Cryptocurrency: Should You Invest Long-Term or Short-Term?

Every investment always comes with risks. Cryptocurrency is considered one of the riskiest investments given its high volatility and price instability. Despite these characteristics, crypto investment is still one of the sought after investments in this generation.

One of the major concerns of crypto investors is whether to engage themselves in long-term or long term investment. However, not all investors are able to make a smart decision when it comes to choosing the appropriate trading and investment style. In addition, with the variety of digital currencies ranging from Bitcoin to other alternative coins, making decisions can be quite difficult.

Also, it is recommended to select an exchange or trading platform that is reliable and trustworthy. Bitcoin Up platform is one of the suggested platforms which enables traders to find the best broker in their region.

This article aims to explain further the differences between short-term and long-term investments, which may help investors like you decide which one is appropriate for you. Experts suggest that before jumping into your final decision, appropriate research is a must.

Short-Term vs Long Term Investment

As a potential trader, in order for you to decide which one best suits your goals, you must first know the similarities and differences between short-term and long-term investments. Having knowledge of the two, you will be able to create your own styles and strategies related to crypto trading.

According to market experts, those who aim for diversification and growth in their portfolio should go for the long-term approach. On the other hand, those who look forward to gaining immediate profit should adopt a short-term approach.

In long term investment, investors usually have high hopes and expectations that the price of the cryptocurrency will increase over time. They base their considerations on forecasts and predictions. In most cases, this type of investment has to do with holding the currency between six months to one year. But for some, they can decide whether to hold the digital assets for several years.

Meanwhile, short term investment refers to the act of holding crypto assets for a short period of time. Cryptocurrencies, in this case, can be held for a few hours to days or weeks. It is considered the most aggressive form of investment. The good thing about this trading style is that you are free to make adjustments in terms of your trading hours. You can choose an hour or time of the day that matches your schedule.

Advantages and Disadvantages

For investors aiming for a quick potential profit and investment, short-term trading can be the best option for them. As long as the trading yields profit, the return of investment can be faster as compared to holding the asset for the long term. For instance, if you are into day trading, you will be able to gain quick profit before you sleep as long as the trade went well.

On the other hand, long term trading has been historically proven to provide higher returns. For instance, if you have invested in Bitcoin for the past ten years, with its radical increase in value, you could be a million richer as long term investment implies incredible profit.

In addition, long term investment is known to have lower transaction fees and charges since the investors do not usually trade that often.

The loophole of a short-term investment is that it carries a higher risk. This includes the risk of missing out on greater market opportunities. On the other hand, long-term trading does not really mind volatility, although they are constantly in the market. Given that the value of crypto often fluctuates, the possibility of attaining a higher value over time is more likely to happen in long-term investments.

Whether you are planning to invest long-term or short-term, here are the questions that you need to ask yourself beforehand.

• How long are you planning to hold your crypto assets? Are you planning to sell them at different times or all at once?
• How knowledgeable are you with the strategies associated with the two types of investments?
• What will you do once you have attained your financial goals?

Conclusion

Recently, cryptocurrency has become more popular due to the rise of its value. For this reason, investors are trying to venture into the crypto space for greater opportunities. However, before you decide to invest, it is essential that you know both the benefits and shortcomings of long-term and short-term investment in order for you to come up with strategies that will help you gain potential returns.

 

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