Before cryptocurrencies came along, investors were content with stocks, commodities, and Forex, as the main assets to invest in.
But in the last decade, cryptos have exploded on the investor scene and proved to be a revolutionary new asset class, making many very wealthy in the process.
It has left many wondering which is better as an investment vehicle – stocks or cryptos.
For starters, any fundamental analysis makes it clear that cryptos are here to stay.
It hit a $1 trillion market value in 2021.
Registered 1 billion crypto users worldwide as of 2022.
18,000 companies now accept crypto as payment globally.
It has forced many bigger names in the corporate world to start integrating cryptos into their infrastructure, while financial institutions are also adopting digital currencies as a means of exchange.
National governments are even preparing to introduce a digital currency as legal tender.
These developments are important to consider as an investor because they can help when deciding whether or not to start trading investments in cryptos.
Indeed, it seems many investors are deciding to ditch stocks altogether and are focusing their investments on cryptos only.
So which is better? Stocks or Cryptos?
One has to examine the main differences between the two assets.
Firstly, cryptos are far more volatile than stocks.
The market ups and downs have been phenomenal over the past few years.
Taking Bitcoin, for instance, it hit $69,000 in 2021 and then sunk rapidly to $17,000 as of the time of writing.
What causes such swings?
The trade of cryptos is driven mainly by pure speculation, which in turn is steered by sentiment.
When sentiments (feelings) change, prices change (often drastically!)
So investors buy crypto in the hope that someone will buy it from them for more than they paid for it.
On the other hand, stocks and prices have been pretty consistent throughout the recent 13-year Bull market.
But suddenly, in early 2022, the market went from Bull to Bear offering a ton of cut-price stocks in big name companies – a fire sale investors everywhere jumped on.
It meant there were fantastic opportunities in BOTH stocks and cryptos as crypto prices also plummeted.
The other obvious difference is that buying a stock is generally for the long term. You are buying a share of that company, a real entity.
Cryptos are digital, not physical.
Also, investing in cryptos is a lot riskier compared to stocks.
After all, stock exchanges have been around for centuries. They can be trusted.
Many new cryptos are like infants in the adult world of stocks.
Even though mass adoption of cryptos is occurring within the global economy and among mainstream industries, its volatility can still be a concern for some investors.
Making a decision
If you are an investor, or thinking about becoming one, and don’t know whether to focus on stocks OR cryptos, how about considering this?
Invest in BOTH.
It’s called diversifying and when all things are considered between cryptos and stocks, investing in both assets makes perfect sense.
Especially in today’s current economic climate and bear market which is affecting both assets.
It is very doable to invest in both. It’s a great strategy because you can go long with stocks, and short with cryptos.
(If you are interested in learning more about trading & investing for beginners, check out IM Insider, a bi-weekly newsletter delivered directly to your inbox, where our Traders review 600+ stocks and cryptos every single month to find the most lucrative, tactical, and timely opportunities that YOU can take advantage of.)
In effect, when going long and short, you are doubling your chances of not only making sound investments but lucrative ones.
But that doesn’t mean throwing your money at everything that moves!
That would be extremely foolish.
That is why research is always something you must do, whether you are investing in stocks or cryptos.
You must understand everything about the company or crypto project before deciding to invest in them to ensure you do not make a bad investment.
There are all sorts of things to look out for, which can be learned on any good investment course.
If you think investing and trading is a way to get rich quickly, you are mistaken.
You should think about NOT investing at all in either stocks or cryptos (or both) if you believe it is the fast way to wealth.
To be successful at trading and investing requires a whole set of disciplines as well as having money to invest that you can afford to put at risk.
To find out more about stock trading for beginners or to learn crypto trading, get in touch now, we are always happy to help.