relevant part of investors frequently mentions stablecoins as a valid investment alternative. Anchoring the value of crypto to a fiat currency can undoubtedly sound appealing. However, fiat money depreciates as inflation increases, making stablecoins less valuable. In this particular context, the crypto market is offering a…

What Are the Differences Between Stop-Loss Orders and Portfolio Stop Loss?

In a volatile market like crypto, investors always look for ways to protect their assets. In this market, just like any other, nobody wants to lose money. Consequently, it's essential to introduce a price floor for the value of your assets. These situations can benefit from stop-loss orders or portfolio stop losses. However, some people have trouble figuring out where they should set their prices. If you set them up too far away, you could lose a lot of money…

Can Hackers Steal Your NFTs? Understanding How Criminals Operate

In a world where NFTs are becoming more and more valuable, NFT theft is a real threat. Criminals and technology are evolving, and users need to move with care in this growing market. Our guide will provide more details on this dangerous trend and share guidelines on reducing the risk of NFT theft. Stealing NFTs – Myth or Reality? When it comes to staling NFTs, exploiting human mistakes is the most typical strategy for a hacker. Without the hacker's access…

Ethereum Name Service (ENS) – A Simple Guide

People can choose domain names that are easy to remember for their wallet addresses, thanks to the Ethereum Name Service (ENS). The secret to this technology is using a computer to understand this domain. When it comes to Web3 communication, ENS has the potential to make all the difference. In this guide, we'll go through some possible reasons for this. Ethereum Name Service (ENS) – A Definition To find out what a specific Ethereum address is, people can use the…

A Beginner’s Guide to the Impermanent Loss Phenomenon

Decentralized finance, or DeFi, presents several hazards to investors. Impermanent loss is a significant concern when dealing with this growing market. This guide will explore the meaning of impermanent loss concerning the liquidity pool. Moreover, the guide will also discuss how to calculate the difference and reduce the risk of this phenomenon. Grasping the Notion of Impermanent Loss There is a high probability of impermanent loss in every given situation. A net difference in the value of two tokens in…

NFT Minting – What Do We Know about Its Environmental Costs?

A multi-billion dollar sector was born out of the non-fungible token (NFT) market in 2021. Environmentalists are increasingly alarmed about the ecological impact of this growing sector.  Is NFT minting a cause for concern for our planet's environment? What options do we have in resolving this problem? These crucial questions will be the core of today’s guide. Minting New NFTs Minting, the act of adding a specific item to the blockchain, is similar to producing a physical coin. It has…

Fair Launch vs. Pre-Sale – What Is the Difference?

Every time we see a new crypto project entering the market, we notice different ways to launch a token. One of the teams' most common choices is leaving (or not) access to the token to early investors. In this context, we have all heard about pre-sales and fair launches. These two strategies represent different approaches to the crypto market. Our guide will clarify the main features of the two funding rounds for our readers. Launching a Crypto Project – Preliminary…