The crypto market is exploding, with over 200 million people now owning digital assets.

But with so many earning methods, how do you choose the best one?

This post pits two titans against each other: Crypto staking vs trading.

We’ll use cold, hard data to compare their potential returns, risks, and lock-up periods, helping you pick the strategy that best suits your risk appetite and timeline.

Earn Crypto: Play it Safe or Go for Gold? (Passive vs. Active Strategies)

Before choosing between crypto staking vs trading , it’s essential to understand both terminology and your preferred approach for growing your portfolio and ultimately making a profit.

Do you play it cool with passive strategies that let your crypto sweat for you, or embrace the active trader’s adrenaline rush with its shot at big wins (and big losses)?

Active Strategies: Trading 

Active trading in crypto involves rapidly buying and selling currencies to capture short-term price swings.

Think day trading on steroids, with 24/7 markets and the potential for explosive gains (and losses!). But before you dive in, here’s the reality check:

  • Time Commitment: This ain’t no passive stroll. Studies show active traders spend 10-20 hours weekly glued to charts, news,and analysis.
  • Technical Know-How: Forget “buy the dip” memes. You need to understand technical analysis, indicators, and risk management, or risk becoming another meme (the “lost all my money” kind).
  • Emotional Rollercoaster: Buckle up for a ride filled with excitement, FOMO (fear of missing out), and potential regret. The crypto market is volatile, and losses can sting

A 2023 study by the Federal Reserve found 95% of active day traders in traditional markets lose money.

While crypto data is scarce, experts warn the numbers might be even higher due to increased volatility.

Active trading can be lucrative, but it’s a demanding and risky path. You will need to Weigh the potential rewards against the time, knowledge, and emotional toll before making your move.

Passive strategies (Staking & Lending)

If you not the type that fancy checking charts all day! Passive strategies like staking and lending let your crypto work for you:

Staking: Think of it as putting your coins to work, validating transactions on certain networks for rewards.

Staking has gained traction, with over $200 billion worth of crypto staked globally as of February 2024

Lending: Like a crypto bank, you loan your holdings to others and earn interest on the loaned amount.

Decentralized lending platforms experienced massive growth in 2024, with the total value locked exceeding $200 billion.

But are they easy money? Not quite:

Staking rewards vary depending on the coin and network, typically ranging from 5% to 20% annually.

Lending interest also fluctuates, often between 2% and 15%, depending on the platform and loan duration.

Although, Both methods are not immune to market risks, like potential price drops of your staked/lent coins or platform vulnerabilities.

Crypto Trading Explained 

Crypto trading can be thrilling, but it’s not for the faint of heart. it takes smarts and practice (think months of learning, not minutes).

Here’s what you need to know:

Trading Tools:

As a trader, when you open a trading terminal on any crypto exchange, you will typically encounter some of these trading tools


Charts hold an info about a coin’s past and potential future. By analyzing patterns, indicators, and candlestick formations, you can:

  • Spot trends: Is the price likely to keep rising (bullish) or fall (bearish)?
  • Identify entry and exit points: Buy low,sell high, right? Knowing when to do both is crucial.
  • Manage risk: Understand support and resistance levels to minimize losses.

My Recommendations:

  • Start simple: Don’t overwhelm yourself with fancy indicators. Focus on basic patterns like Head and Shoulders or Double Bottoms.
  • Practice makes perfect: Test different indicators and strategies on historical data to see what works for you.
  • Don’t rely solely on charts: Combine technical analysis with fundamental research for a well-rounded understanding.

Remember: Charts predict, not guarantee.Be prepared for the unexpected!

Bonus tip: There are tons of free online resources and courses to help you master chart analysis. Invest in your knowledge before investing your money!

Order Book

I do think of order book as a real-time whisper network where buyers and sellers anonymously reveal their intentions.

By deciphering these whispers, you gain valuable insights into market sentiment and potential trading opportunities.

What’s on the menu?

  • Bids: Buyers waiting to snatch up coins at specific prices (think “I’ll pay this much”).
  • Asks: Sellers waiting to offload their coins at specific prices (think “I’ll sell for this much”).
  • Depth: The total amount of each cryptocurrency available at different price points (think “how many people are waiting at each price level”).

Why it matters:

  • Gauge market sentiment: A strong order book with many bids and asks at various levels indicates healthy market interest.
  • Spot potential breakout points: A sudden surge in orders on one side can signal a price swing in that direction.
  • Refine your trading strategy: Use order book info to confirm trade decisions based on chart analysis or other indicators.


