What is the cryptocurrency market and why should you trade it?

 

        What is the cryptocurrency market and why should you trade it? Beginner's         guide

Regardless of the asset class - be it stocks, forex, or cryptocurrency - an understanding of the underlying market is crucial.

could not be more appropriate for the cryptocurrency market - a volatile and highly speculative market.

Luckily for you - we've put together the ultimate beginner's guide on what the crypto market is, how it works, and what you need to do to take advantage of this ever-growing investment arena!

What is Crypto Market - Quick Guide

If you're a bit short on time and want information on what the crypto market is and how it works - check out our Quickfire guide below.

• The crypto market allows people to buy, sell and trade digital currencies such as Bitcoin and Ethereum

• When trading cryptocurrencies, you will do so via a pair. For example, BTC/USD means that you are trading the value of Bitcoin against the US dollar.

• You need to speculate whether you think the price of the pair will rise or fall. For example, if BTC/USD is at $29,000 - do you think the price will go up or down?

• Your ability to make a profit will be determined by whether and how much you speculated correctly as well as the value of your trade.

Are you ready to explore the cryptocurrency market now by placing your first-ever trade? If so - you can buy, sell and trade cryptocurrencies on an eToro licensed broker on a 0% commission basis!

What can you trade in the cryptocurrency market?

As mentioned above, the cryptocurrency market is accessed by trading “pairs”. There are thousands of pairs in the cryptocurrency market, but you might want to stick with a few to get you started. After all, it may take some time to understand how this volatile market works.

However, before you can even consider trading digital tokens, you first need to understand the two major types of pairs. This includes cryptocurrency and cryptocurrency pairs - which we discuss in the sections below.

Cryptocurrency pairs to fiat

If you are completely new to the crypto market - it is better to stick with the pairs of digital assets that contain fiat currency. These are known as cryptocurrency pairs, not least because you will be trading fiat currency for digital token currency.

For example:

• If you want to speculate on the exchange rate between Cardano and the US dollar - you are trading ADA / USD

• If ADA/USD is priced at $1.08 - you need to tell your chosen broker if you think the pair will go up or down

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In the vast majority of cases, the cryptocurrency of your choice will always contain the US dollar. This is because the US dollar is the standard currency used in the cryptocurrency market - as when trading precious metals or oil.