Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The crypto market ends the week at a total market capitalization of $2,17 trillion. Bitcoin continues to trade at around $62,300. Ethereum experiences no changes and stagnates at around $2,400. XRP is down by 2%, Solana by 1%, and Dogecoin by 3%. Almost all altcoins are trading in the red, with very few exceptions. The DeFi sector decreased the total value of protocols (TVL) to around…
Mining, Day Trading, or Hodling: Which One is More Lucrative?
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The cryptocurrency world has its share of success stories and tales of bankruptcy – including scams. However, over a decade since cryptocurrencies became a reality, the sector has advanced rapidly to the present-day solid, stand-alone market.
Knowing how to invest in cryptocurrency may seem complicated, especially for beginners in trading, but it can be a profitable venture with the correct information. In today’s guide, we will focus on mining vs. day trading vs. hodling; thus, read on to find out which would help curve a successful trajectory on one of today’s most popular trading markets.
Crypto Day Trading
Also referred to as intraday trading, it entails buying and selling cryptocurrencies during the day. Day traders aim at gaining profits amid price fluctuations of cryptocurrencies.
It is easy to earn cryptocurrencies in crypto day trading. However, there are both risks and rewards of crypto day trading. Knowing these risks and rewards is crucial, especially if you consider day trading a part of your crypto portfolio.
Rewards of Crypto Day Trading
High Returns
One significant benefit of day trading is the potential to gain high returns. The volatile nature of cryptocurrency, it turns out, is not just a bad thing. When day traders invest in specific crypto and increase value, they may gain substantial profits. Cryptos can increase in value by over 10% in only a few hours.
Low Taxes and Fees
Exchanges that enable day trading usually charge low fees and taxes. Lower fees and taxes mean that the net return on investment increases.
Favors both Large and Average Investors
In crypto trading, both large and medium investors are favored, and the chances of success are equal. One, therefore, does not require a long-term view to define the potential for success while day trading.
Global Access
Day traders can trade from any part of the world without restriction, provided you have a good internet connection. It, therefore, possesses benefits over regular day trading, which has location limits.
Risks of Day Trading
Intraday trading, however profitable, has an array of risks that often discourage day traders. Here are some of the risks worth noting associated with intraday trading.
High Risks
It is common knowledge that the crypto market is highly volatile. The value can fluctuate at any given time, whether increasing or decreasing all of a sudden. As a result, day traders selling these coins could realize significant losses if the price decreases.
It is also speculative. Day trading is mainly speculation, as there is no assurance that a particular strategy will result in profits.
Risk of Getting hacked
While day trading, traders probably keep their coins in cryptocurrency exchanges. However, when cryptos are exchanged, there lies a significant risk of loss of traders’ coins in case the exchanges are hacked.
What is HODLING?
Hodl is an intentional misspelling of “hold,” which refers to holding on for one’s dear life during cryptos volatility. It is rock-solid advice, but it is, in reality, more difficult to pull off than the memes suggest.
It may be a great entry strategy for newbies; users buy coins and hold on in expectation of an increase in the prices of the coins. However, this strategy necessitates a vast deal of emotional strength.
Rewards of HODLING
Less Technical
Novice traders should opt for the HODL strategy as it is better than day trading. In addition, it is easy because one buys coins and puts them in wallets while observing the price movements. However, make no mistake. If HODL is implemented improperly, it could also lead to losses.
Less Effort in Trading
By buying cryptocurrencies long-term, one does not have to worry about selling or often buying, paying fees, or any time-consuming activities other strategies could lead to.
Reduced Stress
The hodling strategy reduces the struggle and stress of buying and selling cryptos often. This form of passive investing has worked for investors in crypto markets and traditional markets.
Cons of HODLING
Less Profitable
Active day trading may have better rewards on investments. Day traders are constantly studying the market; hence if they see the market reaching a peak, the best idea would be to sell close to those highs rather than holding.
Time-consuming
Holding may be a good strategy for long-term traders, but it may not work best for traders looking for fast profits. At times, it may take even years to recover an investment.
Risk of Loss of Investment
Some traders forget where they leave their funds or private keys in their wallets.
Crypto Mining
Mining is a strategy to earn money by solving complex code that needs dedicated computer equipment. When Bitcoin was invented, mining was straightforward, and miners could gain more coins quickly. However, mining became more complicated as more people became interested in Bitcoin.
To earn through mining, you require skills to choose the appropriate PC parts and configure the software. In addition, the specialized equipment costs more than GPU equipment, whereas trading and hodling do not require any equipment.
A step-by-step guide to begin mining:
- Equipment purchase
- Equipment installation and adjustment
- Software setup
- Use of a pool
- Process adjustments, system performance maintenance
Mining Pros and Cons
Pros:
- Ability to withdraw profits daily
- Control of Investment
- Lowest Risks
Cons:
- Requires expensive equipment
- Expensive to monitor and maintain equipment
- Requires basic skills and knowledge of computer hardware
Conclusion
Mining vs. hodling returns is comparatively small, although the risks are minimal. Day trading risks are higher and thus higher possible return on investment, up to 100% on the initial investment. Mining is perhaps the least profitable. There is more to consider in crypto trading than just the strategies’ profitability, hence this guide.
Btc
Bitcoin
$62.547
price
price
0.84959%
price change
There is no exact answer to the mining vs. day trading vs. hodling dilemma. However, every trader has to answer the fundamental question, does the investment strategy favor your lifestyle? To conduct due diligence and find a strategy that best fits your interests, from high rewards, investment time, skills required, and trading stress.
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Adam Robertson
@Adamjr
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