While investing most traders have an idea about how long they plan to hold on to an asset before buying or selling it. With traditional assets, it is relatively simple to plan the time for which your cash will be held up.
With crypto, things get a little tricky. With just over a decade of information and thousands of altcoins, it may get overwhelming to decide the time for which you should invest.
Patterns are still emerging about who is in the crypto market for a quick cash haul or who wants to try the long haul.
Your investment period is majorly decided by the ‘why’ of your crypto investments. This simply means your objective of investing in crypto.
But before we understand more about that, let’s first define the long and short-term of crypto.
What is a long-term crypto investment?
Long-term investing is when you plan to hold on to your investments for a period longer than 12 months. This is more of a save and forget method.
What is a short-term crypto investment?
Investing for a short-term in crypto means that you are going to hold on to the investment for less than 12 months. Short-term investors are also called active investors and buy and sell a lot more than long-term investors. This could be multiple times in a year or even a day.
What should be your investment strategy?
One of the most important decisions, besides choosing the best cryptocurrency to invest in, is to decide your investment approach. Here are some things that will help you decide whether to invest for the long term or short term in crypto:
Answering the ‘why’
The first step is to set your investment goals. This means answering questions such as how much monies are you willing to invest and how much is your risk appetite. The next thing to be clear about is whether do you want to generate quick income or invest.
What helps in setting sound cryptocurrency goals is doing solid research. For instance, you may want to study the historical data about the crypto market and how it has swung or crashed over a period.
If you keep your money locked for a longer period, watch and manage it, and bear the market tidings, you will get a good return on your investment.
The ‘why’ in short-term trading is just the opposite. This approach allows you to maximize your gains from the volatile nature of the market. In the short term, you invest in currencies that you believe are likely to increase in value. This helps you gain profits in a short time frame.
Are cryptocurrencies seeing growth?
Did you know that cryptocurrencies are the fastest-growing phenomena in human history and they have grown faster than the Internet!
They are being adopted by the largest corporations around the world at phenomenal speed. In 2021, there were around 300 million people using crypto. In 2024, these numbers are projected to increase to 1 billion. And, this is not just a trend. This is another affirmation of the benefit of investing in crypto for the long-term.
Do they solve any problems?
Currently, a multitude of problems, both technical and logistical, affect the financial world. One of the major objectives of launching crypto was to address these very problems. For instance, Bitcoin was created to simplify sending money over the Internet without any interference by the intermediaries. If you wish to trade in Bitcoin, check its prices and conversion rates (BTC in INR). TRON was launched to democratize the entertainment industry.
There is a lot of value in the long-term crypto investment, provided you choose the right kinds of currencies and have your objective clear. To keep yourself updated on crypto markets, you can refer to platforms such as Coinswitch.