If you are getting involved in the cryptocurrency market, it’s very important to understand the difference between investing and trading. You can do both, but whenever you are looking at what cryptocurrency to buy, you should consider whether you are trading for the short term, or investing for the long term. It also helps to pick the right cryptocurrencies to trade, and the right ones to invest in.

So, what’s the difference?

Investors buy assets on the basis that their intrinsic value will appreciate with time, and the price will therefore follow. They make money because the value rises, and they can eventually sell the asset at a higher price than they bought it for. Investors require at least 6 months, but usually much longer periods for their investments to gain in value.

Traders buy and sell assets based on what they think the price will do, regardless of value. Their time horizon is much shorter and can range from minutes to months. In the short to medium term, prices are driven by supply, demand, sentiment, and news.

Characteristics of a good crypto asset to invest in

Most cryptocurrencies do not pay interest or dividends, which means their value is derived from their utility. Their price will appreciate if supply is limited, and demand continues to grow because owning the coin provides utility. Speculation can drive demand in the short term, but this demand is not always sustainable – so it’s important that demand is not just coming from speculators but from people using the coin.

Cryptocurrencies to consider for investing

If you really want to know which cryptocurrency to invest in for the long term, you are best off doing your own research. That way you will be more likely to find overlooked opportunities with more upside. By the time an asset is being discussed in the media, most of the gains have already been made.

Some of the very large and liquid cryptocurrencies are suitable for both investing and trading.

Bitcoin is the most established cryptocurrency and is used as both a store of value and as a medium of exchange. It has a fast-mover advantage and is the most widely traded and used crypto asset and may, therefore, have the best chance of retaining and growing in value.

The team behind Bitcoin Cash is working hard to establish the coin as the best digital coin to be used for smaller everyday transactions. It’s also the 4th most valuable crypto asset which gives it a head start versus other coins trying to compete in the same space.

EOS is a platform token used to power an ecosystem of decentralised applications. What sets this token apart is that the team raised $5 billion when it was launched, and this cash is being used to build out the ecosystem.

Smaller cryptocurrencies worth considering as investments are those building very unique solutions to real-world problems. Augur is a protocol used to build prediction markets that can operate without a centralised authority. Anyone verifying results needs to stake Reputation tokens, which they also earn as a reward. Civic is an identity management and verification service which makes it easier to verify the identity of a person. Finally, VeChain is a blockchain system designed to improve supply chains by allowing IoT devices to be connected to a blockchain.

Characteristics of a good crypto asset to trade

For traders, they may be wondering what cryptocurrency to buy. The best cryptocurrencies are those that are both volatile and very liquid. It also helps if the price of an asset is driven by sentiment and emotion. If you can learn how to remove emotions from your decision making, you will have an advantage when trading markets driven by emotion.

Traders also need to learn how a cryptocurrency exchange works and find the exchanges with liquidity and low commissions and spreads.

Cryptocurrencies to consider for trading

Besides Bitcoin, Bitcoin Cash, and EOS which are also good cryptos for trading, the following coins are also favoured by traders:

Ripple is a very controversial cryptocurrency and would be considered highly speculative as an investment. However, the divided opinions make it a great coin for trading.

Litecoin is another established cryptocurrency which is favoured by traders due to its liquidity and the fact that it can be traded on most exchanges.

Ethereum has seen huge price volatility which traders love. It is also used by more decentralised applications than any other platform but faces several major challenges. This means there is a lot of news flow around the coin and opinions are divided. The result is a coin that is always moving, providing more trading opportunities than most other coins.


As you can see, if you are going to be involved in cryptocurrency, it’s important that you do your research and consider if you are trading for the short term or investing for the long term. If you want to trade in cryptocurrency, it’s important to look for cryptocurrencies that are volatile and very liquid. One Financial Markets offers cryptocurrency trading as part of their services.

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