The crypto-craze has changed a lot in the world of finance and stock trading. When Bitcoin arrived, most people never believed it to hold any kind of value. And today, this investment avenue has managed to lure real talent and millions of dollars from Wall Street turning images of dogs into digital assets and bringing on a slew of trading jargon that is enough to bamboozle even the most seasoned crypto market analysis experts. Another aspect that crypto trading has impacted has been the everyday life of an avid investor. Traditionally, an average stock trader could always unplug on Sundays until 6 P.M. New York time, when S&P 500 and other index futures resumed trading after the weekend pause. But those days are long gone. Cryptocurrency trade is a 24x7 game which means you can never take your eyes off the screen.
So how do the modern crypto investors manage cryptocurrency market live trading? Is sleeping an option for a trader? Do they have a life?
Valid questions – especially if you are just starting out in the world of crypto trading. This article will solve all your qualms about the 24x7 nature of cryptocurrency market live trading and give you tips on how you can make your life easier as an investor.
Let’s get the bitter truth out in the open right at the start – the crypto market operates 24x7. Unlike regular stocks, crypto isn’t traded on a regulated exchange. Instead, there are thousands of exchanges providing platforms for trading this stock across the globe, meaning that the market ends up being open all the time. Cryptocurrency market analysis suggests that different time slots witness different volumes of trade during the day. There are times when global market activity is extremely high while others when the trade volumes are low, resulting in weaker exchange rates and difficulty in selling stock. As a trader, you must be well versed in these market timings to ensure that you aren’t left sleeping while investment opportunities come and go.
Once you start acquainting yourself with the world of cryptocurrency analysis and predictions, the first thing you will notice is the presence of different prices for the same asset on different cryptocurrency exchanges. Several factors are responsible for this, including the trade volumes that an exchange witnesses. These variations can be attributed to quite a few factors like:
· Liquidity: Trade volumes can be massive on the larger, more popular exchanges like Kraken, GDAX, Gemini, and the like. Conversely, these volumes tend to be much smaller on the newer, less popular exchanges and these variations can impact the prices of coins traded on them.
· Pricing: Since the crypto market doesn’t follow any standardized pricing strategy for stock, no one knows what it is ‘supposed’ to cost. Hence, exchanges leave coin pricing up to market forces like supply and demand.
· Compatibility: It is quite a messy, cumbersome and expensive task to move your money between exchanges. This exchange compatibility issue doesn’t allow traders to switch between exchanges to take advantage of price differences and hence, the variations end up persisting for longer than it would be possible for an efficient market.
Traders would therefore have to take into account the impact of multiple exchanges on market volatility. Price variations, trade volume disparities, and working hours – all contribute to the mayhem that exists in the already chaotic crypto market.
One of the most baffling aspects of cryptocurrency analysis is the impact of social media and its influences on market numbers. This investment sphere has been more responsive to the tweets of billionaires and celebrities than any other market out there. Many renowned personalities like Elon Musk have been repeatedly accused of manipulating the market through their online following. You may think you had a good trading day and log off, only to find the market in a total state of disruption when you wake up – all because someone, somewhere posted something about a coin on their social media handle and left the market in a tizzy. As a trader, this factor really doesn’t make your life any easier.
Individuals and institutions who hold large amounts of stock of a particular coin are known as ‘whales’. Since their holding is sizeable enough, they gain the power to manipulate the value of certain cryptocurrencies by placing specific trades. Whale traders can put massive sell orders at values lower than other sell positions in the market, forcing the prices to drop, thereby setting off a chain reaction of panic and instability that is tough to control. This ‘sell wall’ tactic is often used by whales to artificially bring down prices to a level where they would like to start accumulating more coins again. 24x7 trading creates multiple opportunities for whale traders to artificially manipulate markets and create trends out of nothing, giving the average trader a hard time reading the market and making any kind of cryptocurrency analysis and prediction.
Market manipulation adds more volatility and chaos to the world of crypto trading, making it even more unsafe and tricky for newbie investors to handle. No amount of crypto market analysis can prepare you for a possible pump-and-dump, wash-trade, or spoofing. In a 24x7 market that is completely at the mercy of market forces on a global scale, artificial market manipulations carried out by institutional traders, whales or influential investors can wreak havoc on asset values. There are times when these manipulators don’t even need to actively trade any asset. A cryptic tweet is all that may be needed to get an asset to soar or take a plunge to the bottom. As a trader dealing in cryptocurrency, you need to be prepared for these volatile market movements at all points in time.
This is where crypto trading becomes even trickier. Hashrate refers to the computational power for verifying transactions and adding blocks in a blockchain. It represents the number of individuals and entities that are participating in the mining process and hence, it denotes the kind of volumes one can expect as add-ons in the current number of coins in circulation. Hashrates have a directly proportional relationship with coin prices as more mining introduces more coins and brings more people in to buy and sell this newly mined currency. Experts predict that any squeeze in mining margins will lead to the consolidation of coin mining operations, especially those being carried out by prominent entities. Any changes in these hash rate numbers can therefore impact cryptocurrency analysis and predictions in a huge way.
One of the biggest changes that every trader must be wary of is the advent of legalization, regulation, and centralized management in the world of crypto. As governments across the globe are waking up to the realities of cryptocurrency, a slew of legal complications is bound to be expected. A market that is operational 24x7 today may change altogether in the near future when entities such as the SEC begin formally regulating it. Whether such developments will be welcomed by the market or rejected is yet to be seen. But volatility and chaotic movements will be part and parcel of the everyday life of investors as these changes take effect, at least until the dust settles.
No – we will not be telling you to quit the world of crypto investments altogether to save yourself from its evils. Instead, we will help you find workarounds to manage the volatility and erratic behavior of market movements so that your life as a trader can get a little bit easier. Here are a few ways in which you can face the challenges that the crypto market presents for investors:
· Be Informed: When it comes to cryptocurrency market analysis, there can be no substitute for timely information. Use multiple sources, set up notifications and alerts, follow the crypto celebs and keep a close eye on asset movements to ensure you are not caught sleeping as trends emerge.
· Historical prices: Basing your investment decisions on historical price trends can help traders avoid falling prey to whale tactics like wash trades on multiple exchanges.
· Diversification: Not putting all your eggs in one basket is age-old advice that holds true even today. Spreading your investments over a healthy mix of assets as per your risk appetite will ensure that you don’t lose everything to a single disruptive event in the market.
· Bot Trading: Computer programs can help you buy and sell specific cryptocurrencies at specific prices or value thresholds in order to generate a profit. This simple tool can help you take advantage of market movements even when you are not logged into the trading platform.
· SIPs: Systematic Investment Plans in cryptocurrencies can help an investor get a better entry point in an otherwise chaotic market. You can use these to your advantage and take at least some of the load off your back of finding the right deals for your portfolio.
Volatility will be a part of your life as a crypto investor, at least until this market matures or gets regulated. A 24x7 open market will have trades coming in from across the globe and trends cropping up left, right, and center. You may not be able to insure yourself against each of these erratic movements but you definitely can make the most of them by using the tools available at your disposal. After all, that is what makes crypto exciting!