Why Bitcoin Trading is the Most Profitable Venture Today
Talks about Bitcoin and other cryptocurrencies have flooded the internet. The mainstream media has also covered stories about cryptocurrencies. Experts say that blockchain technology, which is the basis of virtual currencies, can potentially transform the global financial systems. And this innovation presents excellent money-making opportunities.
For this reason, professional traders have jumped onto the digital currency markets to boost the win ratio. High competition level from some investment banks combined with high-frequency algorithms has led to edge losses in legacy markets for some retail traders.
Bitcoin and other virtual currencies remain relatively new to some people. Consequently, institutional investors are yet to dominate their markets. Massive gains of up to 1000% in prices and the wild swings or volatility characterize the crypto markets. Most people also associate cryptocurrencies with high risks, and this scares off some investors. However, seasoned traders consider these dynamics of a crypto market beneficial. Here’s why Bitcoin trading is the most profitable venture for some investors today.
Anything happens in the cryptocurrency market depending on what the buyer and the seller agree. Crypto exchanges like the Bitcoin Era operate with minimal regulations. Perhaps, you can visit the bitcoin evolution for more information. Such a platform enables you to purchase or sell Bitcoin at any time and from any location.
However, an unregulated market has its downside. For instance, whales may opt to manipulate the market through inside trading, spoofing, wash trading, dumps, and pump. The worst that can happen is losing money through a crypto exchange bust. That’s because some crypto exchanges do not have insurance policies to protect deposits from their users. Thus, you risk losing your money through a crypto exchange.
High-Frequency Powerful Computers Don’t Dominate the Crypto Markets
Some investment banks have spent a lot of money purchasing supercomputers, hoping to get a competitive edge over retail traders. Such high-frequency computers take microseconds to run algorithms and provide essential trading information. Retail investors can’t compete with such computers with high processing power while trading from home.
Large investment banks can use high-frequency algorithms to influence the trading system in several ways. One of them is using flash orders to run trades. Thus, an investment bank may intercept crypto trades within microseconds before processing and selling them at a higher price than the original order. Algorithms can also disrupt the patterns of the cost to work against the typical trader analysis.
Dumb Money Does Not Drive the Crypto Markets
Individual traders compete against large institutions in a legacy market. Prominent players with huge budgets can purchase supercomputers or hire professional traders to work for them as a team full-time. Small players in this zero-sum game might not have adequate resources for competing against more prominent players. However, Bitcoin trading has a lower entry barrier.
That means anybody can venture into Bitcoin trading with a few dollars. And with most crypto exchanges, traders can quickly meet minimal requirements for registration. Thus, the industry attracts more individual than institutional traders.
And most individual traders don’t operate as full-time traders. Amateur traders can also venture into the crypto trading world using automated software. Dumb money refers to traders that purchase high and then sell low. That’s because they chase markets and purchase when prices increase, fearing they will miss out. Unfortunately, they end up panic selling during the market crash. If dumb money drives a market, it becomes volatile. A trader can predict such a market if they know what they are doing.
Bitcoin and other cryptocurrencies are relatively innovative. Using the right tools and information, you can make good profits from your trading activity. Nevertheless, take your time to learn how cryptocurrencies work and the best ways to trade them.