If you want to get engaged in the cryptocurrency world, one of the first things you should think about is whether you will buy the digital assets or speculate on their pricing. Examine some of the advantages of trading CFDs on cryptocurrencies and learn why it has become a popular alternative to purchasing coins altogether.
Why invest in cryptocurrency 2021?
How cryptocurrency works When you trade cryptocurrencies with IG, you are gambling on whether the value of your chosen market will rise or decline, without ever owning the digital asset. This is accomplished through the use of derivative instruments such as CFDs.
Is cryptocurrency safe The following are some of the advantages of cryptocurrency trading:
Cryptocurrency volatility problem
Although the cryptocurrency market is still in its infancy, it has seen substantial volatility as a result of massive short-term speculative interest. Between October 2017 to October 2018, for example, the price of bitcoin surged to as high as $19,378 and fell to as low as $5851. Other cryptocurrencies have been more stable, but new technology are prone to attracting speculative interest.
Cryptocurrency volatility is part of what makes this market so intriguing. Rapid intraday price changes can present traders with a variety of opportunities to go long and short, but they also come with heightened risk. So, if you decide to venture into the cryptocurrency market, make sure you have done your homework and built a risk management strategy.
Cryptocurrency market hours
Because there is no centralized governance of the market, the cryptocurrency market is normally open for trading 24 hours a day, seven days a week. Cryptocurrency transactions occur directly between individuals on cryptocurrency exchanges throughout the world. However, there may be periods of outage as the market adjusts to infrastructure updates, sometimes known as “forks.”
From 4 a.m. Saturday through 10 p.m. Friday, you can trade cryptocurrencies against fiat currencies such as the US dollar using IG (GMT).
How to increase liquidity crypto
Is cryptocurrency a good investment 2021. The answer is yes ofcourse The liquidity of a cryptocurrency refers to how quickly and easily it may be exchanged into cash without affecting the market price. Liquidity is vital because it allows for better pricing, shorter transaction speeds, and greater technical analysis accuracy.
In general, the cryptocurrency market is considered illiquid since transactions are scattered across numerous exchanges, resulting in very minor deals having a large impact on market values. This contributes to the volatility of cryptocurrency markets.
When you trade bitcoin CFDs with IG, however, you can benefit from increased liquidity because we source prices from numerous venues on your behalf. As a result, your trades are more likely to be completed swiftly and at a cheaper cost.
Long and short trading
When you acquire a cryptocurrency, you are purchasing the asset on the hope that its value will rise in the future.
However, by trading on the price of a cryptocurrency, you can profit from both rising and falling markets. This is referred to as going short.
Short Selling and Long Selling
For example, suppose you’ve decided to open a short CFD bet on the price of ether because you anticipate the market will collapse. Your trade would profit if you were correct and the value of ether declined against the US dollar. However, if the value of ether increased in relation to the US dollar, your position would be losing money.
Leveraged ETF strategy
Because CFD trading is a leveraged product, you can open a position on ‘margin’ – a deposit that is only a portion of the total value of the trade. In other words, you might acquire significant exposure to the bitcoin market while just committing a small portion of your wealth.
The profit or loss you make from your bitcoin trades will reflect the full value of the position at the time it is closed, therefore trading on margin allows you to generate significant rewards from a modest investment. It can, however, amplify any losses, including losses that could exceed your initial deposit for a single transaction. This is why, before trading CFDs, it is critical to assess the overall value of the leveraged position.
It is also critical to have a proper risk management strategy in place, which should include appropriate pauses and limits.
Faster account opening
When purchasing cryptocurrencies, you must do so through an exchange, which necessitates the creation of an exchange account and the storage of the cryptocurrency in your own digital wallet. This procedure might be cumbersome and time-consuming.
However, when you trade bitcoin with IG, you won’t require direct access to the exchange because we’re exposed to the underlying market on your behalf. You won’t have to set up and manage an exchange account, so you might be up and running and ready to trade much faster. With our simple application form and rapid online verification, you could be trading in less than five minutes.
Should I buy or trade cryptocurrencies?
What is cryptocurrency trading. Before deciding whether to buy or trade cryptocurrencies, you should carefully evaluate the differences between the two techniques.
If… you might be interested in purchasing cryptocurrency.
- You want to be the sole owner of the cryptocurrency.
- You are willing to pay the whole asset value up front, and you wish to obtain direct exposure to one underlying exchange per account.
- You are willing to wait for an exchange account before buying or selling.
- You are unconcerned with introductory restrictions or maximum deposits.
- You are willing to pay additional costs for deposits or withdrawals.
If… you may be interested in trading cryptocurrency CFDs.
- You want to speculate on the price of a cryptocurrency without actually owning it.
- You want to leverage your position so that you just have to pay a portion of the initial cost.
- You want to profit from the tax advantages of CFD trading. You want to acquire exposure to numerous exchanges from a single account.
- You want to begin trading right immediately.
- You do not desire a maximum deposit limit.
- You do not want to pay any deposit or withdrawal charges.