Bitcoin and cryptocurrencies have brought many people into the world of investing, and they can be attractive to beginners for many reasons. Some may want to jump on the trend or might think that they’re truly the future, while others may think that they’re more accessible than stock markets. But that’s a false assumption.
Cryptocurrency trading is just as complex as stock trading, even more so in some cases, and you should think twice before making this your first investment. Let’s take a look at the differences between crypto investing and stock investing so you can choose the best option for you.
The Volatility Issue
One of the worst things about cryptocurrencies for new investors and investors is the wild swings in the market. There is no telling what is going to happen, and a lot of people are pretty much swinging in the dark. That counts for experts as well.
This is because very few people truly understand crypto, even though they won’t admit it. Movements end up surprising the community as a whole and the reasons behind them are often revealed hours after the fact.
Stocks are much more predictable. That is if you don’t start dabbling into questionable products like penny stocks. It also makes them better stores of value if you want to build something for the long term.
Lack of Products and Resources
Another thing that makes crypto investing not the ideal choice for beginners is the lack of options. Some exchanges do not allow you to exchange fiat for crypto, so that’s one barrier. Day trading is also very difficult with cryptocurrency since it’s not the most liquid asset and fees on transactions can be prohibitively high.
Then there’s the lack of concrete information and educational resources. As we said earlier, many are learning as they go in the space, and you don’t have access to the same educational resources as if you were investing in a well-known product like stocks.
There are so many tools available to traditional traders who lack experience. You have everything from trading signals to social trading that allows you to mimic trades from successful traders. You also have tools like Atom Finance that allow you to analyze stocks fast.
These tools allow you to get news on hot stocks and help you time your decisions. You can also look up information on companies like SEC filings, for instance, and be notified of important events. This brings us to our next point.
There is no event calendar with cryptocurrencies. Cryptocurrencies are not like companies that have to report earnings every quarter. They’re not backed by a country’s economy either. You will have to rely on cryptic information like halvings or murky adoption rate figures, which makes it much more difficult to time trades precisely.
These are all things that you have to take into consideration when choosing between investing in stocks for cryptocurrency. Don’t follow the herd and look at the pros and cons of each before you get started.