Crypto vs. Stocks: Which Is Better For Investing?

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With the creation of Bitcoin in 2009, the world was introduced to digital currency and its underlying blockchain technology. When looking at crypto vs. stocks, institutional stock investors initially dismissed cryptocurrencies as a fringe movement. Since then, cryptocurrency markets have since grown by leaps and bounds.

However, this nascent disruptive technology hasn’t been free of controversy. While some experts expect the crypto market to be a valuable hedge to traditional financial markets, others fear that crypto could crash and possibly drag the broader market down with it. 

Regardless, the impact of digital currencies on financial markets is undeniable. Trading crypto fulfills needs similar to trading in traditional stocks — such as the potential to grow wealth, with more investors adding cryptocurrencies to their portfolios. According to CNBC research, at least 1 in 10 Americans are currently investing in crypto.

Trading digital assets make investing easier than ever. Comparably higher volatility means more potential opportunities. Combine this with around-the-clock trading, competitive leverage, low fees and low minimum trades, and it soon becomes clear why so many new investors and experienced stock traders are beginning to make the switch to crypto. This article will lay out the similarities, differences, and pros and cons of trading in crypto vs. stocks.

Is Buying Crypto Like Buying Stocks? 

Buying cryptocurrencies is like buying stocks because buyers are matched to sellers of digital assets, and the price is determined by supply and demand. Transactions can similarly be done online, and both investments can build wealth or lose it.

Cryptocurrencies and stocks work on very similar mechanics. If you’ve traded stocks or forex, you’ll feel right at home in front of any cryptocurrency exchange’s familiar interface. While a fundamental analysis of a cryptocurrency coin or token will invariably differ from the factors affecting conventional stock prices, the basic trading mechanism and general technical analytics are almost identical. 

For example, you can submit similar types of orders to exchanges on both markets. Market orders either buy or sell at the present market price. Limit orders include a predefined price at which the trader hopes to buy or sell. A stop-loss order works similarly to a market order. It only executes once a predefined price level is triggered. 

Another similarity of crypto vs. stocks is between stock day trading and spot trading cryptocurrencies. Stock market-based day trading capitalizes on short-term market movements to buy and sell stocks within the trading day of a market. Cryptocurrency markets never close. The same short-term trading strategies employed for stocks and shares are viable for cryptocurrencies. Intraday trading strategies like swing trading, range trading, scalping and arbitrage all apply. Market volatility is the key to profitable day trades, and deep liquidity is preferred — two fundamental characteristics of many cryptocurrencies.

Key Differences Between Cryptocurrencies And Stocks 

Gains of over 1000% in a matter of weeks are not unheard-of in crypto markets. Lured by the promise of substantial short-term profits and a low barrier to entry, more and more investors are jumping on the cryptocurrency bandwagon when weighing crypto vs. stocks. Because cryptocurrencies can be traded in fractional units, the entry requirements are low. But with the possibility of massive gains in a short time also comes higher risk.

Cryptocurrency prices have the stability of a roller coaster, and many industry experts consider trading in crypto more as gambling than actual investing. This price volatility is shared with stock markets, but on a smaller level.

The key differences when considering crypto vs. stocks are best viewed through the lens of the characteristics which follow.

Liquidity Issues

Liquidity is the measure of your ability to buy and sell at will in any market. Stock markets have the upper-hand in this crypto vs. stocks comparison as they posses higher trading volumes than cryptocurrency markets and, as such, are more liquid. Comparatively, the crypto market has significantly fewer active traders and, therefore, may suffer liquidity issues.

However, cryptocurrencies are not equal when considering liquidity. Bitcoin is the most liquid digital currency because it has the highest numbers of sellers and buyers willing to trade.

Low market capitalization coins and tokens and smaller cryptocurrency exchanges normally cause liquidity issues for large investors, rendering them uninvestable and unpreferable, respectively. Similar issues are typically encountered in stock trading only when trading over-the-counter penny stocks, or working with micro-cap stock brokerages.


Purchasing shares of a stock traded on a stock market awards the buyer equity in the company. As an equity holder, the investor is entitled to various benefits, such as capital gains or losses, dividends based on profits, and shareholder voting rights. However, buying through a brokerage technically means that your broker owns the shares. Very few investors bother with trying to own shares in their names.

