When it comes to cryptocurrency trading, you have to speculate whether the value of your chosen market will rise or fall. And the interesting thing is that you never own the digital asset. In fact, trading is done using derivative products such as CFDs. Let’s take a look at the benefits of trading cryptocurrencies. Read on to find out more.
Although cryptocurrencies are a new market, they are quite volatile due to short-term speculative interest. The price of bitcoin has dropped from $19,378 in 2018 to $5,851 in just one year. However, the value of other digital currencies has been relatively stable, which is good news.
What makes this world so exciting is the volatility of the value of cryptocurrencies. Price movements offer traders plenty of opportunities. However, there is also a lot of risks associated with it. So if you decide to explore this market, be sure to do your research and put together a risk management strategy.
The market is usually open for trading 24 hours a day, 7 days a week as it is not regulated by any government. In addition, transactions take place between buyers and sellers all over the world. There may be short downtimes when infrastructure upgrades are taking place.
Liquidity refers to how quickly a digital currency can be sold for cash. This feature is important because it allows for faster transaction times, better accuracy, and better prices. In general, the market is somewhat illiquid because financial transactions take place on different exchanges. Therefore, small trades can result in large price changes.
Since CFD trading is considered a leveraged product, you can open a position on what is called margin. In this case, the value of the deposit is a fraction of the value of the trade. You can therefore enjoy a large exposure to the market without investing a lot of money.
The loss or profit will reflect the value of the position at the time it is closed. So if you trade on margin, you can make huge profits by investing a small amount of money. However, at the same time, it amplifies losses that may exceed your stake on the trade. Therefore, before investing in CFDs, make sure you take into account the total value of the position.
It is also important to ensure that you follow a solid risk management strategy, which should include proper limits and stops.
Opening an account quickly
If you want to buy cryptocurrencies, make sure you do so through an exchange. Simply sign up for an exchange account and keep the currency in your wallet. Keep in mind that this process can be restrictive and take a lot of time and effort. However, once the account is created, the rest of the process will be completely smooth and uncomplicated.
Long story short, these are some of the most prominent benefits of cryptocurrency trading in the here and now. Hopefully, you will find this article quite helpful.
If you want to find out more about the future of Bitcoin and cryptocurrency, we suggest that you check out widencrypto.com.
Cryptocurrencies have a bright future ahead
Credit and debit cards will become obsolete, according to a report called Imagine 2030 published by Deutsche Bank. They will be replaced by smartphones and other electronic devices.
Cryptocurrencies will no longer be seen as an outcast but as an alternative to existing money systems. Their advantages such as security, speed, minimal transaction fees, ease of storage and relevance in the digital era will be recognized.
Specific regulatory guidelines would popularise cryptocurrencies and encourage their adoption. The report predicts that 200 million users will have cryptocurrency wallets by 2030 and nearly 350 million by 2035.
The opportunity to be part of a growing community
WazirX’s #IndiaWantsCrypto campaign recently completed 600 days. It has become a mass movement promoting the adoption of cryptocurrencies and blockchain in India.
Also, the recent Supreme Court verdict that overturned the 2018 RBI ban on crypto banking has instilled a new surge of confidence among Indian investors in bitcoin and cryptocurrencies.
People’s growing trust in cryptocurrencies and blockchain technology is also highlighted by the 2020 Edelman Trust Barometer report. According to its findings, 73% of Indians trust cryptocurrencies and blockchain technology. According to 60%, the impact of cryptocurrencies/blockchain will be positive.
If you become a cryptocurrency investor, you will be part of a thriving and fast-growing community.
Increased profit potential
Diversification is a fundamental investment rule. Especially nowadays when most assets have suffered major losses due to the economic woes spurred by the COVID-19 pandemic.
While bitcoin investment has returned 26% year-to-date, gold has returned 16%. Many other cryptocurrencies have seen triple-digit returns on investment. Equity markets, as we all know, have performed dismally. Oil prices fell well below zero in April.
Including bitcoin or other cryptocurrencies in your portfolio would protect the value of your fund in such an uncertain global market environment. This fact was pointed out by billionaire macro hedge fund manager Paul Tudor Jones when he announced a month ago that he planned to invest in bitcoin.
Cryptocurrency markets are open 24 hours a day, 7 days a week, 365 days a week
Unlike regular markets, cryptocurrency markets operate around the clock, all days of the year without fatigue. This is because digital currency systems are essentially designed using pieces of software code that are secured by cryptography.