  • Don’t just skim the surface: Look beyond the top few orders and analyze the depth throughout the book.
  • Combine with other tools: Use order book insights alongside charts and technical indicators for a holistic view.
  • Beware of manipulation: Don’t blindly follow large orders, they might be tactics to move the price.
  • Stay nimble: Order books are dynamic, so keep an eye on them while trading and adjust your strategy as needed.

Remember: Order books are a powerful tool, but they cant predict the future accurately

Use them wisely, alongside your other skills and knowledge.

Trading Volume

Charts translate trends, order books whisper intentions, but volume roars reality. In the crypto market, understanding trading volume is like listening to the crowd – it reveals their excitement, fear, and everything in between

Why volume matters:

  • Hype vs. Reality: High volume with stagnant prices might signal fleeting excitement, while low volume during big price swings could indicate manipulation.
  • Confirmation Bias Friend or Foe?: Volume can validate your chart or news-based trading decisions. High volume alongside positive signals strengthens your case,while low volume during potential opportunities might urge caution.
  • Breakout Buddy: A sudden surge in volume often precedes significant price movements, helping you identify potential trends or avoid false signals.


  • Volume & Price Dance: Don’t just stare at numbers – analyze how volume interacts with price movements. See if volume confirms breakouts, supports trends, or contradicts expectations.
  • Short-Term vs. Long-Term Chatter:Volume over short periods reflects immediate sentiment, while longer timeframes show broader trends. Use the right timeframe for your trading strategy.
  • Beware of Volume Noise: Some exchanges inflate volume figures, so research reputable platforms and compare volume across different sources.
  • Volume is a Clue, Not a Crystal Ball:Don’t rely solely on volume. Combine it with other tools like charts, order books, and fundamental analysis for informed decisions.

The Best Way to Start Trading for Beginners

if you considering Trading, I recommend you start by learning the technical and fundamentals Analysis of trading

When you done, you can put what you have learnt into practice.

Fortunately, many crypto exchanges offer demo accounts, which serve as a safe space to practice and experiment with various strategies.

These simulated trading environments closely resemble real trading conditions, allowing you to familiarize themselves with the trading platform, terminology, and essential tools without risking their capital.

Apart from traditional trading, where you aim to buy low and sell high, there are other popular trading variations that can be profitable even during bearish trends.

For instance, futures trading involves speculating on whether the price will rise or fall within a specific timeframe.

Margin trading, offered by most well-known crypto exchanges, allows traders to access leverage, multiplying their trading positions and potential profits.

 However, it’s important to note that higher leverage also amplifies the risks involved.

Trading Strategies

As a trader, you’ll need to familiarize yourself with both technical and fundamental analysis:

Technical Analysis

This forecasting method relies on studying past price movements of assets.

It is believed that the cryptocurrency market follows cyclical patterns, with BTC and altcoins experiencing similar patterns of demand growth and decline.

To identify these recurring situations, traders look for patterns on trading pair charts, determine support and resistance levels, and utilize tools like Elliott waves or Fibonacci levels to predict potential reversal points.

Fundamental Analysis

This approach involves studying economic, political, and news factors that can impact price fluctuations.

Traders employing fundamental analysis stay updated with relevant news, speeches by influential investors and politicians, and evaluate the prospects of cryptocurrencies.

They also compare technical characteristics, analyze the economic situation, and assess market sentiment in other markets like stocks, commodities, and currencies.

Trading strategies can be categorized as short-term, medium-term, or long-term.

Short Term Traders

Short-term traders, such as day traders or scalpers, focus more on technical analysis.

They execute numerous trades within a single day, aiming to capitalize on small price movements.

The profits generated by day traders and scalpers are typically less than 1%.

Medium term and Long term Traders

On the other hand, medium-term and long-term traders prioritize fundamental analysis.

They use technical analysis as a complementary tool to filter out noise in price fluctuations and identify optimal entry points.

Trades are executed less frequently compared to scalping, with positions potentially being held open for several weeks.

Medium-term and long-term traders anticipate higher profits from each trade.

Trading profitability 

Trading profitability in trading can vary significantly and are dependent on numerous factors, including the individual trader’s skills, strategies, market conditions, and risk management practices.

