Right now, the global crypto industry is valued at US$ 2.92 trillion. The highest record is Bitcoin, which has a rate of 73,750 US dollars and a market cap of $1.44 trillion US dollars. Investing in crypto is a double-edged sword, as it has high risk and high returns. You can invest in multiple cryptocurrencies to increase the stake even more than just betting on one cryptocurrency. Investing at the right time in the right place is important.
If you are a beginner, there are numerous factors for you to learn to improve your trading outcome and efficiency. Through this article, we have put together just some of them to help you out.
Crypto Trading Basics: Strategies Every Beginner Should Know
The basic concept of crypto trading is the buying or selling of cryptocurrencies as a form of exchange. Cryptocurrencies are digital or virtual currencies that can be in any form. Cryptocurrencies are a secure method of payment as they use cryptography to secure transactions made through them.
The decentralized system is one of the key strengths of cryptocurrencies, as they don’t have any centralized issuing or regulatory body; it’s completely a peer-to-peer payment system. There is no need to wait for the bank to confirm your transaction while using this digital currency; it authorizes immediate payment as fast as possible.
The transactions made through crypto are stored on a public ledger. The first and highest-valued cryptocurrency is bitcoin, founded in 2009, which was the trendsetter and contributed to the popularization of cryptocurrency. The mechanism behind cryptocurrency is that it runs on a blockchain, which records all transactions.
Cryptocurrencies are manufactured by solving complicated mathematical problems using computer power to craft the coin; this process is called mining. There are around 13,217 cryptocurrencies in existence as of 2024, such as bitcoin, ethereum, litecoin, ripple, etc.
Some of the Cryptocurrencies in the Market Right Now
Bitcoin(BTC)
Bitcoin revolutionized the crypto industry, founded in 2009 by Satoshi Nakamoto, a pseudonym of the developer whose identity remains mysterious. Bitcoin is the first cryptocurrency to exist and still remains the most traded cryptocurrency with a rate of 73,750 US dollars and a market cap of $1.44 trillion US dollars.
Ethereum(ETH)
Ethereum is the most popular cryptocurrency after Bitcoin. Ethereum is a blockchain platform that was developed in 2015. Ethereum has its own cryptocurrency called Ether (ETH), or it can simply be called Ethereum.
Litecoin(LTC)
Litecoin is a decentralized peer-to-peer cryptocurrency that is similar to Bitcoin. Litecoin has developed many new innovations, such as much faster payments along with an optimized payment system.
Ripple(XRP)
Ripple is a distributed ledger system founded in 2012. It works with various banks and financial organizations that can be used to track different types of transactions, not just crypto.
Key Factors Affecting the Crypto Markets
There are numerous factors affecting the cryptocurrency markets, although the economic and political factors of a country don’t affect the cryptocurrency market or price rate as they are decentralized. It majorly depends on supply and demand, market capitalization, integration, the press, and critical incidents.
Supply or demand: the number of cons to exist of that token and the cost of it.
Market capitalization: the value of all the coins of this token in existence and the users’s perception rate.
Integration: the level of seamlessness in cryptocurrency interaction with established e-commerce payment platforms.
Press: the public perception of the cryptocurrency through the media and the media attention it is receiving.
Critical incidents: major events like regulatory updates, setbacks in the economy, or security breaches.
Essential Tips While Crypto Trading
- Get your mind around the fact that the crypto market is one of the most fluctuating markets with no regulatory body or centralized system. Due to this, the economic health of the country or the government of the country isn’t a factor affecting the price shift. The market price can be highly variable. The fluctuation in price is almost unpredictable, and at any moment the price can dip, but it can also increase significantly.
- Try to invest more in bitcoin and liquidate your altcoin investments; altcoins are all the other coins that aren’t bitcoins. If you have already invested in coins that aren’t Bitcoin or Ethereum, it is ideal for you to exchange those or cash them out and invest them in Bitcoin. This strategy is advised since the altcoin market price and bitcoin market prices are related. The future for Bitcoin promises even more remarkable growth beyond its current enormity, which might put the other coins off the game, which might result in the altcoin you invested in leading to potential losses.
- Conduct research on the crypto market on your own, which will help you find the crypto asset that is the right choice for you. There are more than 13,217 cryptocurrencies in the market right now. Of these 13,217 cryptocurrencies, all have similarities and differences. After short-listing some of the potential ones that could generate profit on someone’s guidance, it is essential to conduct your own research and choose wisely, not just following advice. While researching, make sure you know about the market fluctuations on the crypto token, its launch, and future projects.
- Spread your investments across multiple cryptocurrencies rather than putting them all in one place. This might help you to be stable and stay out of financial loss while one of the currencies suffers a price decline.
- Even though it is advised that you invest in multiple cryptocurrencies, make sure you are investing in the right ones. Do not make your investment just because you have a fear of missing out on the latest cryptocurrency in the market without doing proper research. The latest cryptocurrency might be a financial turndown. Don’t invest in the crypto market due to FOMO (fear of missing out). Fear of missing out is an anxious experience you might have while knowing that you might miss out on an experience. Fear of missing out should not dictate your financial choices.
- Beginners often make the mistake of buying large quantities of cryptocurrency solely because its price is low. However, when investing in crypto, it is essential to prioritize the token’s market capitalization over affordability.
Consider this: it’s wiser to hold 10 coins worth 100 coins each rather than 1000 coins worth 1 dollar each if the 100 dollar coins have a stronger market capitalization over affordability. A higher market capitalization can indicate greater liquidity, increased stability, and better resistance to market volatility.
- Use the stop loss order, which is basically a setting where you can set a specific price and lock, which is a stop loss level you could buy and sell till the specific price is met. Most traders fix the stop-loss order while buying, so if the price declines below the level fixed by the trader, the order is activated. You can also set your profit target in the same way. It will lock your assets if the token reaches the target price you have set.
- Make long-term investments in reputable cryptocurrencies such as Bitcoin and Ethereum. These cryptos have a reputation for continuing upward trajectory. Hold on to these currencies rather than trading them to increase the probability of increased revenue.
- Concentrate on buying more blue-chip tokens. Blue-chip tokens are tokens in crypto that have been around for a long time and are reliable. They have a fair market value along with high liquidity. The penny coins and mid-cap coins might look attractive to you for their price, as these blue-chip tokens may cost you more than the penny or mid-cap coins, but what comes with the higher cost is higher stability and liquidity.
- Stay alert and updated. Be informed on all the latest news happening around the crypto market, both inside and outside your country. This helps you stay ahead while trading.