Crypto trading has firmly established itself in the financial world and it’s not going away any time soon. With its fast-paced growth and substantial returns in recent years, crypto-assets are gaining an increasing amount of attention from both individual investors and institutions. Unlike traditional trading, crypto trading is decentralized, has no intermediaries, and offers 24/7 investment opportunities. However, is crypto trading better than traditional trading? Keep reading to find out.
Accessibility and Liquidity
One of the primary differences between traditional trading and crypto trading is accessibility. Traditionally, trading was only accessible to the wealthy and elite, but now everyone can take part, thanks to crypto-assets. Crypto-assets operate globally and with equal trading opportunities, removing any barriers to entry.
Further, crypto trading has high liquidity, which means that it is easier to buy and sell crypto-assets quickly. The market is not restricted to certain hours of the day, unlike traditional trading, where investors have to wait for opening hours. This means that people with busy schedules who want to invest can make trades anytime, from anywhere.
Volatility
Volatility is the rate at which an asset moves up or down in price. Crypto-assets are known to be highly volatile, even more so than traditional assets like stocks and bonds. Rapid changes in crypto-assets prices have led to financial experts labeling it as a high-risk market, with exchanges and wallets being hacked, fraudulent activities, and market manipulation.
In contrast, traditional trading is seen as the more stable choice with a lower risk factor. Stocks and bonds offer steady returns, and there is less likelihood of a stock price crashing in a single day. Nevertheless, high-level risks in crypto-assets also offer high returns for investors who are willing to take on a little more risk.
Regulation
Another significant difference between crypto and traditional trading is regulation. Traditional centralized trading is tightly regulated by governments and institutions, which guarantees higher security and better customer protection. However, decentralized trading is not regulated, meaning there is a possibility of fraud and hacking.
Crypto trading being decentralized is one of its significant selling points. It means that investors have more control over their money, but recently regulated crypto trading platforms have started to emerge. One Trading is an EU-regulated crypto-assets exchange with a VASP licence from the Italian regulator, the OAM.
Potential for High Returns
Crypto trading has given investors a new frontier to invest their money, and it’s not hard to see why. Crypto-assets’ value has been on the rise for the past few years, spawning new millionaires and billionaires. Bitcoin, for example, has increased from a few cents to a staggering $64,000 per unit in just over a decade. A quick search online will show you that BTC has been the best performing asset in the last decade.
Traditional trading, while it has historically offered good returns over time, can’t match the astronomical gains that crypto-assets have made. Crypto returns far outweight those of traditional asset classes, however, there is always the risk of incurring losses when trading any asset class.
Conclusion:
Overall, crypto trading is a realtively new and still in its early adoption phase, which presents an exciting investment opportunity that has gained significant ground in recent years. It’s a market that has proved to be highly volatile, with the potential for high returns that come with higher risks. Traditional trading, on the other hand, has the stability and institutioanal adoption that crypto-assets currently lack. It will take time for regulatory and institutional buy-in, but we are seeing with the likes of JPMorgan and BlackRock weighing in on the industry as of late.
Whether to invest in crypto or not will always depend on the individual investor and their risk appetite. But, with the rise of crypto trading, its global reach, and the promise of skyrocketing returns, it seems wise for the modern investor to keep an eye on the development of crypto-assets. One thing is for sure; crypto trading has brought a new paradigm shift in the financial world, and its impact will continue being felt for years to come.
