Why is a long-term investment more advisable for cryptocurrencies?

Cryptocurrencies have become very popular throughout the years. Now they are used for many different reasons such as creating smart contracts and other possibilities. Nevertheless, investing in them is still the most popular way of using cryptocurrencies.

If you are interested in starting crypto trading, you must have read some articles and guidebooks about the subject. In this case, you have most likely run across advice to invest in them for a long term. This would require many longer-term plans that would pay off in the future. For example,  Algorand price prediction for 2030 could be usable already now. But why is long-term investing more recommended especially with crypto investing? Whether using a crypto exchange Warsaw or in London, these tipsstill apply.  

Long-term investing vs day trading

For starters, we need to make sure that you understand what long-term investing is, and what is its the opposite way to invest. As its name suggests, long-term investing means investing in something for a longer time. This can mean investing in something for one year or even some decades. This is the most common way to invest when it comes to beginners and non-professional investors.

The opposite of long-term investing is day trading. Day trading means buying and selling for 24 hours. This is the only recommended way to invest for true professionals, and especially with crypto investing it’s not recommended.

Cryptocurrencies are highly volatile

So why are cryptocurrencies especially recommended as a long-term investment? This is mainly due to the high volatility they have. This means that their values fluctuate a lot in a very short time.

Because of this fluctuation, day trading is a tricky business quest. It’s almost impossible to predict a specific cryptocurrency’s value in a couple of hours. Day trading is counted each and every hour of the day. It is that detailed. This is why it’s very difficult and time-consuming, even though it can be rewarding. The difficulty and the increased level of risk are the main reasons day trading is not recommended for crypto trading. So, even though it might be tempting, it’s better to invest for a longer time.

Long-term investing is not the only tip for responsible investing

Many people advise beginners to opt for long-term investing over day trading. This is one of the most popular tips for responsible investing. Still, it should be taken into consideration that it’s not the only tip.

Another suitable tip for beginners is collecting a diverse portfolio. This means investing in many different options over just one. That way the investor can avoid losing the full value of the portfolio if one of the cryptocurrencies sinks in value. Of course, there is still a possibility that the value of the whole portfolio will drop, but it’s less likely.

You may be interested in: How to Getting Started Investing For Beginners