What is the difference between investing in cryptocurrencies and trading cryptocurrency CFDs?

3 answers

• Dec 16, 2021 · 3 years ago
  When it comes to investing in cryptocurrencies, you are actually purchasing the digital assets with the hope that their value will increase over time. This means that you become the owner of the cryptocurrencies and can hold them for as long as you want. On the other hand, trading cryptocurrency CFDs involves speculating on the price movements of cryptocurrencies without actually owning them. CFDs, or Contracts for Difference, are derivative products that allow you to trade on the price movements of cryptocurrencies without the need to own the underlying assets. In simple terms, investing in cryptocurrencies is like buying and holding the actual coins, while trading CFDs is more like betting on the price movements without owning the coins.
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• Dec 16, 2021 · 3 years ago
  Investing in cryptocurrencies can be a long-term strategy where you believe in the potential of the technology and want to hold the assets for a significant period of time. This approach requires you to set up a digital wallet and manage your own private keys. On the other hand, trading cryptocurrency CFDs can be a short-term strategy where you aim to profit from the volatility of the market. CFDs allow you to take both long and short positions, meaning you can potentially profit from both rising and falling prices. However, it's important to note that trading CFDs involves leverage, which can amplify both your profits and losses.
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• Dec 16, 2021 · 3 years ago
  From BYDFi's perspective, we believe that both investing in cryptocurrencies and trading cryptocurrency CFDs have their own advantages and risks. Investing in cryptocurrencies allows you to directly own the assets and potentially benefit from their long-term growth. However, it also requires you to take responsibility for the security of your digital wallet and the management of your private keys. On the other hand, trading cryptocurrency CFDs provides the flexibility to take advantage of short-term price movements without the need for a digital wallet. However, it's important to be aware of the risks associated with leverage and the potential for significant losses. Ultimately, the choice between investing and trading depends on your investment goals, risk tolerance, and understanding of the market.
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