In recent years, cryptocurrency has become more and more popular, offering traders who want to capitalize on the movement of market prices a wide range of opportunities. In just ten years, the cryptocurrency market for digital currencies has grown from one to over 2,000 cryptocurrencies.
However, market activities involve a lot of difficult-to-understand processes and highly specific vocabulary that can look intimidating to both novice and experienced traders. It is important to know how the market works and how to trade cryptocurrency before you join the market activity. With the right tools and knowledge, you will have an easy time in the market. BestChange is a platform with the best exchangers where you can convert bitcoin to paypal.
What Influences the Cryptocurrency Market?
The cryptocurrency market is decentralized, so economic and geopolitical issues affecting traditional currencies usually do not affect it. However, there are still some factors that affect the cryptocurrency market, among them are:
The total number of coins available for a particular cryptocurrency and the speed at which coins are issued, lost or destroyed play a critical role in the movement of market prices. Generally, all other things being equal, the less cryptocurrency there is, the more valuable it should be.
For example, both Bitcoin and Bitcoin Cash, which have an upper limit of 21 million coins, are more valuable than Litecoin, which has an upper limit of 84 million coins. In turn, Litecoin (LTC) is more valuable than Ripple (XRP), which has an upper limit of 100 billion coins.
How a cryptocurrency is presented in the media and how widely it gets covered in the media can also affect its price. For example, negative news in the press regarding serious wallet hacking could also lead to a drop in prices.
3. Important Events
These include key events such as security breaches, the latest important news, ICOs, and updates to the cryptocurrency market regulation rules.
4. Integration With Existing Infrastructure
How easily a cryptocurrency integrates into a wider infrastructure network with advanced applications can add value. For example, the cost of a cryptocurrency that cannot be integrated into any infrastructure can be lower than that of a cryptocurrency that integrates with e-commerce payment systems.
How to Trade Cryptocurrency?
Although trading cryptocurrency is not the easiest thing to do, it can be broken down into several stages.
1. Study how the market works
The cryptocurrency market is not like other financial markets. Before starting to trade, it is very important to understand its specifics. This means that you need to learn, for example, things like adding transactions to the blockchain and how the peer-to-peer verification system works. You will also need to examine other key factors such as market volatility and margin calls.
2. Decide how you want to trade
Before you start trading, you will first need to decide which trading path you will choose – trading on an exchange or trading CFDs on cryptocurrency.
3. Account setup
Once you are familiar with the principles of the market, you can open an account. If you decide to trade through an exchange, you will need to open an account on the exchange of your choice and store the cryptocurrency in your wallet. If you have chosen to trade CFDs, you will need to open a trading account with a broker that offers cryptocurrency CFDs. After you open an account on the exchange, you will need to study the technologies involved and understand how to analyze the data that is provided to you. If you have chosen to trade CFDs, you will need to develop a trading plan.
4. Develop a trading plan
A trading plan is critical in any market, but having one is especially important in the highly volatile cryptocurrency market. You should then choose a trading platform and start trading.