Hodl vs Trade Bitcoin – What’s Your Investment Strategy?
Apr 20, 2020
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should you trade or hodl bitcoin

There are typically two types of investors: those who trade Bitcoin on a regular basis to earn bursts of profit, or those who hold investments until it reaches maximum profitability. Which type of investor are you and should you switch up your strategy in 2020? Let’s talk everything crypto investment and see whether you should be part of team HODL or team Trade in these turbulent times.

Trade Bitcoin

Trading crypto involves buying in when the price is low and selling when the price goes up over a short period of time, typically over a few days or sometimes, even a few hours. It is a fast-paced way of investing for many smaller bursts of profit.

You can buy Bitcoin or other popular altcoins to trade, and always remember that the price of most coins on the market, aside from the always-stable stablecoins, are affected by the price changes of Bitcoin. Remember to only buy cryptocurrencies already listed on reputable listing sites like Coinmarketcap, Coingecko, etc. Being listed means they are already widely accepted on the biggest exchanges and services, unlike unlisted coins. Check out the full list of listed coins and tokens on Coinmarketcap.

Overall, trading is a good investment strategy if you:

  • Can always stay up-to-date with all the rapid changes and movements of the market.
  • Want to make money quickly
  • Can perform technical analysis of price graphs 
  • Willing to take risks associated with fast-paced investment style

What Traders Need to Know

Trading requires a lot of time and effort for in-depth analysis. Depending on whether you are doing it full-time or part-time, you will also need to pick out your best chart time frame – by minute, hour, or day.

In general, you need to:

  • Stay on top of new market developments and trends – by following news channels as well as professional trader communities, as prices can go through big changes daily or even hourly. When there is lots of positive news on the market, crypto prices tend to surge. Vice versa, prices tend to drop when there is a lot of negative news.
  • Know how to read and perform technical analysis of price graphs – to quickly decide exactly when to buy in and sell out, or hold on for a while more. This is rather difficult for newbies and requires professional training. And of course, there are still times when the market can still progress in the opposite direction from your forecast, even after careful analysis. Traders usually focus on 4-hour, 7-hour, and 1-day charts and observe candlestick charts.
  • Be quick and adaptable to minimize risks – oftentimes, the market can become too volatile to make consistent gains. In these situations, traders will need to make stop-loss orders to avoid losing big money in case they failed to forecast the right price trajectory.

Trading is making use of crypto market’s huge volatility which can bring very quick profit but comes with much risk and requires strong mental fortitude to overcome trading psychology. Check out our article on common crypto terms which contains lots of must-know lingos for adventurous traders.

Hold (Hodl) Bitcoin

Pretty much the complete opposite of trading, holding (more commonly referred to as hodling) involves, well, holding a crypto investment for a long period of time to get the most profit possible when the coin’s price hits its peak. Business magnate and one of the richest people in the world, Warren Buffett, also embraces this strategy in stocks investment. His famous quote “The market is a device for transferring money from the impatient to the patient.” is the life motto that all hodlers go by.

Overall, hodling is a good investment strategy if you:

  • Have lots of patience
  • Do not have a lot of time to stay up with all the rapid changes and events of crypto space
  • Do not urgently need money at this point in time
  • Do not have intensive knowledge about the market to do in-depth technical analysis
  • Believe in the future of blockchain and cryptocurrency technologies

What Hodlers Need to Know

Unlike trading, hodling does not require too much experience and technical analysis skills. However, what it does require is patience – lots and lots of enduring patience. Hodlers buy when the market is relatively stable and keep their assets until its price reaches a desired level, or until the coin project sees huge success to sell and earn big profit.

To hodl effectively, you need to:

  • Have strong faith and patience with the project – price rises strongly when the project has lots of good development. Do careful research, buy from coin projects you believe has the most potential for future success, and hold onto your investments until these coins reach their peak prices. Depending on your expectation, it can take months or even years before you can sell.
  • Stay updated on general news and developments of regional and global financial markets – to make sound investment decisions. The development and price of coin projects depend not only on global acceptance of crypto and blockchain but also on the general situation of regional and international financial markets. The same applies for other investment channels like stocks, gold, forex, etc. When there is a financial crisis (like the current situation with Covid-19 pandemic), there will be huge volatility in the global crypto market, as seen since the start of 2020 till now.

Each crypto project has their own mission and value statements for their blockchains like payments and cross-border transactions, developing next-gen applications (DApps), interoperability between different blockchains, etc. You need to conduct research and fundamental analysis of a project to choose the best coin to invest long-term. If you are not confident with your assessment or simply do not have time to do proper research, hodling top 10 coins like BTC, ETH, etc. is also a viable option. Beware of scammers though  as hodlers are typically targeted for always keeping a large amount of assets.

comparing trade vs hodl crypto investment startegy

Should You Trade or Hodl?

Trade is a fast-paced, high risk high return tactic suitable for investors willing to spend lots of time doing in-depth analysis. Meanwhile, hodl is a low-risk tactic that requires extreme patience and strong faith. Both tactics can bring tremendous profit and crypto investors usually switch up between these two different strategies in the short term to maximize gain at different points of the market.

Whether you choose to hodl or trade Bitcoin, the most important thing is always protecting your assets and safely buying cryptos at good prices. With robust security, user-friendly interface, in-app guides as well as “daily mission” quests, and great prices to buy crypto from reputable exchange partners, Infinito Wallet is the #1 crypto investment app especially Vietnamese newbies. Buy Bitcoin at good prices and keep them safe inside your wallet without spending extra for exchange-to-wallet fund transfer. Infinito Wallet also supports trade Bitcoin, track trading pairs and individual coin prices, 24/7 customer support, and many other great features for both crypto traders and hodlers.

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