Highly volatile price trends characterize the cryptocurrency market. The trend operates on the extremes making investing in it very risky. You could almost say it’s ‘gambling.’
Since investing in the crypto market leaves investors open to total loss, it is akin to gambling. A trader can lose their funds if they invest in the cryptocurrency as it has no guaranteed returns.
Taking Bitcoin into consideration, it has reached heights of over $65K but is trading at $30K. The $65K mark was hit in 2021 while it is trading at over 50% lower at the moment, showing that its price is highly volatile. The same coin has also traded below $1K during its early days.
The coin grew steadily since the genesis block was mined in 2010 to exceed a market cap of $1T during its November 2021 ATH. At the moment, it has a market cap of $578.49.
Looking at Ethereum, it launched at $0.311 in 2015 and has grown over time to an ATH of $4800 in 2021. At the moment, it is trading at $1931.52.
We will look at the two coins since they are the largest ones in the crypto space. While they have high volatility, long-term investors are still in huge profits. On the other hand, gambling is the staking or betting on something of value in a risky place, hoping to earn profits fom it and mostly on a short-term basis.
The Truth About the Claim
While it can be argued that cryptocurrencies are risky and share that attribute with gambling, they are two very different entities. Gambling involves the betting of assets, while hodling cryptocurrencies involve investments.
The difference between investing and betting comes in place where skills on strategies are involved. Talking of strategy doesn’t mean picking odd numbers only on a certain day during gambling on spinning wheels. It means the use of logical means of hedging against the volatility of an asset while capitalizing on it. It also means minimizing the risks involved in the investment process.
In crypto investment, there are several ways an investor can take advantage of the market conditions and make their trades more profitable. One of the methods is sat stacking. Sat stacking is done in Bitcoin, where investors hold their BTC funds over a long term while adding to it in Satoshis (Smallest Bitcoin units) regularly along the way. In the end, they make huge profits as they have been purchasing the coin in a way that fits their budget at the best possible price since they averaged throughout their investment period. This strategy can be used in other coins too.
This strategy is common to Dollar Cost Averaging, mostly coupled with the Lump Sum investment method. An investor locks a significant amount of funds in a given crypto asset and then continues adding to the reserve well-distributedly, aiming to average the coin’s investment price.
There are other strategies that investors can use to maximize their profits in the crypto space. One studies the market sentiments and charts and then exits before a dip or a bear market. They sell their assets at the highest prices and re-enter the market when the prices are down, thus getting extra coins from the same amount they had previously held in the asset.
If you compare the nature of the two methods of making money, crypto is more skill-based than luck which disqualifies it as gambling. Therefore, the claim that investing in cryptocurrency is gambling is another huge FUD that investors should avoid listening to. Without workable strategies, you may not survive in the crypto market, believing that you failed since it is a gambling process. It is not!