In this modern time, there are now different options for the types of investments. One of the investment methods that have been gaining track is cryptocurrency. Crypto has been around for quite a long time, and since then, its popularity has continued to rise. Investors who tried crypto back when it was still new are making a fortune out of it today, and many of them have said that crypto has got potential.
Investing in cryptocurrency allows you to earn a huge profit out of it. But, like other investments, crypto also has tons of risks. Especially for those new to crypto, risks such as volatility, fraud, and manipulation are some of the many things you should watch out for.
Some of these risks can become critical and heavily affect your investment if you become careless. It’s always better if you get familiar with the whole idea of cryptocurrency, like how it works, the risks associated with it, and what you can gain out of it.
If you are unfamiliar with crypto, it’s worth knowing that there are now thousands of different cryptocurrencies you can find in the market. Aside from the top-performing cryptos like Bitcoin and Ethereum, there are more coins you can choose from.
Some of the new generation cryptos you can find were created for a certain purpose, and if you choose the right one for your investment, it could benefit you. The right crypto could be used whether you choose to go for a short-term or a long-term investment.
What Is a Short-Term Investment?
Short-term investments can be turned into cash quickly within a limited time frame, usually for less than a year, hence the short-term. The goal of short-term investments would be to protect any capital and still generate more capital that would be near equivalent to that of a Treasury bill index fund – or any benchmark of the same value.
Going into short-term investments would be the less risky bet since you won’t have to feel the depreciation of values in the market like what you’d notice with long-term investments. Short-term investments also diversify your income types – so it could be from cryptocurrency or stocks. This is good in the case of lousy market volatility, where the average for most investments also depreciates.
Short-Term Crypto Investment
With an inherently volatile market such as cryptocurrency, you might think that you should save everything for the right time to cash out and reap what you already sewed, but that is not the way if you’re in it for the short term. If you’re looking to earn more with your short-term crypto investments, then you should be fully prepared about losing your investment or even more – though that would be about time.
The shorter the times you want to trade your assets, the more you risk. And because you’re taking more risk with your shorter investment trading in hopes of not losing the momentum of the asset you’re trading, this short-term trading method is often referred to as aggressive trading. However, being aggressive doesn’t mean you should give up the balance of a good trade-off between risks and returns.
What Is a Long-Term Investment?
Long-term investments are the complete opposite of short-term investments, where you’re aiming to hold all of your assets for more than one year. If short-term investments aim to sell the asset within a year, your goal with long-term investment is to hold on to your assets for more than several years or not even sell them at all. You’re not taking the risk here. You’re accepting the risk in hopes of a higher payout.
Cryptocurrency as a Long-Term Investment?
What’s great about using cryptocurrency as long-term investments is that you won’t have to go down a riskier path just to get the same returns as you would get when aggressively trading. With long-term investments, you will be making passive income steadily, so you won’t have to be in such a rush to sell it. There’s no need for the fast pace when taking it slow with long-term investments.
Suppose you decide to start a crypto investment today. In that case, platforms and apps such as Bitcoin Profit are a good place to start, as you can find various cryptocurrencies to choose from. Even though every trading platform offers a variety of cryptocurrency to trade with, not all of them are properly regulated so stay alert!
As we’ve mentioned above, it’s ideal you be familiar with the risks associated with crypto as it could affect the flow of your investment. One of the major concerns many people have with crypto is its volatility. This means a cryptocurrency’s value could dramatically change at any time. If it’s at a high price, it won’t stay like that very long. New investors who are not used to sudden market changes could lead to a significant loss.
The lack of regulations is also one reason people have second thoughts about investing in crypto. Although regulations are already in play, there are numerous reports about other people’s accounts getting hacked and their funds stolen.
This could be dangerous, especially for beginners who have recently started their journey in crypto. Also, since there is a lack of regulations, fraud and market manipulation reports have increased. As mentioned above, if you are unfamiliar with crypto, it could put you in a bad position.
Last but not least, using digital wallets is still considered a risk, according to many experienced investors. These wallets are used to store private keys and funds by other users, and since these wallets are connected to the internet, hackers can access wallets and steal private keys. Private keys are essential as they are used for transactions, and you should be the only one with access to them.
Depending on the style of trading you’re usually doing, whichever choice you choose would suit you. However, that doesn’t necessarily mean that you rule out the option of having both short-term and long-term investments for your crypto portfolio.
Not only is that a good way of earning as much as you can, but you’re also diversifying to soften your fall if the market does dip.