Wondering how to capitalize on the crypto bull market’s gains?
To achieve that, you can choose between two main methods: to invest in digital assets for the long run or day trade crypto to generate short-term profits.
In this article, we will explain the main differences between the two approaches while introducing the pros and cons of each.
What Are the Pros and Cons of Long-Term Crypto Investments?
One of the easiest ways to gain exposure to the crypto market is by investing in digital assets for the long term.
With this strategy, you buy and hold cryptocurrencies for at least several months (or even multiple years) and later sell them for a profit after their prices have increased to a satisfactory level.
While the investment approach doesn’t take short-term price movements into account, it requires investors to leverage fundamental analysis, in which they carefully research digital assets to select the most promising ones.
Since crypto investing is a long-term strategy, it comes with only a few monthly or yearly trades, which can save you time as well as provide tax benefits in some jurisdictions. For the same reason, less paperwork is required to report investment-related income.
Also, it’s easier for beginners to get started as they don’t have to learn how to use various technical analysis tools and implement them into their crypto trading strategies.
Moreover, investment strategies like dollar-cost averaging (DCA) – in which one invests a fixed amount of funds in an asset at regular intervals (e.g., $100 on the first day of each month throughout a year) – can remove the extra legwork needed for attempting to time the market.
On the flip side, investing for the long-term in crypto is not suitable for making regular or a full-time income.
While crypto investment is usually considered safer than day trading, you face higher risks with this strategy if you fail to research projects properly (or if you don’t do any research).
Furthermore, while you can make a decent income in the long run with this strategy, crypto investors usually miss out on multiple short-term profit-making opportunities.
What Are the Pros and Cons of Day Trading Crypto?
Unlike investing, day trading crypto involves entering and exiting positions more frequently with the goal to generate profits on short-term price movements.
For that reason, this approach requires increased time to monitor markets, especially if you are using a high-frequency trading strategy like scalping.
On the other hand, unlike with investing, you can leverage day trading to capitalize on short-term opportunities to make profits.
And, if you are a successful trader, you can even use this strategy to generate regular, potentially full-time, revenue.
Instead of fundamental analysis, traders incorporate multiple technical analysis tools and indicators into their crypto trading strategies to study trends as well as identify and interpret signals.
For that reason, mastering day trading is often a more challenging task than learning how to invest in cryptocurrency in the long run.
Unlike investors who can just wait out short periods of volatility, traders are more affected by emotions like fear, greed, and hope, which often influence their decisions negatively.
Day trading usually involves more risks than long-term holding, so it’s crucial for traders to learn how to manage and minimize them to maintain profitable trades.
That said, with effective risk management and the ability to keep your emotions under control, day trading crypto can become a lucrative strategy to capitalize on the rising digital asset market.
On top of that, day traders can amplify their gains from successful trades by trading Bitcoin with leverage.
Invest and Trade Crypto on Digitex
Both investing and day trading are viable approaches to gain exposure to the fast-growing digital asset market.
While investment focuses on generating long-term revenue, day trading aims to capture profits from numerous short-term trades.
In addition to its Bitcoin futures exchange, the next-generation crypto trading platform Digitex has recently opened access for its users to spot markets as well.
As a result, you can now leverage both investing and day trading strategies to generate potential profits on cryptocurrencies on Digitex.
Oh, and we almost forgot to mention: since Digitex completely eliminates trading fees, you can keep 100% of your profits on the platform.
Sounds fantastic, right?