Bitcoin trading is a new concept. Ten years ago, “cryptocurrency” was a foreign word. At present, cryptocurrency has a market capitalization of more than $ 100 billion dollars. Even though the market is very limited, there are some good tutorials about the Bitcoin trading strategy. Today, let’s help by listing some of the preliminary things that Bitcoin operators need to know before they start. Cryptocurrency fulfills all traditional currency functions, besides that they offer high performance as an investment instrument. The use of cryptocurrency is a trend that cannot be restored, so it is convenient to learn how this market works.
Understand the nature of the Bitcoin market
The first and foremost thing you should know about Bitcoin is that people don’t think of it as the current currency. Sure, you can spend Bitcoin in more and more places around the world. People have bought homes with bitcoin. Some people have Bitcoin debit cards without contact they can spend anywhere in the world. However, most investors do not treat Bitcoin as a currency: they treat it as a financial product that can provide a return on investment.
The value of Bitcoin comes from its potential use. Bitcoin completely avoids traditional banking institutions. Eliminating third parties, with all exchange rates and decelerations, from the financial system. Send transactions to the network (blockchain) transparently. Like many unknown products, bitcoin is subject to price volatility. Some investors see this as an opportunity, while investors who avoid risk want to stay away.
Bitcoin is not only an unknown product: it will always be an unknown product. Bitcoin does not have the fundamentals that investors usually use to analyze an asset. Most stocks or bonds can be analyzed based on several instrument features. Stocks have a P / E ratio and dividends, for example, while bonds have a percentage of returns. Bitcoin has no basics that can be measured easily.
Trading Bitcoin occurs in exchanges. These exchanges accept their fiduciary currencies (such as USD and EUR) in exchange for a cryptocurrency (such as BTC). These exchanges maintain a group of liquid bitcoin, which allows users to withdraw their bitcoin at any time. Investors who wish to trade in that exchange can deposit bitcoin in their personal wallet in the exchange, or make a bank transfer to the bank account of the exchange. The exchange notices this transfer and then credits your account.
Other exchanges are known for certain pairs. Bithumb, for example, has particularly strong liquidity in the ETH / KRW (South Korean Won) pair at this time (and is easily the most popular cryptocurrency exchange in Korea). CoinMarketCap.com has a ranking of the main exchanges of bitcoins for its volume of 24 hours. Anything in the top 50 allows good liquidity. However, you can also sort the list by specific currency pairs, so if you want to operate in a darker cryptocurrency, you can find the market with the best liquidity.
Bitcoin trading technology
Most bitcoin traders do their own operations manually, just as they would ordinary exchanges. However, bitcoin trading applications including crypto signals have improved by leaps and bounds in recent years. Currently, automated bitcoin traders use algorithms to analyze the market and then adjust their portfolios as needed.