When you decide to start investing, including investing in crypto, you need to determine which investment period you will invest in. Should you invest for the short term or long term? As the investment strategy used will be different.
Difference Between Short Term and Long Term Investment
Short term investment is often used for a type of investment within a very short period, which is less than a year. Returns on Investment for short term can happen within days, weeks, or months. Whereas long term investment is a type of investment within a period of years, even more than 5 years.
Short Term and Long Term Investment in Crypto
To put it simply, the system used in crypto investment is trading, to buy crypto and then sell them back when they are at a higher price. This price variance between the purchase and sale will be your profit.
In short term investment, trading can be done real fast, even within hours. Meaning, if you are smart enough to take advantage of the situation and if you are able to implement an optimal trading strategy, you might get high investment returns within a day.
However, in long term investment, you will have to hold your crypto assets for at least a year or more. Whether or not this investment will work out, depends on your ability to predict the increase of crypto assets price in the future. It is not easy, indeed, but you will make a huge profit from this investment if you know how it works.
Take Bitcoin for example, it had a price of $1 back then, but the price has multiplied manyfold now. If an investor made a long term investment in those crypto and bought them when they were still $1, can you imagine how much profit he would make by now?
The Cost and Risks of Short Term VS Long Term Investment in Crypto
Regarding the cost, long term investment is more profitable because you will not be charged a trading fee. Whereas in short term investment, you will be charged this fee for each trading transaction, crypto tax included.
From a risk point of view, in short term investment, you may miss an opportunity to make a huge profit when the cryptocurrency is at the highest selling price due to fast trading. Whereas in long term investment, the risk is quite significant. For nobody knows exactly what the future holds. The selling price may go down during the holding period of these assets, and whether the price will bounce back or not, nobody knows for sure. Hence to make long term investment, you need to have good analytical skills to accurately predict future market conditions.
Either short term or long term investment has its own benefits and risks. You just need to know which of these matches your characteristics before deciding. But no matter which investment you choose, you can use NANOVEST application as your investment platform. You can download it on Play Store or AppStore and register yourself. We wish you the best of luck in your cryptocurrency journey.
References:
- https://smartasset.com/investing/long-term-vs-short-term-investment#:~:text=Generally%20speaking%2C%20short%2Dterm%20investments,as%20one%20or%20the%20other.
- https://blog.coindcx.com/cryptocurrency/should-you-invest-in-crypto-for-the-long-term-or-short-term/
- https://cryptomode.com/long-term-vs-short-term-cryptocurrency-trading/
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