August 16, 2021, | AtoZ Markets – Cryptocurrency is a virtual currency. The majority of digital cryptocurrencies can be characterized as "decentralized networks", most of which were developed using blockchain technology and digital files.
When we say that cryptocurrencies are decentralized, it means that they are not backed by a central bank - as in the case of the Australian dollar, US dollar, and British pound sterling, for example. There are about 7000 such virtual currencies, and their number is growing from year to year, so the possibilities of pairing are almost endless.
You can think of cryptocurrencies as digital tokens that you can use to exchange, trade, and transfer. Unlike the bank account you use for government-issued print money, traders store their digital coins in a "cryptocurrency wallet". For those who don't know, a crypto wallet is essentially software that you can use to store, send, and receive virtual currencies.
How many cryptocurrencies are there in the world?
According to the CoinMarketCap portal, as of June 2, 2021, there were more than 10,000 cryptocurrencies in the world. However, most projects are minor. It is believed that the top 20 cryptocurrencies account for almost 90% of the total cryptocurrency market capitalization.
Before starting work, any cryptocurrency requires a thorough study. First of all, they look at the project itself, to which the altcoin is tied.
The game is worth the candle: how to make money on cryptocurrency trading?
The founder of a large analytical agency, Tommy Lee, is convinced that one bitcoin will be worth $25,000 in 2022. The American is not afraid of forecasts made by pessimistic analysts. Fundstrat Global Advisors's founder and bitcoin analyst Tommy Lee - recommends trading cryptocurrency actively.
It’s very hard to trade without basic knowledge in the cryptocurrency market. It turns out guessing from the category "go with the crowd". This exchange looks like a solid monolith.
However, an attentive observer will see many interconnected instruments: charts, trades, orders, quotes. The crypto exchange will absorb all the effort if you don't know how to read financial statements with the same ease as interesting news on social networks.
Crypto trading platforms make life easier for brokers. Information in the form of tables and graphs provides visual information. All that remains for the broker is to analyze it.
Experienced Trader Tips
Many players who have achieved little success in crypto trading think of themselves as great geniuses and start giving advice. It is up to you to listen to them or not, but there are generally recognized gurus of the INX crypto trading platform whose opinions cannot be ignored.
Among the most prominent figures:
- Olaf Carlson-Wee, who created a crypto investment fund from scratch and managed $15 million in assets;
- Laura Sheen is the editor of Forbes magazine, a person who really understands economics and knows how to distinguish fashion trends from regularities;
- Tai Zen and Leon Fu are successful crypto investors who founded YouTube's oldest digital asset trading education channel;
- Amir Rosik is a successful serial entrepreneur who is renowned for his lucrative cryptocurrency trading deals.
However, many agree that the most prominent figure is Chris Dunn. The expert not only conducts active trading but also launched his own school, the goal of which is to train 100 thousand people. Most recently, his new book was published, in which he provides tips and really working techniques for beginners and advanced crypto traders. Let's consider 5 of the most interesting ones:
- Do not expect that the rate will always rise. Any market is cyclical. It is important to learn to find patterns and play on them.
- Investing and trading have nothing in common; if you want to trade, trade.
- Before starting a transaction, make a detailed plan according to which it should take place. Consider what you will do if something goes wrong.
- Once you've drawn up a plan, follow it without being distracted by outsiders. Successful traders are those who bring what they started to the end.
- If you were able to earn so much that the amount received can change your lifestyle, save it for 30 days and only then decide how to dispose of the capital.
Why is cryptocurrency so volatile?
Volatility is a property of fluctuations in the price of an asset, which is a fundamental feature of any market. It can be moderate, with a small amplitude of growth or decline, or it can be sharp, with impressive price fluctuations in both directions.
For most traders, volatility is a good profit opportunity. However, high volatility with sudden price jumps can increase the risk and size of losses.
Why are cryptocurrencies so volatile? The volatility of Bitcoin, like any other cryptocurrency, has its own nature. While the reasons for price fluctuations in the stock and cryptocurrency markets may be the same, including the latest news and market sentiment, the effects on the crypto market often lead to stronger and faster price fluctuations - both up and down.
The cryptocurrency market is relatively young and lacks powerful salespeople and institutional investors. This makes it vulnerable to the actions of large players - the so-called "crypto whales". For example, the news that Elon Musk intends to invest $1.5 billion in Bitcoin triggered a rally that led to the first cryptocurrency reaching its all-time high at $64,800 on April 14, 2021.
The average age of most of those who buy cryptocurrencies (crypto investors) has changed by 2021. Crypto investors are getting older. 59% of investors today are between the ages of 31 and 49, while back in 2018. 60% of investors were under the age of 31. In addition, recently, newcomers who had no previous experience of investing in cryptocurrencies have become massively crypto investors.
Another trend that the study showed is an increase in the number of women in the cryptocurrency trade. Compared to 2020, the number of women on the market has grown from 10% to 14%. This figure is slightly higher for classic stock trading on the stock exchange: about 20% of traders are women.
It is foolish to follow the rules without putting your head into them, it will not lead to anything good. Everything should be done wisely and gradually.
The crypto market is a very risky place where only savvy traders can “survive” and earn money.