Stocks are still a popular investment and trading instrument today. However, since cryptocurrencies have become popular, many have also started to look at Bitcoin and Altcoins. Moreover, when the cryptocurrency price spike in 2020 made many try to enter several cryptocurrencies.
Before stock traders try cryptocurrencies, there are several points that must be understood. You see, the character of stocks with cryptocurrencies is very different. Then, what are the differences between stocks and cryptocurrencies?
The most distinguishing thing is the trading time. For those who are used to trading stocks on the Indonesia Stock Exchange, the trading time is only on Monday-Friday working days. The time is also divided into two sessions, 09:00 WIB – 11:30 WIB and session 2 at 13:30 – 14:50 WIB. That is, traders already know that the most busy time for transactions is only at these hours.
Unlike stocks, the crypto market is open 24 hours and 7 days aka never a holiday. With the time difference, the stock trading strategy with crypto is also different.
For example, crypto trading should also look at times that are busy trading. You see, the price will move more when the transaction goes up. Usually, trading is busy during active days in the United States (US) and Europe, from early morning to early morning in Indonesia.
If stock transactions are in Indonesia, traders must make a minimum transaction of 1 lot or 100 shares. That is, if the share price is IDR 1,000 per share, it means that the minimum issued capital is IDR 100,000 per lot.
Unlike crypto, the price of Bitcoin can be up to hundreds of millions of rupiah, Ethereum is tens of millions of rupiah. However, don’t be afraid, small capital traders can still trade by buying the smallest fraction. For Bitcoin, you can buy up to 8 decimal places.
The character of the stock trading platform with crypto is also different. For stocks, traders can make transactions by becoming customers in securities.
For crypto, traders can make transactions via crypto exchanges such as Binance, Pintu, Tokocrypto, Indodax, and others. Then, for crypto storage, traders or traders can also save in crypto wallet applications such as Metamask and others.
The imposition of transaction fees is also different, stocks usually charge a transaction fee for buying and selling transactions at a rate of about 0.3 percent per transaction. The amount of the fee will be different for each security.
In contrast to stocks, transaction fees in crypto have quite a variety of schemes according to the exchange used. However, the majority of exchanges will charge transaction fees for making money at different rates.
Well, volatility is the biggest differentiator between stocks and crypto. Stocks, especially in Indonesia, have a mechanism to limit volatility when the market is out of control, such as through up and down auto rejection to trading halts, namely the temporary suspension of trading. This means that volatility can be more maintained if there is a drastic decrease or increase.
Unlike stocks, crypto does not have such volatility control. So, crypto prices will move according to supply and demand . That’s what makes crypto can go up or down drastically.
From the connection point of view, stock transactions can be limited to an exchange in one country. For example, a foreign trader who wants to try to buy shares in Indonesia must comply with the rules in Indonesia, such as creating a securities account in the country.
For crypto, the connection is not limited between countries. That is, the number of traders who can trade is also more.
Many think crypto has no fundamentals. In fact, the fact is that crypto also has fundamentals that can be seen from a whitepaper or some kind of prospectus in stocks. This whitepaper contains a crypto project development roadmap, from the development map, crypto traders and investors can see how good the crypto prospects are.
Indeed, the fundamentals of this crypto are somewhat different from stocks. You see, for stocks, fundamentals are seen from their financial performance. If the condition is a lot of debt and losses, it means that the fundamentals are not good.
Cryptocurrencies do have a decentralized mission, but when they want to operate in a country, they still have to follow the rules automate trading. Indonesia itself has legalized cryptocurrency as a commodity, not a means of payment. For that, cryptocurrency is under CoFTRA. On the other hand, stocks which are included in financial instruments are under the OJK regulator.
How? Do you understand the difference between stocks and crypto? Want to know more about technical crypto analysis and risk management?