Simplicity, speed, and profitability are what attract most people to invest in cryptocurrencies. Compared to traditional investments, they’re less of a hassle and are easier to manage. However, investments in any shape or form are still quite complex. Especially in the beginning, investors have many questions on their minds about choosing a proper strategy, what position to take, and even what crypto to select.
Some of you may have certain questions, like how long should you hold cryptocurrency? Or, what strategy should you choose? If some of these questions resonate with you, keep reading this article to obtain the answers.
Is there a Perfect Timeframe?
The short answer is no. Why? Because like any other investment, the primary concept of investing in crypto is to gain profit through any strategy that appears appropriate at the time, there’s no golden rule to follow. It’s true there are many investors who earn a significant profit by adopting long-term strategies. However, there are just as many who make a lot of money off of day trading crypto.
The “perfect time frame” depends on a myriad of factors, such as your strategy, capital, choice of crypto, the market condition, and the target return. In the world of investment, especially crypto, one size doesn’t fit all.
In this article, we’ve decided to focus more on holding crypto for the long term since that’s what many, maybe even you, consider the optimal approach.
Is Crypto a Good Long-Term Investment?
Many investors and traders see crypto as a long-term solution, where they ride out the tough times until they can accomplish their desired objectives. That’s true, and Bitcoin’s astronomical surge in the last decade leaves almost no room for an argument.
Of course, a long-term approach doesn’t mean you have to wait ten years to see any profits. If you hold on to your crypto for a year or two, or even six months, you can see prices gradually go up. However, other than the timeframe, you must have the right information to make it work.
For instance, you should know what you’re investing in. You can’t just select a random crypto, let it sit there for years, and expect it to grow. That’s why in the next section, we’re going to show you what to consider when buying cryptocurrency.
Elements to Consider Before Buying Cryptocurrency?
There are a few factors to consider when choosing crypto, as listed here below.
1. How Is It A Solution?
All great companies solve large, complex problems and fulfill critical needs, including those who introduced cryptocurrencies like Bitcoin and Ethereum. Hence, before you select a cryptocurrency, you should know the issue it’s trying to solve. Take a look at the company’s team and mission to view how they intend to attain a competitive advantage in the market.
For instance, do they provide security tokens where every buyer will get a small share of the company? Or, do they sell utility tokens where they can be used on the blockchain?
2. The Supply
It’s not just what you trade, but how much there is to trade, you need to assess the circulating supply. In addition, determine how many coins in total are available for mining or entering the market. That’s the total supply.
Why is that important? Because by the basic rule of supply and demand, the total supply dramatically influences the coin’s value. For instance, there are only 21 million Bitcoins available in the world, which has greatly impacted its value. Once all unlocked by minders, Bitcoin prices will see a substantial increase, which is a natural result of supply and demand.
The crypto market is highly volatile due to multiple factors such as speculation, hype, and inadequate oversight. Looking at the coin’s value history, you can see its susceptibility to certain schemes, correlation with other price movements, or even world events. For instance, the price of Bitcoin is inversely related to the price of altcoins.
If you zero in on a coin based on these factors and some others, you can benefit greatly from long-term investments.
Benefits of Long-Term Investing in Cryptocurrencies
There are likely more, but we’ve decided to point out the three biggest benefits of investing in crypto:
- Recent Success. By looking at the historical data, you can see sustained price increases over long periods of time.
- It’s Affordable. While day-to-day trading is fine, long-term strategies are wiser because you don’t have to deal that much with transaction fees. You don’t make trades every day, and therefore, your profits won’t be cut down for paying fees.
- Less Risk. We’ve all seen, or been, investors who panic through ups and downs, especially in the crypto market that is highly volatile. A long-term strategy continuously keeps you in the market and helps you not miss out on profitable moments.
Finally, is crypto a good long term investment? As you can see, there is no clear-cut answer here because it depends on a multitude of other factors. The good news is you can be profitable using both long-term and short-term strategies because it’s not just the trading time frame that makes you successful. You just need to do your research, take in proper advice, find the right crypto, and choose a suitable platform to execute your trade.
Some people may opt for crypto exchanges to start trading, but OTC desks are a much better option since exchanges have limited liquidity and cannot usually execute large orders.
By using OTC desks, you can easily make large trades without shifting the market price. Plus, you’ll be trading directly with the other party without worrying about a middle man violating your privacy.
At Secure Digital Markets, we provide you with our low-latency software at minimum costs to make safe trades with transparent fees. Our team is capable of onboarding new clients very quickly, so don’t hesitate to reach out!