Cryptocurrency is often compared to stocks and vice versa, and they do have similar characteristics. But they are totally different assets and need to be treated as such. Some people will do better with cryptocurrencies while others will have more success with stocks. It’s all a question of background, trading philosophies, and your particular objectives. Let’s take a look at both asset classes in more detail so you can choose the best option for you.
The Benefits of Investing in Cryptocurrency
One of the major benefits of cryptocurrencies is how accessible and democratic they are. While some hurdles need to be jumped before you can start trading cryptocurrencies, you can trade as much or as little as you want once you have everything in place. You can trade crypto easily from user to user without having to go through a central authority, and the markets never close.
One thing you have to know about crypto, however, is that the markets can be highly volatile. This can be a good or bad thing depending on your goals, but you will need to always keep a very close eye on price action and have a resource for converting crypto into fiat so you can tell exactly what you can expect to pay for a certain coin at any given point in time.
Who is Crypto for?
Cryptocurrencies are best for people who want to make money on sharp price movement over a moderate period. They are not always considered the best for Intraday moves but they can be depending on the fee structure of a cryptocurrency.
Cryptocurrencies are also a great option for people who love technology. People who have inside knowledge of the blockchain and the different protocols governing cryptocurrencies are the ones who do the best with crypto, so you should try to learn as much as you can about them if you want to get an edge.
The Benefits of Stocks
Stocks are considered more restrictive than cryptocurrencies, and they are often seen as being less beginner friendly. But they could be your cup of tea if you’re more of a traditionalist. One thing that stocks can do that cryptos can’t is give you dividends over the long term. Their movement tends to be more predictable as well.
One of the issues with stocks, however, is that they do not offer anywhere near as much freedom as cryptos. There is a limit to the number of transactions you can make with stocks per day before you are considered a pattern day trader and have to submit to stringent funding requirements. Stock markets also open and close at different times and capitalizing from price movements from single stocks is not very effective. This is why most beginners are advised to stick with things like ETFs.
Who are Stocks for?
Stocks are mainly for people who need a steady store of value that can give them returns. Contrarily to how stock trading is often portrayed, they are not as good as crypto for Intraday speculation and are better for mid to long-term investors.
If you’re still stumped as to which option you should pick for investing, you should continue your research and look into both of them more in detail. Be careful before you get too invested in either of them, however, and get as much practice as possible before you invest your own money.