Perhaps, by now, almost every person on the planet knows about the amazing growth of Bitcoin, which it has gained in a decade. People who invested a hundred dollars in this cryptocurrency in 2009 became multi-millionaires by 2021.
Bitcoin is not the only digital asset which is on the rise, in fact, the entire crypto industry in 2021 achieved its record-high in terms of market capitalization. In other words, there is a lot of money in crypto, and millions of people see it as an opportunity. Some companies decide to get their fair share by accepting cryptocurrencies, while others provide tools to investors that want to trade digital assets.
- Crypto trading involves buying and selling cryptocurrencies on exchanges
- Before trading cryptocurrencies, one has to become familiar with the trading basics and learn about how various trading instruments work
- Crypto traders utilize a great variety of strategies which can be both short-term and long-term
- Nevertheless, crypto trading entails considerable risks so accepting cryptocurrencies is always a safer option
About Crypto Trading
What is Crypto Trading?
Essentially, crypto trading is the process of buying and selling cryptocurrencies with an intention to make a profit. When people want to start trading, they set up an account on a crypto exchange. Spot trading is the most common type of trading users of crypto exchanges engage in. It involves simply buying and selling cryptocurrencies, with the buyer retaining full ownership over their acquired asset. Such platforms also provide numerous types of trading instruments that traders can utilize to execute their strategy better. For instance, derivatives such as futures and options are among the most common types of trading instruments. Futures are a special instrument that ultimately allows traders to speculate on the price of a certain asset without owning it.
Crypto Trading Pairs
Trading pairs are two cryptocurrencies which exchanges allow users to trade for each other. Trading pairs are an essential instrument of any crypto trader since some assets can only be bought using other cryptocurrencies. Every trading pair has a base currency and a quote currency. The base currency is quoted in relation to the second one. For instance, in the pair BTC/USD, the first currency is the base one, therefore in terms of this particular pair, BTC will be priced in USD (e.g., 1BTC is $30k). When people want to buy the base currency, they place a bid order and set the price which they are willing to pay for that currency. While people who want to sell the base currency place an ask order and subsequently specify the asking price.
Benefits of Crypto Trading
Volatility is, perhaps, the most controversial thing about cryptocurrencies. Prices of all digital assets are unpredictable and can change radically on an hourly basis. Nevertheless, volatility actually provides endless opportunities from the trading perspective. Traders can employ various strategies and capitalize on currencies’ rapid growth or fast depreciation. For instance, short-selling is ideal in situations when a coin is losing its value quickly. Traders can instantly sell their crypto and then buy it back at a much better price.
Crypto exchanges work without any breaks, and so are their trading markets. Unlike the stock market, which has a strict schedule according to which it functions, cryptocurrencies are available for trading 24/7. Of course, there can be situations when cryptocurrencies’ blockchains may stop working for some time, for instance, during hard forks, but such occasions are rare. So, traders do not have to allocate a certain part of the day to trading and can do it at any moment.
Low Barriers to Entry
Exchanges allow users to trade cryptocurrencies with really small sums, which would be hard to imagine in the stock market context. Crypto exchanges let users create their accounts for free and allow them to top up their balance with less than fifty dollars to start trading. As a result, crypto trading is perfect for beginners who want to familiarize themselves with the concept of trading in general.
Crypto exchanges do not take away a large portion of their clients’ profits; instead, they simply ask for a small fee which is often minuscule. Thus, users can be confident that even if their profit is small, it will not become non-existent due to trading fees.
Cryptocurrencies are not regulated by any central bank; therefore, there cannot be any possible way for authorities to influence the crypto market directly. Essentially, the decentralized nature of cryptocurrencies makes them an asset whose value stems not from the government but from a collective agreement.
Finally, traders do not have to worry about waiting for days until their funds are finally in their wallet. Blockchains ensure fast peer-to-peer transactions, which means that the sum which you decide to withdraw from the exchange will be sent to your wallet address in a matter of minutes or even seconds.
Best Crypto Trading Platforms
Binance is one of the most prominent players in the crypto trading sector. It is an exchange that operates in numerous countries around the world and has earned a reputation as a reliable platform. Binance traders can both buy and sell crypto on the spot market. There are more than fifty cryptocurrencies available for purchase. Of course, Binance also has other trading instruments and can provide traders with leverage.
Kraken is another platform with a huge fan base and which is known for its low fees. It is available in many countries around the world, including the United States. Since the exchange has low fees, traders with high volumes of crypto choose it as their primary trading partner.
Even if you have never traded cryptocurrencies, Coinbase is the name that you have probably heard of before. Many people consider Coinbase the best crypto exchange out there for its excellent customer service and user-friendly interface, perfect for people starting their crypto trading journey. Coinbase has been in operation since 2012, which proves that it cares about its reputation.
Accept Cryptocurrencies and Trade them
Cryptocurrency trading can potentially yield massive profits, but it still is an extremely risky way to earn crypto. There are other paths people can take to get hold of cryptocurrencies. One of them is accepting cryptocurrencies as payment. If you own a store and sell various products or provide services to clients, you can use NOWPayments’ solutions to receive payments in crypto. Crypto invoices are a simple but effective tool which one needs to generate only once to use indefinitely.
E-Commerce entrepreneurs who use platforms such as PrestaShop, WordPress, Shopify, or other crypto plugins, can install NOWPayments’ plugins that will automatically process all of their payments. There are also crypto donation widgets, buttons, or links that are ideal for bloggers and charities that can feature them on their websites or social media. NOWPayments lets you accept more than 60 cryptocurrencies and does not gain any control over your funds since all of your clients’ payments go straight into your wallet.
Crypto trading is gaining popularity as more people invest in cryptocurrencies and want to use their assets to get profit. Before entering crypto trading, it is essential to learn about the basic concepts in this sphere, such as spot trading, derivatives, and base/quote currencies. Nevertheless, trading is a risky activity that no one should engage in unless they are ready to lose all of their funds. Accepting cryptocurrencies is a much safer and more enjoyable option.