Differences Between the Stock Market and Crypto Market

Although cryptocurrencies were designed to be an efficient, private form of payment, they quickly became speculative assets that were able to be traded by investors. That being said, the assets that are traded on the stock market and the coins and tokens that are traded on the crypto market do not function in the same manner and trying to approach any of these markets using only knowledge of the other can negatively impact your portfolio. To better understand the key differences between the crypto and the stock market, use this guide to help you figure out how you can differentiate the two markets.

1. You Can Expect to See Larger Losses and Gains in the Crypto Market Than in the Stock Market

Stocks are known for their relatively low losses and gains and stability on the market, making them a desirable option for those who are seeking to slowly grow their wealth. Those who are considering investing in cryptocurrency assets, however, won’t have as much safety or security in the cryptocurrency market but you will be able to see massive gains and losses due to the overall volatility of crypto assets. To give you an idea of how volatile crypto assets can be, simply take a look at the overall growth of Bitcoin in the year 2017. January was already experiencing a large improvement with prices starting at around $9,000. By December, the prices already reached a staggering $20,000. Nowhere on the stock market will you find assets that can achieve this type of growth. However, nowhere on the stock market will you find this type of volatility with assets or exchanges, which means that you can lose just as much as you can gain.

2. It’s Simpler to Begin Trading Cryptocurrencies Than to Trade Stocks

Those who are looking into the stock market can expect to jump through a variety of hoops in order to begin investing in and trading assets. Most exchanges will require you to fill out an extensive amount of paperwork and you will have to have the capital necessary for investing in stocks as well as paying for any of the associated fees that come with using a certain exchange. Cryptocurrencies, on the other hand, are widely available and only require you to have a wallet and a platform that will allow you to purchase your own. Once you have the desired amount, you can begin exchanging on almost any platform you wish, making crypto assets a desirable investment and trading option for those who aren’t capable of trading in the stock market.

3. The Stock Market Only Operates During Certain Hours While the Crypto Market Never Rests

As you may already know, the stock market is only open for a certain amount of time during the weeks, usually from 9:30 a.m. to 4:00 p.m. on Monday through Friday to be specific. This allows for a more efficient and stable ecosystem for investors. The crypto market doesn’t follow this model and instead operates 24/7, which is both an advantage and a disadvantage for investors. On one hand, they can benefit from any news that might boost the prices the moment it happens. On the other hand, things can change at a moment’s notice and you may lose quite a bit of your initial investment if you are not operating on an exchange during that time.

Although the two markets may share some characteristics that resemble the other, the differences between the two are what truly shows the striking separation. If you are currently involved in the stock market and are thinking of becoming involved in the crypto market or vice versa, make sure to review these three main differences to get a better understanding of your desired market and the risks and rewards associated with it.

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