Many traders and analysts point to cryptocurrency’s incredible volatility as a reason not to trade the asset. However, while this volatility can lead to considerable decreases in investments, it is also this volatility that has helped create considerable wealth for some people.
Potential investors do need to learn everything about the crypto market, develop a clear plan that aligns with their goals, and make the most of the tools and information that is out there, but doing so could lead to generous trading profits.
Cryptocurrency Popularity
Twenty years ago, Bitcoin hadn’t even been developed. Today, it is considered a disruptive technology that has directly influenced the financial and many other markets. Thousands of businesses around the world now accept cryptocurrencies, and it has helped some innovative businesses beat the status quo in well-established industries.
Top crypto casino sites now have revenues that rival those of the world’s best-known casinos. According to cryptocurrency expert Hira Ahmed, cryptocurrency casinos have become popular not only because these currencies are faster and less expensive than traditional methods but also because using crypto offers provably fair gaming while improving privacy and security.
This same high level of privacy has also seen crypto become popular for financial transactions, and crypto ecommerce companies generate sales that outstrip traditional markets. And, when it comes to potential investment profits, there are no other assets or investments that have greater earning potential than Bitcoin and altcoins.
Secure Storage
To safely invest in cryptocurrency, investors need a means of storing their cryptos. Typically, this is done via a crypto wallet. Wallets can be hot or cold, software or hardware-based. They can be basic or they can offer more advanced features. The range of available wallets is larger than ever before, and it includes those with advanced features like direct access to exchanges, portfolio tracking, and more.
Hardware wallets are considered the most secure because they are not prone to hacking or digital theft. But, software wallets make it quicker and easier to send and receive payments.
Another storage option, which is most often used by institutional and large investors, is that of custodial storage solutions. The average investor won’t usually require custodial storage, however, and as well as being prohibitively expensive for most crypto holders, using custodial storage can add time to deposits and withdrawals.
Exchanges
Crypto isn’t available from banks and other high street financial institutions. There are, however, various ways to buy coins. Private sales can be initiated by the buyer or seller at an agreed-upon rate, and this is a relatively common way for large deals to be conducted.
Decentralized exchanges, which use smart contracts for deals that are set up and agreed upon by both parties in the deal, offer a considerable degree of privacy, too. However, most people use centralized exchanges to conduct cryptocurrency transactions. Centralized exchanges offer dozens or even hundreds of currency pairings, and they may also offer users access to trading charts and other invaluable data and information.
Users do need to ensure they choose reputable exchanges with robust security policies, however, because the amount of currencies held in user accounts makes these sites especially prone to cyberattacks. And, while centralized exchanges enable users to store their crypto on the site, investors should move their holdings away from exchanges as soon as deals are complete.
Charts
Long-term investors who believe Bitcoin, Ripple, Monero, and other cryptocurrencies will continue to see their price increase and can hold coins without having to keep buying and selling. As such, they don’t need complex data and price charts.
Day traders and short-term holders, however, will need to understand some basic chart-reading skills. For those who want to take crypto trading seriously, there are various chart patterns as well as theories like Elliott Wave theory that can be used to help predict price movements.
At the very least, charts can help identify the best entry points and exit points, and they can be used in conjunction with other data and analytical tools to help improve an investor’s chances of making sustainable profits.
Other Charts
Trading and price charts aren’t the only charts available. The fear and greed index is used in traditional investing and has become an especially popular tool for crypto investors. It can be used to help determine whether an asset is fairly priced or whether it is under or overpriced. The theory is that excessive fear leads to value prices, while excessive greed can lead to commodities and assets being overpriced. Bitcoin’s volatility itself is also measured in charts.
The Bitcoin volatility index can point to periods when the crypto’s price is likely to become highly volatile, offering potential for big price movements.
Traders can also check out volume charts, which show the volume of crypto that has been traded and whether this leads to any potential movements, and Bitcoin dominance charts. Some trading platforms offer basic charts, while others offer more advanced features, but it may be necessary to use multiple platforms to gain access to all of these charts.
Expert Analysis
Bitcoin really only started trading in July 2010, and even then there were very few people interested in buying and selling the cryptocurrency for gains. However, by the mid-2010s, when Bitcoin was worth around $250, mainstream media caught on to the price movements and more people became aware of Bitcoin’s potential.
More interest led to increased price momentum, and this saw some investors return massive profits from relatively meager outlay. Since then, many people, some professional and others not, have attempted to sell their trading systems or offer their advice to others.
Expert analysis advice can be invaluable, but users need to ensure that they really are following the guidance of seasoned investors, rather than people who are trying to make a quick buck by selling inaccurate predictions.
Forums
Bitcoin prices are, at least to some extent, sentiment-driven. And this is even more true of certain classes of cryptocurrencies. Meme coins, for example, have prices that are driven entirely by public sentiment and the strength of their communities.
Investors in these coins should be involved in the communities, or at least be prepared to monitor forums and social media to determine the underlying sentiment behind the coins.
Even if you are investing in Bitcoin or other major coins, you should take the time to view forums, get involved on social media, and see which way the crypto wind is blowing. It can be an effective way of determining how the price is going to be affected in the short term, while also seeing news and relevant stories.
Zoom Out
Zoom out is a phrase that has become common in crypto trading, especially among those who are new to investing in general. The volatility of cryptocurrency can put people on edge and cause serious anxiety when prices start to move.
Zoom out means investors should zoom out from whatever timeframe they’re looking at to look at the big picture. It is a term that is most commonly used by absolutists and long-term holders to suggest that any short-term loss will be recovered by long-term gains.
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