Buying cryptocurrencies means you can transfer ultimate ownership of the coin or token to the investor. Initially, cryptocurrencies are typically traded on an exchange and stored in an exchange wallet. However, you can transfer the cryptocurrency to a hardware device (cold storage), which is generally safer than an online wallet. You don’t have to worry about an intermediary being hacked if you keep the private keys to your crypto secure.

High Volatility

One similarity when considering crypto vs. stocks is that they’re both volatile. With price fluctuations that are difficult to predict, it’s virtually impossible to determine the exact time to enter or exit a trade. That being said, the stock market allows investors and traders access to company information, which they can use to decide how to trade their securities. Furthermore, the stock market, despite regular price movements, has tended to grow over the long term. 

Stock markets only fluctuate during the fixed span of a business day. Cryptocurrency markets never close, and experience fluctuations relative to other digital assets, happenings in the crypto space and the movement of global stock markets.

With the vast spectrum of influences that are present 24 hours a day, cryptocurrencies experience more volatility than stocks. More market volatility also means less stability in price, which may keep institutional investors from participating in crypto. It also means there are more entry and exit opportunities for trades, with a potentially greater scope for large gains.

Unrestricted Cryptocurrency Market

Stock markets are regulated, and margin requirements are often strict and tightly monitored. Portfolio minimums may also keep traders from using leverage. 

When comparing crypto vs. stocks, cryptocurrency derivatives trading is definitely more accessible than stock market margin trading. The world’s leading derivatives exchange has a minimum deposit of just $1, making leveraged trades available with the lowest amount of funds possible. Leverage starts as low as 2×, reaching as high as 100× or more on leading digital asset exchanges.

Lack of Diversification

The purpose of diversification is to hold assets that perform differently in diverse markets. Stocks may actually offer less diversification than crypto, as they tend to follow the broader economy. Factors such as inflation and monetary and economic policies have an impact on stocks and bonds. 

Bitcoin and Ethereum’s low correlation with stock market securities and assets make cryptocurrency investing an attractive strategy in portfolio diversification. The prices of cryptocurrencies largely move relative to those of coins that have stability, like BTC and ETH. Stocks and shares, on the other hand, respond to broad economic factors, the individual performance of companies and sectors, and the interconnected supply and demand of related indexes, industries and services.

Crypto vs. Stocks: Which Is the Better Short-Term Investment?

Cryptocurrency is a promising short-term investment that offers the potential for large, fast gains — and equally rapid losses. With the average return on the stock market at roughly 10% per year, Bitcoin has risen as the top-performing asset of the decade with an average annual return of 230%.

Keep in mind that digital assets can shoot to the moon within hours or crash in minutes, for instance with a pump-and-dump scheme. Not all trades yield steady returns or guaranteed gains. However, the fluctuating state of cryptocurrency markets makes them ideal for day traders looking to recognize patterns and trends and claim immediate profits.

Crypto vs. Stocks: Which Is the Better Long-Term Investment?

The stability of stock market trading is a factor that draws many long-term investors. After all, the S&P 500, which has tracked  500 large publicly-traded and listed U.S. companies since 1975, has shown losses in 10 out of 46 years . Yet over time, it’s resulted in long-term portfolio growth.

Besides the systemic risk of high volatility, crypto also faces regulatory uncertainties, slow mainstream adoption and cybersecurity threats. Despite these risks, crypto can be rewarding if you make an effort to understand the market and tread carefully.

Whether investing in crypto or stocks, playing the long, steady game is the way to go. Unless you’re a day trader, it’s best to avoid the short-term volatility in either market. 

The Bottom Line

Deciding which to trade when comparing crypto vs. stocks largely depends on your expertise, trading strategy and the amount of money you’re investing. Stocks are better for those who want predictable, limited investment growth over the long-term, with relatively low volatility. Cryptocurrencies are better for those who wish to diversify and seek a hedge against inflation and factors adversely affecting the financial markets.


This article is intended for and only to be used for reference purposes only. No such information provided through Bybit constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific person. These forecasts are based on industry trends, circumstances involving clients, and other factors, and they involve risks, variables, and uncertainties. There is no guarantee presented or implied as to the accuracy of specific forecasts, projections, or predictive statements contained herein. Users of this article agree that Bybit does not take responsibility for any of your investment decisions. Please seek professional advice before trading.

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