Welcome to the great crypto bull market of 2024–2025. The “banana zone,” as some call it.
You’re here to make a TON of money.
There are two ways to do this with crypto: trading and investing. Make sure you know the difference, or it might cost you!
Mark, aren’t they the same?
Nope.
I consulted the dictionary.
- Trading: buying, selling, or exchanging stocks, bonds, or currency.
- Investing: putting assets to use, by purchase or expenditure, in something offering potential profitable returns, such as interest, income, or appreciation in value.
Trader’s mindset: cash now, not later
Do you have your eye on that amazing memecoin everybody’s talking about? Is your mind racing with possibilities and the potential for huge returns? Are you expecting to cash out in November 2025 and buy some Lambos?
If so, you need to trade the market.
When you trade, you’re trying to make money from changes in the prices of cryptos. You don’t want crypto. You want to sell it for more of your government’s money. Buying is simply the cost of doing business.
This means you will identify entries, exits, stop-losses, and take-profit targets. You may follow the news, read roadmaps and whitepapers, or research key events that make for good buying or selling opportunities.
You keep as little money in the market as necessary and wait for momentum to shift. Then, after the market has gone up a little bit, you buy. After the market has gone down a little bit, you sell.
While an investor will aim to get ahead of the market, you will wait for the market to act and then ride the momentum whichever way it goes.
Investopedia has a nice article about trading, An Introduction to Trading Types.
Investor’s mindset: win no matter what happens
Do you want generational wealth you can bank on for years to come? Durable financial assets that throw off income and generate capital gains?
Chances are, you’re an investor. You don’t worry as much about what happens today or how much cash you can get out of the market. You want to make sure that you are in a position to take care of yourself for as long as you need to.
When you invest, you find projects that will likely grow and succeed, then buy their tokens, stake those tokens for passive income, delegate them for rewards, or deposit them into liquidity pools for a portion of fees and perhaps incentives from using them.
When you do this, it’s like earning dividends or interest and recycling the profits back into the market to compound month after month, like a snowball.
You can also leverage your tokens in other ways, for example, to buy land or items in a metaverse, participate in play-to-earn games, mint NFTs, become a validator, run a node, and participate in the communities that grow around the tokens.
Both make money in different ways
You can do well with either approach, but you need to pick one. What drives success in one approach will drive failure in the other.
For example, as an investor, you will lock up your tokens for weeks or months for passive rewards and income. Free crypto!
That’s terrible if you’re a trader. It defeats the whole point! You don’t want to keep the tokens. You want to sell them as soon as possible!
On the other hand, when you lock up your tokens, you have to accept all the volatility that comes your way. You have to sit through big upswings and downswings. Some altcoins will go up or down 50% in a week, sometimes in a day.
When you need to sell, it may not be on your terms.
As a trader, you will buy after prices go up and sell after prices drop.
That may fly in the face of the adage, “buy low, sell high,” but that is not a trading strategy. When you trade, you may buy high to sell higher or sell low and then short the market.
As one trader put it, you play for the middle of the field, not the red zone.
This makes no sense for an investor. The whole point is to build a position before the market turns so that you can capture limitless upside.
Traders can’t expose their capital like that. They need to wait until there’s less upside because they need clarity about the market’s direction.
In other words, you can’t trade and invest with the same money. Pick one.
Options abound
Some people split their portfolios into a separate trading account and investment account.
Others take an investor’s approach but try to time their entries and exits. You can do well with either approach or another path of your choosing.
Whether you’re here to trade or invest, remember: the key to success is knowing your strategy and sticking to it.
If it helps, subscribe to my newsletter, Crypto is Easy. I sometimes share trading setups, analysis, and commentary to help you with either approach.
We look at trading charts, on-chain data, and various metrics and strategies to navigate the ups and downs so you can make the most of this market and the opportunities it brings.
Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top Bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio and connect with him on Tealfeed.
