Cryptocurrency is infiltrating many different spheres of our lives. Many individuals manage to capitalize on its potential. There are two main ways one can follow to make money in crypto: investing and trading.

Knowing what sets each one apart can help individuals reach their financial goals much more effectively.

What is Crypto Investing?

Investing implies buying an asset and holding it for a long period of time in the hope that its value will rise over time. Cryptocurrencies are digital assets that can also be purchased to bring profit in the future. This strategy is often referred to as the “HODL” (hold on for dear life).

Crypto investors are well aware of the high likelihood that crypto, especially some specific coins, will increase significantly in price over time. This is due to broader adoption, technological advancement, and institutional support. Thus, they evaluate these factors to decide on the long-term potential of a cryptocurrency. If the cryptocurrency seems to be worth the investment risk, they buy it and wait months or even years for that perfect time to reap the money.

Crypto investing can be summarized as follows:

• Its goal is to accumulate wealth through price appreciation over time.
• The risk level is moderate to high, depending on the crypto chosen.
• After initial selection, it requires minimal effort.

What is Crypto Trading?

Trading is almost the opposite of investing. Although the goal here is also to earn money, the strategy is completely different. The trader buys and sells the assets numerous times. They have to analyze the market and know when a small fluctuation in price will occur. If done right, such fast trades can bring small but steady income.

Some traders choose to buy and sell the assets on the same day. This is referred to as day trading. It requires constant monitoring of charts and markets. Meanwhile, others hold positions for several days or weeks. They buy and sell based on short-to-mid-term price trends. Trading can be summarized as a short-term (minutes to weeks) activity that aims to profit from short-term price movements. It requires high risk tolerance as the trades are fast-paced and the assets are volatile. Moreover, crypto trading requires skill, time, and discipline. Beginner traders can try copy trading, which entails repeating the actions of professional and successful traders.

Both investing and trading require an intermediary – broker. AvaTrade, for instance, is a broker that offers diverse trading opportunities, including crypto trading. It supports many crypto trading platforms. This expands the user’s ability to use different trading assets and strategies. These enable one to trade cryptocurrency in a convenient and preferable way.

Related: How To Become A Successful Forex Introducing Broker In 2025

Which One Is Right for You?

Before diving into either investing or trading, you should recognize the potential rewards and unique risks associated with each approach. Investing exposes one to unpredictable market fluctuations and the inherent volatility of these digital assets. At the same time, there is a big chance to take advantage of steady growth over time. When it comes to trading, the activity requires a high level of skill, discipline, and emotional resilience. It offers an opportunity to make quick money, but it is important that these can turn into losses at any moment.

The choice between investing and trading comes down to your goals, time availability, risk tolerance, and knowledge. If you do not want to watch the market daily and believe that some cryptos have great potential, then you can try investing. For instance, you can buy Bitcoin or Ethereum and hold it for five or more years. Investing gives slower but often more stable gains.

Individuals who have higher risk tolerance and are able to make fast decisions under pressure can consider trading. Successful traders have emotional readiness and time to study the trends, and enjoy market analysis. For example, you would use technical indicators (like RSI or MACD) to buy and sell altcoins within a week.

We should mention that you do not have to choose between one or the other. Many choose to diversify their portfolio and combine these two earning strategies. They allocate a portion of their portfolio for long-term holding while using another portion for short-term trading.

Final Thoughts

Both traders and investors can incorporate cryptocurrency into their earning plan. Every choice, though, calls for distinct abilities and psychological factors. To successfully navigate the cryptocurrency market, one must comprehend the distinction between trading and investing. Acquiring knowledge, including risk management strategies, should always be your key priority. Whether you’re trying to ride short-term waves or are in it for the long run.