Crypto investing is something you do with a long-term plan in mind. On the other hand, crypto trading is to make a quick profit on a trade. Crypto investing and trading are two different beasts.
So, we’re going to have a look at the difference between crypto investing and trading.
What Is Crypto Investing?
This is a strategy in which you plan to invest in cryptocurrencies for a longer period of time. The long-term goal is that you make a profit because the asset’s price increases. Bear markets are prime opportunities for this strategy. Crypto prices are down in general. They offer low entry points, with the potential for price appreciation over time.
This is also referred to as “hodling,” a misspelled version of “holding.” This strategy requires research and analysis of the market. Investors typically find strong fundamentals in the crypto they hodl. They are not affected or influenced by short-term market changes.
Long-term investors look for different coins compared to traders. The expected price movement will occur over an extended period, not on short notice. We will look at Bitcoin (BTC) and Polygon (MATIC). We will also give you a TA, or technical analysis, on these.
What Is Crypto Trading?
With this strategy, traders look for short-term profit. They need to research and determine entry and exit points. Market fluctuations and prices play a big role in this strategy. In contrast to long-term investors, fundamentals are not as important. Traders look merely for short-term profit. Time frames for this can be as short as a day. For swing traders, the time frames can even be shorter, like from seconds to minutes, or hours.
Traders make more use of technical analysis tools. In general, short-term trading is riskier, and you need to put more effort in. They also use different strategies. Long-term is basically buy and hodl. On the other hand, short-term can go long or short or use arbitrage. Going long is when you think that a cryptocurrency will increase in price. In contrast, going short is the opposite, as now you expect a crypto to decrease in price. Arbitrage is when you buy a crypto coin on one exchange at price “X” and sell it on a different exchange at price “Y.” In the process, you make a profit.
As an example, we look at Lukso (LYXE) and Lido Finance (LDO). We also give you a TA rundown on these two tokens.
Long-Term Crypto Investing TA
We first look at Bitcoin. We will show you a daily, weekly, and monthly chart. Furthermore, we will also look at the Bitcoin dominance chart.
Here’s the Bitcoin daily chart from early January 2023.
On the daily time frame, BTC is trading below the resistance zone at $18,784. If this resistance can be flipped to support, we could start seeing a move towards $21,491, $22,465, $24,487, and $32,473. Rejection of $18,784 could lead to a drop towards $12,489.
In the previous two cycles, we have seen BTC bottom at around 82-83% from its ATH. Given this cycle’s ATH of $69,000, we could see BTC bottoming towards $12,489.
Bitcoin’s weekly chart:
In this chart, we consider $69,000 as the top of the previous cycle and $12,489 as the bottom. We could see the following levels as the targets for BTC in the next bull cycle — $105,161, $162,397, $219,632, and $255,003.
Bitcoin’s monthly chart:
The monthly chart suggests that failure to hold the support at $12,489 could lead to a drop towards $9,148.
Bitcoin dominance:
BTC dominance is just above the support area of 41.6%. If this support holds, we could see a bounce towards 43.16%, 44.43%, 46.58%, and 47.71%. So, this increase in the dominance of BTC could lead to an increase in BTC price. In turn, this can decrease the stability in the price of altcoins in a short time-frame. We wrote a dedicated article about BTC dominance and altcoin price action.
MATIC TA Charts
Here are the MATIC daily and weekly charts.
MATIC is trading above the support zone at $0.785. If it stays above this support, in the short term, we could start seeing a move towards $0.903, $1.027, and $1.308. Failure to hold the support at $0.785 could lead to a drop towards $0.614.
MATIC weekly chart:
Let’s look at $0.379 as the bottom for MATIC and $2.893 as the top of the previous cycle. This could see a move towards the following zones in the next bull cycle — $4.465, $6.990, $9.514, and $11.075.
So, long-term traders look at long-term charts. Now let’s move on and have a look at some short-term charts.
Short-Term Crypto Trading TA
The short-term traders look at short-term charts. They have, in general, no real interest in weekly or monthly charts. But, they look at charts and use the information most of the time instantly.
First, we look at LYXE.
Source: TradingView
LYXE is trading right above the resistance flipped to support zone at $7.43. So, if it continues holding this support, we could start seeing a move towards $10.47, $12.55, $17.18, and $22.18. This is almost 300% above the current price. If the support of $7.43 breaks, we could see a drop towards the crucial support zone of $5.32. This is a crucial support zone and our preferred buy price. Breaking $5.32 could push the price further down towards $4.43 and $3.50.
Here’s also the LDO chart from a few days ago. However, this chart is already outdated because the market moved, and all targets were hit. Longing, as mentioned, wouldn’t make any sense anymore for this chart.
LDO has broken the resistance of $1.25 with a strong impulse. However, if it stays above this zone, we could see a move towards $1.66, $2.00, and $2.63. Failure to hold $1.25 could lead to a drop towards $0.99 and $0.87, which are good areas to long LDO.
Conclusion
We showed you the difference in crypto investing versus trading. Long-term investors use coins that have good fundamentals. Their price should increase over a longer time frame. Traders, on the other hand, don’t care too much about fundamentals. Their goal is to have short-term profits, and fundamentals don’t play a role in this.
As a result, investors and traders look at different charts and coins. They need different information to meet their respective goals.
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