The meteoric rise in the price of Bitcoin in 2017 drove the growth of individual altcoins and the cryptocurrency market as a whole, increasing the liquidity and volatility of cryptocurrencies. However, despite strong price movements, traders of stocks, futures, and other trading instruments remain hesitant about digital coins. Let's find out if it is worth trading cryptocurrencies and what are the main advantages.
ContentsVolatilityVarious rolesFreedom of choiceIncreased liquidityLeverageFast account openingAre there any downsides? Uncertainty linked to hard forks Conflict with central banks Conflict with the financial worldVolatility is good for trading because price fluctuations create profit opportunities for traders. If the price only went sideways for a week, a month or a year, it would be impossible to trade and make a profit.
Back in 2017, it looked like the uptrend of Bitcoin and other cryptocurrencies would never end. However, market sentiment can change, and more often than not it happens at the most unexpected time. Nothing lasts forever, and market participant sentiment also goes through ups and downs.
Long positions differ from short positions in that the trader buys an asset at one price and sells it at a higher price. In this case, the difference with the sale will be its profit. In turn, with a short position, the trader borrows the cryptocurrency, sells it on the open market, and buys shares at a lower price, again profiting from the difference in value. In other words, there are no restrictions on cryptocurrency.
Another advantage of crypto trading is the freedom of choice. You can trade with or without a broker. Of course, the presence of a broker is necessary, but you can always do without it.
Generally, crypto brokers are rapidly gaining popularity in recent years. Yet online forex brokers also provide crypto-trading opportunities to clients. They have a wide selection of trading instruments and cryptocurrencies are one of them.
Only a liquid market can guarantee high returns and thorough trading. Cryptocurrencies have high liquidity, which is why they are popular among traders. Compared to currency markets, they have a huge advantage, which is really beneficial for customers.
This means the use of a deposit (margin), through which you can gain increased access to digital currency. In other words, you partly trade with your assets and the supplier lends you the rest. Leveraged trading includes CFDs and spread betting. This trading option is suitable for experienced traders who do not have a large starting capital, but can earn money by borrowing capital.
Registration on a cryptocurrency exchange does not take long and does not cause difficulties, so a trader can focus on cryptocurrency transactions and start trading as soon as possible. In addition, to save time, traders have special tools for automatic trading.
These tools are crypto robots that serve as advisors to traders. They have a wide range of advantages and can make profitable trades.
When we talk about the advantages of cryptocurrencies, it is necessary to say a few words about some disadvantages of crypto trading.
The general public is unaware of what Bitcoin management and developers are discussing. Sometimes internal contradictions lead to the Blockchain splitting into two chains, as happened with Bitcoin and Bitcoin Cash. Information appears in various sources that developers and the Bitcoin community are considering other options to modernize the protocol.
The possibility of the coin's next split undermines investor confidence in the reliability of the coin and poses a threat to both Bitcoin and the entire cryptocurrency market.
Bitcoin and most other cryptocurrencies are decentralized in nature, they are not issued by countries' central banks. On the contrary, if digital coins become a popular means of payment and accumulation, it will be difficult for central banks to conduct monetary policy. In the long run, it could even render government financial institutions useless. It cannot be claimed that the development of events will follow this scenario, but its results may lead to:
Deflation is undesirable for highly indebted countries because it increases the real value of their debt. Moderate inflation offers debtor countries a reduction in the nominal value of debt securities without a threat to the national economy. Deflation leads to lower sales taxes and wage income, as well as lower consumption levels.
It is not yet clear how governments and central banks, especially Western countries, will react to such trends.
Bitcoin and other cryptocurrencies are independent not only of governments and central banks, but also of the banking system as a whole. Blockchain technology makes it possible to do without traditional banks, which exposes them to the risk of collecting commissions and other income. Financial institutions can try to counter this by pushing for laws governing cryptocurrencies.