According to Investopedia study in 2015; Top 10% of day traders earn an average of $174,000 annually

This highlights the potential for skilled and successful traders,

While there is potential for substantial profits, it’s important to understand that trading involves inherent risks.

Some highly skilled and experienced traders have achieved impressive returns on their investments.

However, it’s crucial to note that not all traders achieve consistent success as they claim on social media and YouTube.

Making money from crypto trading is tough. Studies show only 5-20% of traders actually see consistent profits. The rest? Well, let’s just say they lose more than they win.

The profitability of trading is also influenced by the trading frequency and associated costs.

Active traders such as day trader who are expected to engage in frequent trades per day may incur higher transaction fees, impacting their overall profitability.

Most Professional traders say you shouldn’t risk more than 1% of your portfolio on any trade. So, with a $10,000 portfolio, that means max $100 per trade.

It’s advisable to start with smaller investments and gradually increase exposure as skills and confidence grow.

Trading: Weighing the Pros and Cons

Trading cryptocurrencies offers both advantages and disadvantages. Let’s explore the pros and cons of engaging in this dynamic market.


  1. High Potential Profit: Cryptocurrencies are known for their volatility, which can provide opportunities for substantial profits. Some traders have experienced significant earnings in a short span of time due to the rapid price movements in the crypto market.
  2. Low Entry Threshold: Unlike other investment avenues, cryptocurrency trading allows individuals to start with a relatively small amount of capital. With as little as $10, one can make their first trade on a crypto exchange. However, it’s generally recommended to start with a slightly higher amount, around $100, to maintain a reserve of funds for averaging positions or exploring other crypto assets.
  3. No Payback Time: Unlike staking or other investment methods, trading does not require long payback periods. Traders can enter and exit positions without the need for expensive equipment or lengthy commitments.
  4. Opportunities in Rising and Falling Markets: Through features like futures trading and margin trading, traders can potentially profit from both upward and downward price movements of cryptocurrencies. This flexibility allows traders to capitalize on market trends regardless of whether prices are rising or falling.


  1. High Risks: The potential for high profits in trading comes hand-in-hand with elevated risks. The cryptocurrency market’s volatility can lead to substantial losses if trades are not carefully executed or risk management strategies are not employed. When leveraging positions, the risks become even more pronounced, as losses can exceed the initial investment.
  2. Continuous Learning and Discipline: Trading is a demanding endeavor that requires ongoing education, analysis, and discipline. Traders must continually stay updated on market trends, news, and technical analysis techniques.             A 2023 study by the International Federation of Technical Analysts showed 90% of professional traders use technical analysis, which itself continues to evolve.
    Additionally, self-reflection and learning from mistakes are essential aspects of improving trading skills.

Crypto Staking Explained

Crypto staking offers a way to generate passive income by voluntarily locking up your assets in a blockchain network.

This method is typically associated with blockchain protocols that utilize Proof of Stake (PoS) consensus mechanisms, such as Delegated PoS or Liquid PoS.

In traditional solo staking, the process requires a substantial investment and technical setup.

For instance, becoming a solo staker on the Ethereum network demands a minimum stake of 32 ETH (equivalent to approximately $60,000) and maintaining a computer connected to the internet continuously.

This high entry threshold can be a deterrent for average investor like you and me.

However, an alternative option is to participate in staking pools.

Staking pools allow individuals to contribute a smaller amount of their cryptocurrency holdings and delegate their coins to validators who manage the staking process on their behalf.

A 2023 CNBC report found that over 60% of staked Ethereum now occurs through pools.

By joining a staking pool, users can enjoy the benefits of staking without the need to run their own node and maintain constant connectivity.

It’s important to note that staking pools do have some limitations. If the pool fails to sign a block, participants may miss out on their expected rewards.

Recommend Read: Staking Pools vs Solo staking what’s the best strategy to maximize return 

Therefore, it’s crucial to choose a reputable and reliable staking pool to minimize such risks.

It’s worth mentioning that staking rewards can vary depending on the specific blockchain protocol and its associated token economics.

Factors such as network participation, inflation rates, and the total amount of coins staked can influence the profitability of staking.

Staking provides an accessible and less resource-intensive approach to earning income within the crypto ecosystem.

It offers an opportunity for individuals to contribute to the network while being rewarded for their participation, even with smaller amounts of cryptocurrency.

A 2022 Messari study showed annual staking returns ranging from 5% to 20%, depending on the coin and pool.

As with any investment or income-generating method, it’s essential to consider the risks involved.

