The world of cryptocurrency is one of the most fascinating developments of the 21st-century tech revolution. These digital assets are already capable of being used to purchase goods and services, while the leading cryptocurrencies such as Bitcoin have been known to be worth five-figure sums each. 12 months ago, the market cap of the cryptocurrency space was more than $30 billion and it has continued to rise ever since. Subsequently, it’s not hard to understand why investors have taken such a keen interest in trading them.
As a newcomer to trading cryptocurrency, it’s important to be made aware of the risks from the outset. Cryptocurrencies are still very immature markets. The true value of even leading cryptocurrencies such as Bitcoin is still not yet known, so you can expect considerable volatility in the markets. When we say volatility, we don’t just mean a few pips. A downswing or upswing of at least 3% a day has been known to happen. Check out Forbes’ explanation on why Bitcoin is so volatile to understand why its price oscillates so much.
There are many factors that can influence the price of a cryptocurrency. If you are considering trading a cryptocurrency, you will need to bear in mind all of these to decide what way the market is going to move next. The price of a cryptocurrency can be influenced just by its inclusion on an exchange, giving investors and consumers easier access to it than before. Software upgrades that lead to the improving performance of a cryptocurrency can also have a positive impact on its long-term price. It’s also important to keep your finger on the pulse of public perception. Any overly negative – or positive – news stories in the press may influence the value of a cryptocurrency, even if it’s just the short-term. Government regulation can also have a bearing on the price of a cryptocurrency. For example, when Chinese regulatory authorities sought to crack down on all cryptocurrency trading with a ban on foreign and local exchanges, this led to a sharp downswing in the value of Bitcoin.
The most common place to buy and sell cryptocurrency is a cryptocurrency exchange. You can buy and sell your cryptocurrency using fiat currency. There are various aspects of an exchange you’ll need to consider before choosing your preferred platform, such as liquidity, trading volume, transaction fees, user security and so forth. Generally, those with the best liquidity and volume will help you complete your cryptocurrency trades quickest.
However, there is another way for new cryptocurrency investors to profit from crypto price moves in the market. eToro pioneered Bitcoin trading through Contracts for Difference (CFDs) some time ago, allowing cryptocurrency traders to take positions on the price of a crypto coin based on whether they believe its price will increase or fall. With CFD trading, you never physically own the cryptocurrency you’re trading. You simply trade it to capitalise on its price movements. This means there’s no need to open crypto wallets and connect them to your exchanges. With eToro, you can complete CFD cryptocurrency trades within your eToro account, with all the trading information you need to make an informed decision in one place. If you’d like to know more about cryptocurrency CFDs, check out Best Bitcoin Exchange and their full review of the eToro platform.
Cryptocurrency trading is not a get-rich-quick scheme by any stretch of the imagination. It takes time and patience to pick the right investment opportunities based on a technical and fundamental analysis. Fortunately, the cryptocurrency markets are open 24/7, allowing you to profit at all hours of the day and night, if necessary. Start investing small amounts to get a feel for the markets before going in too deep, too soon.