There are many ways to invest in the crypto market. Some investors prefer to trade and actively monitor their holdings, while others prefer to ‘hold’ for the long term with no intention of selling their coins anytime soon.
Both trading and holding have their advantages and drawbacks, which is why it’s important to understand what works best for your own personal financial situation.
Here is an insider’s guide to crypto investing looking at the pros and cons of both, that will help you decide whether you should actively trade with crypto bots or hold your digital coins for a more profitable future.
What Is Crypto Bot Trading?
If you choose to actively trade cryptocurrencies, you’re essentially buying and selling different coins as short-term investments.
There are tons of crypto trading bots that can automatically execute your trades, including the most popular crypto trading platforms like Binance, Bittrex, and Kraken.
In order for a crypto bot trading account to work, you need to select a cryptocurrency trading bot that uses a set of predefined trading strategies.
Why Trade with Crypto Bots?
Trading cryptocurrencies is an excellent way to make passive income.
While you may make a few quick bucks from holding a few coins for the long-term, you could also make money from actively trading cryptocurrencies.
It’s important to do your homework before investing in a certain cryptocurrency because you could lose money if you don’t do your research.
Pros of Trading with Crypto Bots
- Making use of pre-programmed trading strategies could help you make more informed investment decisions.
- It can help you determine whether a coin is likely to increase or decrease in value based on past price movements.
- Crypto trading bots allow you to automate your trading strategy and make more informed decisions. If you have a set trading strategy in mind, you can easily program your crypto bot to execute trades in a timely manner.
- These bots help you generate passive income if you invest wisely and make the right trading decisions.
Cons of Trading with Crypto Bots
- Making impulsive trading decisions because you depend on the bot.
- Making emotional investment decisions if you realize the bots have not been making anticipated profits.
- You can lose money as you may ignore doing your homework prior to picking different coins to invest in.
- It can lead you to pay a sizeable trading fee because some trading exchanges charge a commission fee for trading.
Warning: There are a lot of risks associated with using bots to trade crypto. For instance, you should ensure you’ve selected the right bot, because bots like Bitcoin Code are scams that should be avoided at all costs.
What Is Holding Crypto Assets?
Holding your digital coins long-term could be an excellent way to earn money from price appreciation, by holding digital coins that are expected to rise in value over time.
However, it’s important to note that holding your digital coins for the long term could result in a loss if the price of the coin drops. Therefore, you should have a good strategy in mind on how to go about trends that might arise.
Why Hold Crypto Assets?
There are a few reasons why it makes sense to hold your digital coins for the long-term. This is so if:
- The price of the coin is undervalued.
- There’s a possibility that the crypto market will see a bull run in the future.
Pros of Holding Crypto Assets
- You avoid trading fees. Some trading exchanges charge a nominal trading fee. This could significantly impact your investment returns if you actively trade cryptocurrencies.
- You avoid emotional trading decisions because there’s enough time to do your research.
- You avoid time-consuming research. Instead, you could simply research the coins expected to increase in value over the next few months.
Cons of Holding Crypto Assets
- Holding crypto assets could lead you to lose money if the price of a coin drops.
- It is only a good strategy if you believe the coins have a strong chance of increasing in value over a short period.
- If you decide to hold your coins for the long term, you could miss out on significant gains if the coin price experiences a dramatic increase in value.
That’s it. Now that you’ve understood the motivation behind why investors prefer to actively trade or hold their cryptocurrencies, you’re ready to start getting stuff done.
Still, before investing in any of the two, it’s better to do research and come up with an informed decision in order to make profits, and not losses.