Several traders are devising ways of creating alternative income streams in the cryptocurrency market by buying and selling digital coins such as Bitcoin, Ethereum, and Ripple when their prices fluctuate. If you employ the right strategies and know the best time to trade, you can generate significant returns in the sector.
The primary target for many investors is to stockpile as much crypto as possible and later earn a profit. During a bullish trend, your investment portfolio can rise in value.
Trading cryptocurrencies comes with ups and downs. You can likely record losses or generate profits as the crypto market is highly volatile. However, some traders choose to hold their cryptocurrencies on a long-term basis. You can use reliable platforms such as bitcoinera.io platform to trade and monitor your crypto assets with much ease.
Let’s dive deeper to get a clearer picture.
Overview of a cryptocurrency?
The crypto industry has seen the emergence of many digital coins over the years, while Bitcoin was the initial crypto. These cryptocurrencies are backed by robust Blockchain tech and are decentralized, meaning any government or local central banks do not control them.
Decentralization comes with many merits compared to the traditional financial system, and they are:
- Enabling speedy and affordable transactions across all parts of the world.
- Reducing the overhead costs affiliated with local banks.
- Eliminating the urgency of financial intermediaries.
Bitcoin is the dominant cryptocurrency based on market cap and is considered digital gold. Traders use Bitcoin as a medium of exchange as well as a store of value for their assets. Ethereum comes second to Bitcoin in terms of market cap and is currently trading at $2,070.83 as of this writing. Also, Ethereum is renowned for its smart contracts that enable the underlying team of developers to build decentralized apps on its network.
How to select a cryptocurrency?
In essence, you can’t tell the right cryptocurrency since your underlying conditions will determine the suitable digital coin for you. For instance, Bitcoin is considered the suitable coin for a reserve asset since it enjoys prestige in terms of international acceptable and limited supply.
However, you will likely find the ideal digital coins among the top 30 currencies based on market cap. Several digital currencies with a lower market cap can tend to have unresolved applications or have underdeveloped features. Many analysts claim that digital coins with lower market cap tend to have higher risk levels compared to more significant market cap cryptocurrencies.
Moreover, it’s a smart decision to invest your capital in digital coins that have a well-known and reputable team of developers. You can learn and understand a cryptocurrency better by researching and relying on relevant materials that will offer you helpful info on how a cryptocurrency works and its purpose in the long run.
There are other decentralized finance (Defi) tokens, which appear as affordable Altcoins to invest in this year. In general, Altcoins are other digital coins that offer alternatives to Bitcoin. More to say that these defi coins such as Uniswap, Aave, and Marker have been created using the Ethereum Blockchain.
How does a cryptocurrency work?
Any cryptocurrency functions effectively with the help of Blockchain technology. The Blockchain tech serves as a public ledger for recording each crypto transaction on the node supporting the Blockchain. Nodes are interconnected computer devices to the Bitcoin network that helps to mine the crypto. This means that in case of a wrong entry, the correct ledger will cancel the transaction.
If you have decided on trading cryptocurrencies, you have to get a private key and a public key. A private key acts as a password and is provided by your preferred exchange platform. On the other hand, a public key is linked to your wallet address to enable anyone to send you digital payments. Also, a private key will help you make wallet transactions, but if you lose it or someone else gains access to it, you will lose your crypto assets.
How to start trading cryptocurrencies?
For a beginner, the steps involved in trading cryptocurrencies are easy and straightforward. However, you need to identify a reliable and regulated trading platform. You can take some time to research and analyze the right platform for you since many platforms in the sector have distinct features. Also, you can consider other factors such as transaction fees, the withdrawal process, and if the customer service is responsive. After determining your suitable platform, follow these simple steps.
Many platforms offer a smooth registration process, while it’s completely free to register. First, you need to visit the official site of your preferred platform to fill the online application form. You will provide minimal info such as name, email address, contact number, and password. The account activation is done within minutes, and later, the system will connect you to the underlying broker.
The next step is funding your account through the underlying broker to enable you to start trading. If you’re wondering how to deposit, many platforms offer different methods of making the deposit amount, such as Visa, Mastercard, Debit / Credit card, or through Paypal. As per several platforms, the initial amount you can deposit is $250, while you can also make an amount not exceeding $15,000. However, the amount is processed quickly into your account, and you can begin trading immediately.
Identify your crypto trading pair
Although several traders invest their capital in the top cryptocurrencies such as Bitcoin or Ethereum, there are other Altcoins you can choose from and can turn out suitable for you. You can use technical indicators as these top coins fluctuate at a faster rate than other Altcoins.
You can use crypto trading pairs such as BTC/ETH, ETH/LTC, or crypto-fiat pairs like BTC/USD and XRP/EURO.
After you have done your due diligence and feel confident, you can begin live trading. The live session involves using your invested capital, which means that if you don’t employ better strategies, including a stop-loss limit, you may leave the financial market after recording huge losses.
Trading will require committing quality time and other resources. As a beginner, you’re not likely to learn everything on the first day, but by taking calculated risks and improving your skills each day, you can succeed in the long run.