2022 is the year crypto trading achieves mainstream status. However, before you venture out into this exciting world, here are a few benefits of crypto trading you should know.
#1 Markets are Open 24/7
Cryptocurrency markets are open 24/7 and available in all time zones and major holidays, including Christmas Day and New Year’s Eve. During natural disasters, war, or any other unforeseen events that keep the markets from being open, some exchanges will have a contingency plan in place to protect their customers.
Cryptocurrency markets are accessible even when you’re traveling abroad or in remote areas where it may be difficult for you to get online access due to connectivity issues. For example, if you’re on vacation with your family but still want to trade cryptocurrency while away from home, there’s no need for any special equipment — just your mobile device and an internet connection!
#2 Can be Traded on Margin
Another benefit of trading cryptocurrencies is that you can trade on margin. Margin trading allows you to borrow money from a broker to fund your investment and increase exposure.
For example, Bitcoin is trading at $6,000 and you have $3,000 in your account. However, you want to buy more Bitcoin to sell it later at $10,000 when the price rises again. So, margin trading will allow you to do just that.
It is vital to note that there are risks associated with margin trading because it allows investors to leverage their capital (borrow money) to increase potential gains — but increases potential losses as well.
#3 Cryptocurrencies are Volatile
Volatility is a measure of how much the price of a commodity or asset changes over time. A highly volatile market means that cryptocurrency prices are fluctuating widely, while a less volatile market sees smaller price fluctuations. Cryptocurrencies are inherently highly volatile assets due to their nature as unregulated assets with little intrinsic value and relatively low barriers to entry.
Because cryptocurrencies are so new and because they lack any backing from any government or organization, investors can never be sure if the cryptocurrency value will go up or down next week—or even the next day! That makes it very difficult for investors who want to get involved in this space without risking significant losses from sudden price drops.
#4 A Wide Range of Cryptocurrencies Available
Trading cryptocurrency is a great way to diversify your investments.
Because there are so many different cryptocurrencies on the market, traders can choose from a wide range of options. For example, if you want to invest in bitcoin but don’t want all of your money tied up in one currency, it is possible to trade other cryptos like Litecoin or Ethereum instead.
#5 Cryptocurrency Exchanges can be Unregulated
The cryptocurrency market is unregulated. That means that there are no federal or state laws governing how cryptocurrencies are bought and sold, or who can use them. As a result, criminals can buy and sell cryptocurrencies on an unregulated exchange with little fear of repercussions.
You cannot hold a cryptocurrency exchange accountable if they fail to protect your money from theft or loss because they aren’t required by law to do so. The only way you could seek recourse in case of theft would be through arbitration with the company itself, which means you’d have to agree with the company for it to be valid (not all companies offer arbitration).
If something does go wrong with your account on an exchange, you won’t have much recourse if anything goes sideways despite having done everything right yourself beforehand. That can make trading cryptocurrencies feel like taking my life savings out onto High Street Road without wearing any clothes on top while blindfolded while texting behind me while driving at 100 mph with no brakes.
#6 Cryptocurrency Prices can Change Suddenly
Cryptocurrency prices can suddenly change due to speculation. These price changes can be caused by:
- New information coming into the market about a cryptocurrency, or about cryptocurrencies in general.
- Market manipulation. That can happen when a group of people decides they want to buy up large amounts of a certain type of cryptocurrency (or all types), so they create more demand for it than there would otherwise have been without their actions. On the flip side, this same group could try to drive down demand by buying up large amounts at once on purpose and driving down its price artificially—this is called “pump-and-dump”.
By itself, this isn’t necessarily bad; many merchants use market manipulation tactics as part of their business model because they’re getting paid more money this way than they would if they didn’t manipulate markets!
#7 Short-Selling is Available
When you short-sell a cryptocurrency, you are selling it at an artificially high price to buy it back later at a lower price and profit from the difference.
Shorting is risky because if the price of your chosen coin goes up instead of down, you could lose money. However, if your crystal ball says that the crypto will go down in value (or stay stable), then shorting can be an effective way to make money off of trades.
This article has introduced you to the world of cryptocurrency, and hopefully, you have learned why it can be a great way to start investing. If you are ready to get started, feel free to try some out! There are plenty of different exchanges and ways to buy crypto, but keep in mind that it all comes down to what works best for you.