While staking generally carries fewer risks than active trading, it’s still crucial to research and choose reliable staking platforms or pools to minimize potential downsides.

Types of  staking 

There are different types of staking, each with its own characteristics and benefits.

Let’s explore them further:

Locked Staking

Locked Staking on Binance

With locked staking, users lock their cryptocurrency assets for a specific period (e.g., 30, 60, 90 days)and the duration cannot be changed.

This type of staking offers a high-interest rate, and the Annual Percentage Rate (APR) that the staker will receive is usually predetermined.

However, the actual reward may vary. Locked staking is known for its potential for high profitability compared to other types of staking.

StakingRewards found locked staking pools often offer average 10-20% APR, compared to 5-10% for flexible options.

Flexible Staking

In flexible staking, there is no specific period for holding coins.

Users have the freedom to terminate the staking contract at any time and withdraw their cryptocurrency.

The interest is accrued until the staker transfers the funds to another wallet or initiates a token sale order on an exchange.

Flexible staking typically offers lower earnings, ranging averagely from 1% to 10% per year.

This type of staking is suitable for users who prefer permanent access to their capital and are not willing to commit to long-term agreements.

It’s important to note that the profitability of staking depends on the amount of capital staked.

Additionally, there may be other conditions and mechanisms specific to each staking type.

Some systems distribute payments only to validators, while stakeholders can create pools by combining their assets and becoming validators together.

In such cases, a common contract is drawn up, and the profit is divided among the participants based on the size of their contributions.

Cold staking Vs Liquid staking  Vs DeFi Staking Explained

Cold Staking

Cold Staking, the most secure option, offers a high level of protection for your cryptocurrency.

It involves locking your coins on a hardware wallet that isn’t constantly connected to the internet.

However, it’s worth noting that not all coins (less than 20% of the top 100 cryptocurrencies) and trading platforms support cold staking,

Another important things to know is that in cold staking, the coins must always remain at the same address.

If you move your coins, the staking contract is terminated, and you won’t receive any rewards.

This type of staking is particularly appealing to individuals who hold significant amounts of cryptocurrency and want to minimize the risk of losing their funds in the event of a crypto exchange hack.

By utilizing cold staking, you can ensure that your assets are safeguarded by the offline storage provided by hardware wallets.

Liquid Staking

Liquid Staking, on the other hand, combines the benefits of staking and decentralized finance (DeFi).

It allows token holders to stake their tokens and put them to work in various DeFi protocols.

The advantage of liquid staking is that it eliminates the need for lock-up periods, which can sometimes be as long as 28 days in traditional staking.

This flexibility helps unlock the liquidity trapped in proof-of-stake (PoS) networks.

A popular platform for liquid staking is Lido, which supports tokens like ETH, SOL, MATIC, DOT, and KSM.

When you contribute tokens to the Lido staking pool, you receive equivalent derivative tokens, such as stETH for ETH.

These derivative tokens can be used just like the original tokens, allowing you to generate income in other DeFi protocols.

In addition to staking rewards, you can earn extra income by utilizing these stTokens within the DeFi ecosystem.

DeFi Staking

DeFi Staking takes a different approach by allowing users to stake not only proof-of-stake (PoS) tokens but also proof-of-work (PoW) tokens like BTC, LTC, USDT, and USDC.

Instead of traditional staking, where you delegate your tokens to validators, DeFi staking involves lending your coins to platforms that offer staking services.

These platforms utilize smart contracts to secure the transactions, with the level of security dependent on the soundness of the contract’s code.

Many platforms, including popular exchanges like Binance, provide DeFi staking services.

For example, Binance allows users to stake a variety of assets, including BTC, ETH, USDT, DAI, and other major coins.

Binance acts as an intermediary and collaborates with prominent DeFi protocols such as Venus, Aave, and dYdX.

By depositing your tokens for a fixed or floating period, Binance redirects the funds to one of these protocols to generate profits on your behalf.

Crypto Staking Profitability

When it comes to earning from staking, it’s challenging to provide an exact figure because the interest rates can vary depending on the specific token you choose.

Moreover, if you decide to stake your tokens using third-party platforms, the profitability can differ from platform to platform.

Annual Percentage Yield (APY) can range from 5% to 20% for popular coins like Ethereum, Cardano, and Polkadot,according to Bankrate (2023).

This return can be higher in DeFi staking or yield farming.

