There are alternative investment strategies that traders can use to profit from the inevitable volatility of the cryptocurrency market.

Trade the volatility

Bitcoin’s current rally has been characterized by a series of pullbacks and rebounds that completed the cycle in a higher position than the one before the pullback. However, things appear to have slowed significantly over the last six weeks with bitcoin failing to hit current historical highs. But it has continued to be highly volatile, which opened up short-term trading opportunities.

However, short-term trading is one of the riskiest strategies. The success rate is very low, which means that unless you are an expert, then you are probably better off buying and holding for the long term. Daly Young, Chief Product Officer at cryptocurrency derivatives exchange Bingbon adds “There are several ways that traders can invest in crypto. The buy and hold strategy works well in bull markets but short-term traders can still make money by capitalizing on frequent pullbacks. And now, there are effective techniques like copy trading that make this strategy easier to execute.”

Investing in cryptocurrencies carries a higher risk than buying stocks and bonds. So if you add that risk exposure to the risk of short-term trading, it leaves less room for scoring wins. This is why platforms like Taiwan-based Bingbon have introduced crypto trading features that allow traders to copy the trades of industry experts.

Buy and hold indefinitely

Buying and holding is what everyone buying bitcoin is essentially doing. The level of volatility means that you could buy bitcoin with a view of selling when it hits a certain price level only to sell sooner. So you cannot really put a time frame on when you plan to sell unless you are a day trader that has no interest in owning crypto.

But then again, if you consider those who invested years ago, you can see the benefits of holding indefinitely. They have managed to ride out all those pullbacks. The current rally looks set to continue further as experts predict bitcoin to trade in the region of $100,000 at some point in the near future. Whether that takes eight months, a year or two years remains to be seen. It is the indefinite wait.