Many people choose to trade Bitcoin since it is such a volatile asset. If you can time the market perfectly, investing in crypto may yield far higher returns than traditional investments.
Cryptocurrency traders often have one of two goals: to amass Bitcoin or to profit in US dollars. Raising the value of your portfolio in USD is relatively easy in a crypto bull market, but increasing the value of Bitcoin is more challenging. To maintain track of the Bitcoin value of your portfolio, you may trade altcoins against Bitcoin on sites like Coinbase Pro.
If you enthusiastically trade bitcoin, you incur the risk of losing it. Because of the considerable volatility of cryptocurrency values, traders seldom lose money quickly while trading cryptocurrencies. This is why so many Bitcoin enthusiasts simply HODL their coins.
What exactly is a cryptocurrency?
A cryptocurrency is a type of digital currency that is unrelated to any country or government. Instead, who owns what is recorded on computerised systems protected by strong cryptography and blockchain technology.
While some establishments accept cryptocurrencies for everyday purchases, they are more often exchanged as digital assets for investment benefit. On cryptocurrency exchanges, you may make a lot of money by buying and selling. However, because prices are so unpredictable, you might lose a lot of money.
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What are the different crypto trading strategies?
Those looking to make money from bitcoin trading use a number of strategies. A handful of the most important are listed here.
- Day trading
This is a fast-paced form of cryptocurrency trading in which investors buy and sell cryptocurrencies often throughout the day in order to profit from price swings. However, for novices, this may not be the greatest way to trade bitcoins. This is because attempting to time the market has a great risk of losing money.
- Hedging
Hedging is a method adopted by certain crypto traders who want to keep the coins but not be over-exposed to volatile swings. It involves one of your assets cancelling out some or all of the risk of losses with another.
Financial products like contracts for difference and futures can be used to hedge cryptocurrencies. These basically enable you to stake on the future value of the coins. This is a hazardous process that should only be employed if you are entirely assured in your capabilities.
- HODLing
Those that “hodl” a cryptocurrency reserve it in their tenure during good times and bad. If it seems like a typo, that’s because it was the phrase was coined as a result of a typing error on an early bitcoin forum. However, it is sometimes interpreted in retrospect as meaning for “Holding on for Dear Life.”
- Investing in trends
Crypto traders practice trend trading to choose whether to buy or sell specific currencies based on whether their price is rising or falling.
There are many more complicated theories on how to spot a trend or predict when it will shift. However, the underlying principle is that these cryptocurrency traders purchase when the market is rising and sell when it is falling.
Want to invest in Cryptocurrency?
Some of the most well-known cryptocurrencies are bitcoin, ether, and dogecoin. However, there are hundreds to pick from now. There are numerous facts to consider while investing in the Cryptocurrency. The fundamental analysis assesses an asset’s fundamental worth, which is more difficult to accomplish with crypto. You must also consider risk management.
Few of the currencies, whose manufacture imposes a lot of computational power, may cause you to be worried about their environmental impact. If that’s the case, you could choose an environmentally friendly alternative. Alternatively, you could be interested in utilising a specialised coin exchange or broker that exclusively works with a restricted number of currencies, limiting your options. This prevents the perplexity that occurs with having too many options.
Some individuals may be drawn to the newcomer world coin, which is backed by some big Silicon Valley personalities and is said to be established on the altruistic principle of better income sharing. For determined HODlers, Safemoon, a new currency designed to dissuade day traders by imposing a penalty on those who sell the currency, is a viable option.
Which Cryptocurrency you should choose?
There are several cryptocurrency investment possibilities available, but none of them is likely to be suitable for everyone. Before buying, you should consider crypto investing guidelines to get the most out of the investment. Do you expect it to appreciate? Do you want to use cryptocurrencies to carry out transactions? Do you want to use the underlying technology to create decentralised apps? These might assist you in making your selection.
WDDUK has prepared guidelines for some of the most popularly used cryptocurrencies, such as Bitcoin and several Bitcoin alternatives:
| Cryptocurrency | Market capitalization |
| Bitcoin | $829.6 billion. |
| Ethereum | $369.5 billion. |
| Tether | $78.7 billion. |
| BNB | $70.4 billion. |
| USD Coin | $52.5 billion. |
| XRP | $39.3 billion. |
| Cardano | $36.1 billion. |
| Solana | $31.7 billion. |
| Avalanche | $22.7 billion. |
| Terra | $22 billion. |
Conclusion:
Cryptocurrency trading is sometimes seen as having a higher risk than stock trading, however, this is dependent on the stocks or cryptocurrency you’re trading and how you’re doing it. Trading penny stocks or options may be just as hazardous as trading cryptocurrencies, if not more so.
You should be aware that trading bitcoin has the risk of losing your money to the market. If you truly believe in the future of cryptocurrencies, it may be more profitable to store your crypto assets for the long term rather than trying to time the markets.