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Blockchain technology and digital currencies got their start with bitcoin in 2009. At first, big investors thought cryptocurrencies were nothing. Since then, cryptocurrency markets have grown by leaps and bounds.

It’s not without drama, though. While some experts expect cryptocurrencies to be a useful addition to traditional financial markets, others worry they’ll crash and take the rest with them.

The impact of digital currencies on the financial markets cannot be denied. The primary purpose of crypto trading is the same as trading traditional stocks: to make money. Therefore, more and more investors are adding crypto to their portfolios. A CNBC study found that one in ten Americans is currently investing in cryptocurrency.

Digital assets have made investing easier than ever. High volatility creates more income potential. But you also have the ability to trade around the clock, high leverage, low commissions, and transaction thresholds. It’s no wonder that so many novice investors and experienced exchange traders are switching to cryptocurrency. In this article, let’s examine the similarities and differences, as well as the pros and cons of trading cryptocurrencies and stocks.

Buying cryptocurrency is like buying stocks, right?

Because buyers exchange funds with sellers of digital assets, and prices are determined by supply and demand. Transactions are made online, and both investments are risky.

Stocks and cryptocurrencies behave the same way. If you’ve traded stocks or forex, you’ll have no problem with the interface. However, it’s important to note that while the fundamental analysis of a cryptocurrency or token is slightly different from that of a stock, the basic trading mechanism and general technical analysis are almost identical.

For example, the markets offer similar types of orders. Market orders buy or sell at the current market price. Limit orders have a set price at which the trader wants to buy or sell an asset. A stop-loss order is similar in that it is executed only after a certain price level is reached.

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Intraday trading in stocks and cryptocurrencies is the same thing. The trader speculates on the rate of the securities during one trading day. The same trading strategy applies to cryptocurrencies, with the only difference being that the cryptocurrency markets don’t close.

Traders use cryptocurrency strategies like swing trading, range trading, scalping, and arbitrage. The cryptocurrency market is volatile and liquid, and these are the most important factors for making money on the market.

What’s the biggest difference between cryptocurrencies and stocks?

It is not unusual for cryptocurrency portfolios to grow more than 100% in a matter of weeks. There are substantial profits in a short period of time, and there’s a low entry barrier. The entry threshold into the cryptocurrency market is quite low since it is possible to trade in tenths and hundredths of them. However, the higher the potential for substantial earnings, the higher the risk.

In general, cryptocurrency prices aren’t stable, so many experts consider cryptocurrency trading to be more of a gamble than a real investment. Stock markets, by the way, are also volatile, but not as much.

When you compare cryptocurrencies and stocks, the following characteristics stand out.

Lots of liquidity

Liquidity is the ability to buy or sell an asset in the market quickly and smoothly. Crypto markets are inferior to stock markets on this indicator, because stock markets have higher trading volumes, resulting in more liquidity. The crypto market has fewer active traders, so there is less liquidity.

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The low market capitalization of coins, tokens, and small cryptocurrency exchanges often creates liquidity problems and makes these assets unfavorable to invest in. But there are similar issues with stocks, for example, when investing in small stocks over-the-counter or working with microcap brokerages.


By buying shares on the stock market, an investor becomes a shareholder and is entitled to various privileges, such as capital gain or loss, dividends from profits, and voting rights in various company matters. However, if the purchase is made through a brokerage company, the stock is technically owned by the broker, not the purchaser. Very few investors own their own shares.

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If you buy a cryptocurrency, you become the sole owner of it. The coin or token is usually traded and held on exchanges, but it can also be transferred to a separate electronic device (cold storage), which is usually safer than an online wallet. If the secret keys to the wallet are kept safe, you won’t have to worry about theft.

Volatility is high

Cryptocurrencies and stocks have similar volatility issues. When the price fluctuates a lot, it’s hard to pinpoint the right time to open or close a trade. However, in the stock market, traders have access to information that can help them make trading decisions, and the stock market tends to grow over the long term despite frequent price fluctuations.

Markets fluctuate only during the trading day. Cryptocurrency markets, on the other hand, never close and are influenced by other digital assets, crypto events, and global stock market fluctuations.

Since the market is influenced by so many variables around the clock, cryptocurrencies are more volatile than stocks. Because of the high volatility, corporate investors cannot invest in cryptocurrencies, which means that traders have more opportunities to enter and exit trades, making high profits.

Cryptocurrency market

Stock markets are regulated by law, and margin requirements are pretty strict.

In the cryptocurrency market, derivatives trading is more affordable than margin trading on the stock market. There is only a one-dollar deposit on the leading exchange, whereas the stock market has never heard of such figures. The size of leverage on the leading digital asset exchanges varies from 2* up to 100* (or more).

There’s no diversification

The goal of diversification is to hold assets that behave differently in various markets. Stocks, in fact, have fewer options for diversification, since all stock markets are affected by the global economy. Bonds and stocks are affected by monetary policy and inflation.

The low dependence of Bitcoin and Ethereum on stock market assets makes them a good way to diversify your portfolio. The prices of cryptocurrencies depend a lot on stable coins, such as BTC and ETH. Stocks and bonds depend on a variety of economic factors, individual indicators of companies and sectors, as well as supply and demand within those indices, industries, and services.

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What’s better for short-term investments, crypto or stocks?

In the short-term, cryptocurrency offers the potential for rapid high profits and equally rapid losses. The average stock market return is around 10% per year, but the return on bitcoin, which is the most profitable asset of the decade, is 230%.

Traders should be aware that digital assets can soar to the moon (the term “native”, or To the Moon, describes a lightning jump in prices when prices rise beyond the chart) in just a few hours or collapse in a matter of minutes when performing the “pump and dump” scheme. Not all transactions bring stable, guaranteed profit. However, the volatile state of the cryptocurrency markets makes them ideal for traders looking to make quick money.

What’s better for long-term investments: cryptocurrencies or stocks?

The stability of stock markets attracts investors for a long time. For example, the S&P 500 has tracked the performance of five hundred largest US companies for 46 years, and 10 of them were unprofitable. However, in the long run, the portfolios have grown anyway.

Aside from high volatility, cryptocurrency markets face the influence of the authorities, slow implementation in the rest of the world, and cybersecurity threats. Despite these risks, if you study how it works and act carefully, the cryptocurrency market can become a useful tool.

Whether you invest in cryptocurrency or stocks, it’s best to play for the long run. If you’re not an intraday trader, it’s best to stay away from short-term volatility.

Final thoughts

When choosing an asset to trade with, you should start with your experience, your trading strategy, and the amount you want to invest. Stocks are better for those looking for predictable, limited investment growth in a low volatility environment. Cryptocurrencies are better for those who want to diversify their portfolio and insure it against inflation and factors that negatively affect financial markets.

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