When you first begin investing, ask yourself a simple question: Which crypto investing strategy will yield the most money?
Bitcoin Holding
In early 2019, Bitcoin was trading around $4,000. On May 22, 2025, Bitcoin reached an all-time high of $111,970. That’s approximately a 52.8% annual growth for those long-term investors who simply used the HODL method.
Active Crypto Trading
Experienced traders during strong crypto bull markets have seen returns ranging from 10% to 200% annually. This is especially true in altcoin markets with high volatility.
These results are highly inconsistent and depend on timing, experience, and fast decision-making.
Day Trader in Crypto
Statistically speaking, only around 10% of day traders consistently beat the market over one year. Since the crypto market is so volatile, it amplifies gains but also losses.
Over the long term, over 90% of active traders lose money.
What Do Trading and Holding Really Mean?
These are terms that we hear thrown around a lot.
But do you understand exactly what each one entails?
Trading Explained
Active trading in crypto means trying to profit from short-term price movements.
The main goal is to capitalize on volatility, price swings, and market changes.
But there are several distinct approaches to crypto trading based on time horizon and strategy:
1️⃣Day Trading
Day traders open and close within the same day, usually holding assets for minutes or hours.
For example, a Bitcoin day trader might buy at $68,500 and sell at $68,900 within an hour.
Their target is a small profit, but done multiple times within a day.
This requires constant monitoring and fast decision-making.
2️⃣Swing Trading
A swing trader holds for days or weeks. Their main intent is to profit from medium-term price moves.
For example, a swing trader might have bought Bitcoin at $60,000 and sold it at $70,000 a few weeks later.
Swing trading has more flexibility but still requires close market tracking.
3️⃣Position Trading
Position traders hold assets for several months. The focus is on larger market trends.
A position trader may have purchased Bitcoin at $30,000 in 2023, with the “knowledge” of it rising to over $65,000 in a bullish market based on their technical analysis to make the prediction.
4️⃣Grid Trading
Grid traders will place a series of buy and sell orders at predefined price intervals to make a profit from changing markets.
For example, during Bitcoin’s consolidation between $60,000 and $65,000, grid bots automatically buy low and sell high within the range.
5️⃣Algorithmic Trading
This trading method uses algorithms to execute trades based on pre-set criteria.
Large trading firms and retail traders now use trading bots that scan markets 24/7, executing trades based on technical indicators, trading signals, and risk management rules.
6️⃣Arbitrage Trading
Arbitrage trading takes advantage of price differences for the same crypto asset across different exchanges.
For example, if Bitcoin is trading at $69,500 on Coinbase and $69,800 on Kraken, an arbitrage trader will buy on Coinbase and sell on Kraken.
They make a $300 profit on the price gap.
These arbitrage opportunities exist in the crypto market due to liquidity and 24/7 trading.
What Is Holding and Why Long-Term Investors Prefer It
In contrast, buy-and-hold focuses on buying a crypto asset and having it grow over time.
This is considered a passive investing strategy.
Buy and Hold
Investors purchase crypto and hold it for the long term, usually several years or even decades.
The strategy assumes that the asset’s value will grow over time.
As a passive investor, there is no need to time the market.
Investors accumulate crypto over time, using a combination of strategies like DCA and/or lump sum buying.
The main objective is to hold through entire market cycles.
Secure Your Long-Term Bitcoin Holdings
For long-term holders, security is non-negotiable.
Material Bitcoin offers a fully offline cold storage solution that is air-gapped, tamper-proof, and built for serious HODLers who want full control over their crypto.
Main Differences Between Trading and Holding
Time Horizon
- Trading focuses on short-term moves, while holding is about staying invested for years.
Risks and Market Volatility
- Trading puts you up against daily price swings and sudden shifts in volatility.
- Holding is exposed to long-term cycles but can still suffer from large drops.
Time Commitment
- Active trading is like a full-time job that needs constant monitoring.
- Holding requires very little time or daily decisions.
Trading Fees, Taxes, and Hidden Costs
- Trading fees, frequent transactions, and bots will eat into your profits.
- Crypto is taxable!
- Keep in mind that trading often triggers higher short-term capital gains taxes, while holding benefits from long-term tax rates.
Pros and Cons of Trading vs Holding Crypto
Active trading can work well in highly volatile markets, especially if you are a skilled and experienced trader.
Day trading VS Hodling, which do you prefer?
byu/ChemicalAnybody6229 inCryptoCurrency
However, holding allows you to benefit from long-term growth, compounding returns over time.
😌It’s less stressful
✅Requires fewer decisions
💰Has a lower tax burden
🧠No emotional mistakes made
Traders: Emotional trading, overtrading, FOMO, discipline failure.
Holders: Panic selling during bear markets, losing confidence in long-term strategy.
Which Strategy Is Best For You?
Now that you understand what each strategy is, you must evaluate a few key points.
Ask yourself:
How am I with risk? Can I handle losing crypto without panicking?
➡️If you’re low risk, focus on holding.
➡️If you’re high risk and can handle swings, then trading might work.
How much time can I commit?
➡️Active trading requires hours a day for research, monitoring, and trading.
➡️Holding only needs a few minutes each month (or year) to check your portfolio.
Combining Trading and Holding in One Portfolio?
Some investors combine both strategies.
A common approach is to allocate most of your portfolio to long-term holdings and a smaller portion to active trading.
Keep in mind that you will need to be on top of your trades, so make sure you have sufficient time and resources to dedicate to trading.
But what do the experts have to say?
Expert Opinions: Trading vs Holding Crypto
After researching extensive portfolios and expert recommendations in crypto investing, one thing is clear: 🏆HODLing is the best strategy for seeing high returns.
View this post on Instagram
But why is this the case?
It’s simple: Bitcoin has had exponential growth over the last 10 years, outperforming the S&P 500 and other asset classes.
You can grow your investment by 4x by simply buying and holding BTC for 10+ years.
The Key Takeaway
For most beginners, and even many experienced investors, buy-and-hold strategies outperform active trading in the long term.
Holding Bitcoin gives better and more consistent returns with less stress, time commitment, and emotional risk.
Unless you have the advanced skills, discipline, and full-time dedication needed for active day trading, long-term investing will always be the safer and more profitable option.
Make sure to protect your assets in a non-custodial cold wallet, like Material Bitcoin, to set it and forget it.
FAQs
Which is better for beginners in 2025?
- For most beginners, holding is safer and more effective. It’s simple, needs less time, and avoids trading mistakes.
What mistakes should new investors avoid?
- Avoid overtrading, chasing hype (FOMO), ignoring risk management, and selling in panic.
How are trading and holding taxed differently?
- Trading is a frequent taxable event with higher short-term capital gains taxes. Holding benefits from lower long-term capital gains rates if you hold assets for over a year.
0 Comments