BTC/USD
 
ETH/USD
 
XRP/USD
 
LTC/USD
 
EOS/USD
 
bitcoin dollars as currency

Active vs Passive Bitcoin Investing: Which Is Right For You

· 26 Jan 2019 in Analysis

Bitcoin investing is similar to any other form of investing in regard to technique. The rest just depends on the economic environment, common jargon and a learning curve of the different systems. If you’ve invested before, investing in Bitcoin or other cryptocurrencies shouldn’t be too difficult to get your head around.

At some point, you’re going to have to decide how to invest your money. Do you go the passive route or full active by buying and trading Bitcoin?

Both sides are lucrative and have perfectly reasonable arguments for their uses, so finding the one right for you is a personal decision based almost solely on the state of your bank account.

Passive Investing

Passive investing is the safer and far less thrilling option of the two. It’s the waiting game everyone’s warned you about in investing money. To be passive is to be patient, extremely so, potentially waiting years for a payoff. However, you will almost always see a payday with the passive option.

Cryptocurrencies, however, are strange and very new beasts. In normal investments, passive techniques will result in something good, but that isn’t always the case with Bitcoin.

Some will tank suddenly for no discernable reason, and they’re just as likely to skyrocket on other days. If you don’t know much about Bitcoin and aren’t willing to invest a lot of time at the start, passive investing may be something to tackle later.

Active Investing

Where passive is slow, active is fast. Active investing has about the same number of risks, but they can add up quickly in a totally different abstract. Basically, active is when you’re putting a lot of money in to get a lot more out very quickly. You won’t usually get as much of a turnaround per dollar as you would with passive, but active is the way to make a quick buck.

Because you’re hoping for quick fluctuations, you won’t have as much time to get to know your investments as you might like. This process is a waiting game, but not as much of one. With active, when you lose, you’ll lose big and fast.

If you’re making a lot of investments at once and they all tank, you’re out way more than you’re likely comfortable with.

Active Versus Passive

The initial differences are obvious. Passive is slow, costs less money and usually gets a small payout at the end. Active is fast, costs more money and usually nets a large payout.

If you’re just getting into investing, these are the bare bones of the two techniques, but you should always keep in mind that both are risky and require you to decide what you’d personally like to do.

For a more detailed argument, you’ll find the passive technique consistently meets below the comparative index, mostly because the money slowly builds up over time rather than all at once. As such, passive will almost always look bad on paper but great for the long haul. At the same time, active might be too fast-paced, and the reflected stock’s price might not be updated soon enough to show the true value, making you potentially lose money for essentially no reason.

Risky Business

There’s always a risk with investing, whether you’re on the New York Stock Exchange or fiddling with cryptocurrencies.

The argument between the better option of active versus passive is another very old great debate with no clear winner. You’ll have to do your own research and decide for yourself which is best for your situation.

Once you’ve learned about what each technique is capable of and have a better understanding of what to do going forward, you should find the decision a bit easier to make.

The Bear Market Report
Our Bear Market guide not only helps you survive this crypto winter, but also guides you through the foundation you'll need to thrive in the next bull run.