Cryptocurrencies: A Short Term or Long Term Investment?
When buying cryptocurrencies, every investor has one question in mind — whether to hold for the long term or sell in the short term. Well, either option is good depending on what you are looking to make from the crypto market. Here, in this article, we take a deep look at crypto trading vs holding trends and which option is suitable for which types of investors.
Trading crypto in the short team
When you buy a cryptocurrency with the purpose to sell it as soon as its price increases, it is called trading. This is where you buy and hold a coin only for as long as you need and sell it as soon as you can make a profit.
Short term investing/trading is suitable for investors who prefer to not hold a cryptocurrency and are ready to take risks in order to make quick profits. Their only purpose is to make quick profits in the short term as possible.
Here are a few things you should know about short-term crypto investing:
- Investing in high volatility coins will pay you more in the short term.
- This involves significant risk. There is a chance that you will lose your money.
- It is not for the faint-hearted.
- The ideal period for short term investing is 1 day to 1 month. Then, you sell even if you are at a loss.
Do your research when investing in a short term coin. You do not want to get stuck with the wrong coin. Always, try to buy at the lowest price possible. Invest only what you can safely afford to lose.
Investing crypto in the long term
The best way to invest in a crypto is to buy and hold it for the long term. Good, high potential cryptocurrencies excel when they are given enough time to grow. Take the example of the Libra Coin. It may not give outstanding returns in a day or month, but in about a year, it can produce much better returns than even many well-established coins. This is because the project comes with high potential and amazing use cases. This is the kind of coin that you can buy and hold for the long term.
Here are some of the benefits of long-term crypto investing:
- Outstanding return potential in the long-term
- Low risk and high returns
- Peace of mind as you know that you hold valuable coins
- The ideal holding period is 1 year to 3 years, depending on the coin
- Long-term investing can help you overcome the market ups and downs
- It gives you the benefit of compounding (returns on returns)
- It’s easy and saves time
- Dividend-paying coins will pay you recurring interest when you hold them for a specific period.
Long-term investing is suitable for investors who have a low-risk appetite or the ones who are looking to benefit from the long-term potential of a coin. When you invest for the long term, your money gets the time to grow. This is why many investment experts recommend long-term investing over short-term investing.
If you are new to crypto investing or confused between long-term vs short-term investing, make sure to do your research and analyse your risk profile before getting into it. Cryptocurrencies are good either way, depending on what your purpose of investing is.