Cryptocurrencies are often hailed by many to be the future and may eventually become as prevalent as traditional currency. While cryptocurrencies still have far to go in terms of global acceptance, they are undoubtedly gaining popularity in a number of sectors. Cryptocurrency enthusiasts, however, are no longer content with the act of mining (though ripple mining is impossible) or even buying. Instead, they have moved onto the next stage: trading
It is not unsurprising for the average trader to be somewhat confused by the aspects associated with crypto-trading. While there has been a considerable amount of fanfare about the cryptocurrencies themselves, there aren’t nearly as many resources available on trading. To clear a few things up, here are some of the factors you need to understand regarding crypto-trading:
What are the Benefits?
Arguably, the most important point you will need to understand about crypto-trading is the demand regarding cryptocurrencies. At this point, demand continues to be quite high as the interest in this form of digital currency is still going strong. There are also numerous indicators that cryptocurrencies, bitcoin, in particular, could continue to experience growth. Thus, it appears that cryptocurrencies will be set to enjoy high prices for the rest of 2018, at least.
One of the more attractive aspects of cryptocurrencies is the fact that they are decentralized. As such, they are not attached to assets or government in any discernible manner. This is why trading with cryptocurrencies affords you the opportunity to diversify your portfolio, along with other forms of trading (fiat money, stocks, etc.).
Choosing Your Cryptocurrency
At the moment, four of the most popular cryptocurrencies are bitcoin, Ethereum, Ripple, and Litecoin, with bitcoin enjoying a considerable position over the rest. Despite this, it is cryptocurrencies such as Neo, Tron, and Ethereum that have really shown growth over the last few months. So, with all these choices available, how should you decide which cryptocurrency to trade with?
At this point, it appears that bitcoin continues to be the “safest” option, though still unpredictable. Given a chance to mature, unlike the other newer cryptocurrencies on the market, bitcoin has gone through numerous highs and lows, and stability could continue to improve if high-level institutions accept bitcoin as a form of investment.
This doesn’t mean, however, that the cryptocurrency can be relied upon completely. Traders will need to continue to monitor bitcoin’s value closely, especially as it continues to experience highs and lows in value. As a cautionary measure, it is advisable to continue to trade with some of the other cryptocurrencies as well.
Understanding the Obstacles of Crypto-trading
Perhaps the biggest issue associated with crypto-trading has to do with the value of the cryptocurrencies. These digital currencies are notorious for rising in value, only to crash a short time later. Bitcoin alone has undergone 13 separate corrections since its introduction and this trend doesn’t appear to be changing any time soon. While all this volatility provides traders with opportunities, it also means that cryptocurrencies can be quite unpredictable.
If there is one tool that all experienced traders pride themselves on, it is trading charts. This allows you to pinpoint how assets behave at any particular time in the market. Cryptocurrencies, however, are relatively new, which is why it can be difficult to map out these points. In turn, it can be difficult for traders to predict the movement of the cryptocurrencies.
What is the Future of Crypto-trading?
Those who want to begin trading cryptocurrencies are largely concerned with one thing – what does the future hold? At this point in time, it can be difficult to outline just how cryptocurrencies are going to perform over the next few years. This is mostly due to the legislation and regulations that currently govern cryptocurrencies. However, if these begin to change in favor of digital currencies, there is a good chance that crypto-trading will take off as well.
One thing is for certain, though, cryptocurrencies and crypto-trading have gained a foothold in the market. Furthermore, there is a large community across the globe that have adopted cryptocurrencies, cementing their role for good.
While you will now be better equipped to begin your crypto-trading journey, it is important to understand that, like any other form of financial trading, there is just as much a chance of making a profit as there is incurring a loss.