What crypto traders can learn from the stock market

It’s been more than 15 years since the first crypto exchange, BitcoinMarket, appeared online, giving a start to the earliest meaningful trades in cryptocurrency. Since then, the crypto market and trading cryptocurrencies have matured significantly, with countless exchanges, decentralized finance (DeFi) protocols and other trading platforms currently supporting the game of buying and selling crypto.

Despite the ongoing maturation process, the crypto market is still vastly different from the stock market. As a relatively young market, crypto has starkly different characteristics from those applicable to the highly mature equities trading environment. Compared to stocks, the crypto market is more volatile and focused on shorter-term trader strategies — just some of the many differences easily observable between the two markets.

Yet, there are many strategies, concepts and principles of the stock market that traders can adopt, in many cases with requisite adjustments, to help them be more successful in the fast-paced, emotion-filled world of cryptocurrency trading. The key here is to differentiate what works for crypto from the world of equities trading — in order to determine what can be adapted and what should remain exclusive to equities. 

Key Takeaways:

• Crypto traders can adopt some of the more useful tools, concepts and strategies from the equities market.

• While direct application of project valuation techniques used for stocks isn’t feasible or advised for crypto traders, it’s critical to look at fundamental data pieces, such as market caps, project-related data and investors behind the project.

• Applying risk management techniques, avoiding emotions and planning for the long term are among the key concepts that crypto traders can adopt from the common behavior of equities traders.