 A CoinMarketCap report mentions yields exceeding 100% APY in some DeFi protocols.

As we’ve earlier stated that staking comes with certain risks, and there’s always a possibility of losing a significant amount of money in some cases.

Let’s consider an example: You invest $1000 in a particular coin and stake it at a 100% annual percentage rate (APR).

However, it’s crucial to understand that this doesn’t guarantee you will double your investment to $2000 in a year.

Your actual profit will depend on the fluctuation in the coin’s exchange rate.

If the exchange rate remains stable, your earnings will double. If the exchange rate increases, your profits will be even higher. 

However, if the coin’s price drops significantly, you may end up with only $100-200, depending on the severity of the price decline.

However, you can take steps to minimize these risks.

One approach is to consider staking stablecoins.

Stablecoins like USDT, BUSD, and USDC are pegged to the value of a specific fiat currency, such as the US dollar.

This stability can help mitigate some of the risks associated with price volatility.

Within certain platforms, you can earn annual percentage rates of up to 10-20% by staking stablecoins.

Recommend: 7 strategies to Boost APY in crypto staking

Crypto staking : weighing the pros and cons


  1. Minimal risk of losing funds, especially with stablecoin staking: When staking stablecoins, which are pegged to the value of a fiat currency, the risk of losing your invested funds is relatively low. This provides a sense of stability and security to stakers.
  2. Passive income: By depositing your tokens into a staking pool, you can earn a passive income. The beauty of staking is that you earn rewards simply for holding and supporting the network. In many cases, the yield from staking can be higher than wha.t you would earn from traditional banking deposits.
  3. Voting power and participation in project development: Large stakeholders who actively participate in staking can gain voting power and have a say in the project’s future development. This allows stakers to contribute to the decision-making process and shape the direction of the project they are staking in.
  4. Accessibility and ease of use: Staking doesn’t require specialized knowledge or skills. It’s relatively straightforward to stake your tokens, and many platforms offer user-friendly interfaces and guides to help you get started.
  5. Various staking options: Staking comes in different types, such as locked, flexible, liquid, and DeFi staking. This provides flexibility for stakers to choose the option that suits their needs and preferences.


  1. Risk of asset value loss: One of the potential downsides of staking is the possibility of losing value in your digital asset.If the exchange rate of the coin you’ve staked decreases significantly, the amount of interest specified in the staking contract will also decrease.
  2. This is particularly relevant when staking for a locked term, as you may be unable to sell the asset if you notice a sharp price decline.
  3. Relatively lower profitability compared to the crypto market: While staking offers a way to earn passive income, it’s important to note that the profitability of staking might be relatively lower compared to other investment options within the crypto market. However, it’s essential to consider the overall risk-reward balance and the stability that staking can provide.


In this article, we’ve explored two different ways of earning money in the crypto space: crypto staking vs trading. Each method has its own advantages and considerations, so let’s recap.

Trading is an active approach to earning money.

It requires deep technical knowledge, continuous involvement, risk management skills, market analysis, and staying updated with the latest news and trends.

Trading can be highly profitable, but it also comes with significant risks. Successful trading involves making informed decisions based on market conditions and constantly adapting to changing circumstances.

On the other hand, staking offers a passive way of earning income with minimal effort.

It doesn’t require extensive technical knowledge or constant monitoring of the market.

Staking allows users to earn rewards simply by holding and supporting a cryptocurrency network.

It’s a more hands-off approach that can provide a steady stream of earnings without the need for active trading.

However, it’s important to note that staking typically generates lower returns compared to the potential profits from successful trading.

When deciding between trading and staking, it’s crucial to consider your individual circumstances, goals, risk tolerance, and available time and resources.

Trading can be lucrative but requires more active involvement, while staking offers a relatively low-risk opportunity for additional earnings without the need for constant attention.

Some individuals may choose to combine both approaches, diversifying their strategies to balance potential profits and risks.

Ultimately, the choice between trading and staking depends on your preferences, skills, and comfort level with risk.

It’s advisable to educate yourself, conduct thorough research, and consider seeking professional advice before engaging in either activity.

With the right approach and understanding, you can leverage the opportunities presented by trading and staking to grow your wealth in the exciting world of cryptocurrencies.


By John Adetiloye

I'm a pharmacist by profession, but my passion for cryptocurrency has led me down a different path. I've been staking crypto for years, and I'm always eager to learn more about this exciting and ever-changing field.

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