Crypto trading is reasonably appealing for those with investor flair and intrinsic motivations to either make some profits given the market’s hearty potential or hedge their savings against inflation. There are literally thousands of cryptocurrencies out there, and new ones are being released continuously. Most exchange platforms have a low benchmark when it comes to the minimum obligatory amount of money you should invest to start your trading journey. Pioneers in the online exchange market industry make managing the portfolio and wallet easy. And the reasons why you’d like to explore the crypto market and test your luck can continue. But here’s a downside that some newcomers neglect when entering crypto. There are also numerous trading strategies and financial concepts that can either mess up their minds or help them through the journey (if approached and used correctly). The workings of the market can also be overwhelming.
Cutting to the chase, one of the main building blocks of your trading is the cryptocurrency pair – a concept denoting two cryptocurrencies that have historically evolved in their mutual relationship. Take, for instance, one of the most popular trading pairs to date – ETH/BTC. Like old-school Forex pairs, this exchange reflects the amount of Bitcoin you’d need to buy a specific amount of Ethereum. If the rate of the crypto-cross pair is 0.09, this means that you’ll buy 1 ETH by giving away 0.09 BTC.
Crypto trading pairs are among the most critical concepts—they are the core for swapping assets on crypto exchanges. They reflect trading efficiency, liquidity, and value, influencing market strategy and movement. So, what exactly are cryptocurrency trading pairs? Why does it matter?
The basics
Some time ago, one could only swap crypto for another, making profits from this exchange. You could only trade a crypto for another crypto – and crypto exclusively. In plain English, you couldn’t trade crypto for USD, GBP, Euro, or other fiat currency. You’d buy Ethereum and then decide whether you keep it in the long-term, hoping to see it rise or exchange it for fractions of Bitcoin or a whole Litecoin or more. Stablecoins were launched during the 2010s to help create more stable stores of value and hedges, with USDT, a USD-based asset, being the front-runner. It was after USDT’s introduction that more and more exchanges started offering fiat currency base pairs.
Since trading digital currency for fiat money was not a possibility, investors had no choice but to become truly familiar with the concept of trading pairs. But now that most online exchanges permit what was once a distant dream, things have changed. Trading cryptos today is easier, but there are also more trading options, more forms and features on platforms, and other evolved aspects. Exchanging between stablecoins and fiat currencies, for instance, is seen as the norm, but they’re not that old on the market.
The BTC and ETH pairs still lead among the top pairs in trade today, but you have more pertinent options other than the staple one. Some time ago, the limited selection of trading pairs often turned out to be problematic for investors and a larger part of the market since hedging against market volatility was a more difficult stunt.
The most common trading pairs
The list of the hottest trading pairs changes with the market’s financial health. Generally, the following pairs are the most common trading pairs.
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BTC/ETH – BTC for ETH
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BTC/DOGE – BTC for DOGE
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BTC/ADA – BTC for ADA
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BTC/LTC – BTC for LTC
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ETH/BTC — ETH for BTC
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ETH/BCH — ETH for BCH
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ETH/LINK — ETH for LINK
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ETH/ADA — ETH for ADA.
Looking into crypto pair dynamics
There are a few factors that impact crypto pairs’ price performances. Let’s explore them.
Market supply and demand are the most influential elements driving cryptocurrencies’ success and establishing their value. When a crypto is in high demand compared to the other crypto in the given pair, the price within the pair usually rises.
Trends like the rising adoption of blockchain solutions or the expansion of decentralized finance can impact particular cryptos’ performance and their consequent trading pairs. Fear of missing out (FOMO), fear, uncertainty, doubt FUD), and other psychological phenomena encountered by investors impact the crypto market as a whole.
Crypto-related events and news can be game-changers. For instance, tech updates, new collaborations grabbing headlines, or positive social media trends catching on can improve a cryptocurrency’s value and impact the other crypto within the pair.
Tech developments and advancements drive innovation, which is particularly positive for cryptos and their trading pairs. Examples include but aren’t limited to, new consensus mechanisms transitions from POW to POS, scalability solutions, new crypto-based developments, and the integration of a blockchain into a larger fintech solution.
High trading volume/liquidity
High liquidity means that the market’s sellers and buyers are active, and entering and exiting positions is easier. This aspect is more critical for bigger trades since higher liquidity implies that you can see your order completed faster and at a price closer to its most appealing mark registered during those moments. As you know, crypto prices are constantly fluctuating.
On the other hand, trading volumes usually indicate the amount of crypto activity and liquidity over a given period. This component also mirrors the market’s activity and allows traders to carry out orders at the nearest favorable price. Large trading volumes signal the market experiences abundant activity, which usually results in tighter spreads and more stable prices.
Before investing
You should pick the most reliable and professional online crypto exchange to ensure your trading’s safety and success. Various factors, such as the platform’s trustworthiness and reputation, can tell you whether you’re targeting a worthy or poor online exchange. You can assess the exchange’s track record and user feedback to gain this information. Look for apps using superior security solutions like two-factor authentication.
This goes beyond the fees you’ll pay. You don’t want to pay lower fees with your investment’s value at risk.
Parting words
Today, you have a wider informational package to approach than months or years ago, before crypto gained this astronomical popularity. For this reason, you should review the basics before getting into more complicated things, as leaping without understanding core concepts can be the shortcut to failure.
Disclaimer:
CBD:
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Gambling:
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