Cryptocurrencies have been around for about ten years now. Their popularity and value have been driven by demand and their usefulness in today’s world. Cryptocurrencies are obtained through a process known as mining. The process takes time and quite a bit of processing power. However, for someone looking to make money with crypto, trading is the way to go. “Trading pairs” in the world of cryptocurrency essentially means trading between two types of crypto.
How does it work?
In a cryptocurrency exchange, business is handled in trading pairs. In trading pairs, the value of a particular pair is determined by comparing the cost of one to the other. Since Bitcoin is the most valuable of all crypto, prices are usually in relation to it. In simple terms, how much cryptocurrency would you need to purchase one Bitcoin? Thus the act of trading pairs helps the other cryptocurrencies to move in the markets. Here are things you have to consider in starting your crypto trading pairs.
Choosing your crypto trading pairs
Before entering the market, all traders should first do their research. This means analyzing several cryptocurrencies that are doing well. By doing so, they can determine which will give them the most profit. After that, it is prudent to perform a unique technical analysis to get a clear picture of current trends and gauge how the market behaves. How do you choose the trading pairs you’d like to work with? In today’s markets, the most popular trading pairs include BTC/LTC, BTC/ETH, ETH/LTC, USDT/BTC, and many others.
Essentially the pair you pick will often determine how much you’ll make in profits. The pairs mentioned above are popular across trading platforms. This is due to the global demand for Litecoin, Ethereum, Bitcoin, and other similar cryptocurrencies. You may also trade in other less popular cryptocurrencies. But you need to check the crypto’s trading volume. This should give you a clear picture of whether there is a connection to the other currencies.
The liquidity of an asset is something every entrepreneur should check before purchasing an asset. Liquidity means how fast you can sell off an asset should the need arise. In the world of cryptocurrency trading, the liquidity of a particular currency will determine how much profit can be made on a trade. Liquidity, in this sense, also goes to the risk-reward structure in a specific trade. Cryptocurrencies with a proven track record have higher liquidity. This means better prices and stable demand making them more attractive to buyers. When a cryptocurrency doesn’t have enough demand, its price falls. People who bought it will face losses since they will sell it for less than their buying price.
Base currencies to use
The base currency is a currency known and accepted by the whole industry. In cryptocurrency trading, Bitcoin and Ethereum are an excellent base currency to have. These two work as base currencies because they are the most stable and in demand. As such, they make worthy trading pairs because most exchanges will have them paired with nearly every cryptocurrency with value. This means multiple opportunities to make money. Recently, a stable coin called Tether (USDT) is making waves around the world. It’s gaining popularity because, unlike the other cryptocurrencies, this one mirrors the U.S. dollar price. This makes it highly liquid and reliable, which is immensely valuable in this space.
Advantages of one pairing over another
The objective of pairing these currencies is to aid in their trading and help traders make as much as possible while trading. Although most exchanges list every sort of pairing you could think of, you must know how to choose the one with the best returns. Most exchanges will likely list BTC/ETH pairings like those with the highest volume of exchanges. But keep an eye for opportunities where a different combination has higher liquidity or trading volume. That means choosing the right combination with more buyers and better profit margins.
Hottest cryptocurrency trading pairs in 2020
Today, cryptocurrency is already accepted all over the world. Many countries have developed a framework to use these assets as alternative means of payment. Cryptocurrencies are getting more stable, which enhances their viability for trading. As of this article’s writing, USDT has the highest trading volume, which means that it can do well when paired with Bitcoin and other currencies. Pairs such as USDT/XRP, USDT/BTC, USDT/EOS, and USDT/ETH could make a significant impact. They are entering the market with about 100 USDT should give you plenty of opportunities to make big profits.
Furthermore, EOS has been busy at work with their blockchain management. Not only is it more secure today, but it’s also much faster, which has gone a long way in improving its popularity. Pairs like EOS/BTC, EOS/LTC, and EOS/USDT have a good trading volume, which creates an opportunity to make good profits.
Alternative cryptocurrencies to trade
The world of cryptocurrencies is fast changing. Today, there are plenty of technological innovations, investment opportunities, and financial regulations that gave birth to new currencies to the limelight. Not only have these assets gained a lot of momentum, but they are also here to stay and can make a lot of money for those who see an opening. One such currency is NEO. Often referred to as the Ethereum of China. Not only has it become valuable, but it’s also shifting the entire industry to the future giving it a lot of potentials. Another crypto is LINK, which is native to the ChainLink Company. With a price of $10.74 and a trading volume of $592,099,204, it’s also a prime target for anyone who wants to make money trading cryptocurrency.
Though 2020 has been a roller-coaster, most cryptocurrencies haven’t taken a massive plunge in terms of valuations. Many fiat currencies are having a difficult time in the forex markets. But crypto is holding steady and is expected to do so over the next couple of months.