Cryptocurrencies have long been the focus of investors and traders around the world. A pressing question for many is whether to keep cryptocurrency in their portfolio for a long time or decide to sell it. Here are several reasons why holding cryptocurrency may not only be the right decision but also a profitable one.
First, historical data show that cryptocurrencies tend to grow in the long term. While short-term price fluctuations can be significant, many cryptocurrencies demonstrate impressive growth. Holding cryptocurrency allows investors to avoid reacting to short-term downturns.
Second, some cryptocurrencies have low liquidity, which can lead to significant losses when sold during price drops. Holding cryptocurrency helps avoid urgent sales during periods of unsatisfactory liquidity.
The third reason is tax payments. In most countries, selling assets is subject to considerable taxes. Holding assets for a year or longer can reduce the level of tax liability, which is an additional financial incentive for the long-term holding of cryptocurrency in one’s portfolio. More about the taxation of cryptocurrencies in different countries can be found on the TokenTax blog.
Holding cryptocurrency over a long period may provide opportunities to participate in staking projects or receive dividends, which in turn significantly increases the overall profitability of long-term investment.
A strategy to save cryptocurrencies in one’s portfolio allows investors to diversify their assets to reduce risks. After all, cryptocurrency offers an additional opportunity to protect assets from inflation and geopolitical risks.
The global recognition of blockchain technology and its application in various industries indicates that cryptocurrency is becoming an important aspect of the global economy. Looking at holding cryptocurrency more broadly, this process can significantly help investors and traders become an integral part of technological progress and its potential profit.
Certainly, short-term trading of cryptocurrencies can be attractive due to potential quick profits, but holding them might prove to be a more beneficial option for investors in the long term.