Cryptocurrency investors are more 'risk-averse' than traders, since they are more comfortable with leaving their investments alone and are not concerned with the daily price volatility. However, traders are risk-takers since frequent trading incurs a much higher degree of risks. This is because the extreme volatility of short-term cryptocurrency prices can present traders with the opportunity to make lots of money but could be equally disastrous if they are on the wrong side of the bet. Additionally, traders often engage in margin trading, which is a practice of borrowing funds from third parties to trade cryptocurrencies. Margin trading significantly increases the risks of trading since the traders have the ability to make more money (as compared to using their own funds) but also increases their potential losses.