The concept of cryptocurrency came into existence in 2008 with the launch of Bitcoin. The digital asset was meant to revolutionize the monetary system, but it didn’t pick up at all in the beginning. Fast forward to a decade later, cryptocurrency is surging towards all-time highs.
The potential of cryptocurrency is being recognized across the world. There’s a high wave of demand amongst people, signaling mainstream adoption in the near future. Investors understand both the challenges and opportunities of this exciting sector. It is resulting in more people entering into the crypto sphere than ever before.
However, new investors could easily feel overwhelmed with crypto trading. The information that is usually provided isn’t easy to digest when you aren’t aware of the terminologies. Reading a crypto chart is nothing less than an art.
You need to develop certain skills in order to understand the analysis of crypto trading. Doing so not only helps you make wiser investment decisions but also gives you an understanding of market trends. Here are a few tips and tricks that may help you read the cryptocurrency market better.
Set a Clear Goal Before Entering the Market
Cryptocurrencies have progressed to become an extremely lucrative market in the investment industry. According to Statista, their market capitalization grew by 300% in 2020. A lot of this growth is attributed to retail investors who have resorted to speculation as a way to earn extra income during the pandemic. This has led people to jump into it impulsively, which is never the correct way to jump into any investment sector, let alone be the crypto market. Investing without any goal can lead you to a roller-coaster ride. The probability is you won’t be able to reach the desired point in the market.
Before setting your foot into crypto trading, set up a clear purpose for yourself and plan ahead for how you’ll be executing on that. Identify the pattern of trading you want to delve into in the beginning and study it. This could be day-trading, scalping, or long-term trading, but pick up on a trading style first.
Study the Current Market Conditions
Nothing could teach you more about the market than the market itself. Do research on market conditions and various cryptocurrencies on a regular basis. Follow trends and read information that helps you decode the reasons behind those trends. Always keep yourself updated on the changes happening in the market – it could be pricing, demand, supply, market cap, and other factors.
Tracking changes would help you get the hang of the market trends and conditions. Follow all the news about the industry and the currencies you are trading or planning to invest in. You can sign up for newsletters from different exchange platforms that’ll update you with the market highlights every day. At Wisebitcoin, we provide our users with an e-calendar as well as a news section that’s equipped with up-to-the-minute information and industry trends.
Assess What Leaders are Doing
In the beginning, your focus shouldn’t be on just making big sums of profits. Instead, you should focus on picking up good and effective trading habits and strategies that’ll help you in the long run. Developing constructive trading patterns is the way to avoid making impulsive, disastrous decisions.
One way to ensure you are going in the right direction is by studying the trading patterns of experienced traders in the industry. There are multiple sources online depending on your goals. You can follow their trading strategies and learn along the way, all while keeping a critical eye.
Diversification Makes You a Winner
Just as it happens in the traditional investment industry, diversification is key to become a winner in crypto trading. Financial advisors all over the world suggest investing in multiple assets to maintain a healthy portfolio. Cryptocurrency markets are not different. Placing all your crypto coins in one basket increases your overall risk and decreases the probability of crypto gains. Therefore, invest in a way that serves different use cases in different sectors.
Know the Factors that Influence the Price
There are a variety of factors that affect the pricing of cryptocurrency. It may rise or fall depending on these. When you start trading, you should study the common factors that make a difference in the prices. Supply and demand for a coin play a huge role in this process. The difficulty level of the mining process also affects the price. If it’s difficult to mine an additional unit of a coin, its supply will require more computing power, resulting in changes in the coin’s price.
Furthermore, if a coin has multiple applications, it’ll increase in price. For instance, a crypto coin provides dividend payments, voting rights, mode of exchange, and many other applications. These applications decide the coin’s utility. The more the utility of a coin, the higher is its price.
Study Individual Coins and Tokens In Depth
Cryptocurrency is a vast market, and, like traditional investing sectors, it may also have scammers and fraudsters. While most options are going to be legitimate, there could be a few which are not. The risks might be low with a known cryptocurrency, but a new coin or token could be a fraudulent operation. Therefore, before you invest, do your own thorough research on the coin or the token. More often than not, beginners are the prey of fraud since they may easily get intimidated by the market.
The cryptocurrency market can never be predicted with 100% accuracy. However, understanding the market basics helps you make decisions that lie on the higher probability scale of profit. If you’re new to the market, the first thing you need to do is be informed. This will prepare you to handle the market shifts in a better way.
If you’re ready to dip your feet in the crypto trading market, Wisebitcoin, a crypto trading platform, may help you with it. We’re one of the fastest and most liquid exchanges and provide around-the-clock customer service to answer any and all questions you might have as a new crypto trader. Visit our website right now and let us help you in your journey.