No individual’s financial position is fixed which is why it is crucial to make investments. Wealth generation will save people in difficult situations eliminating the need for borrowing a sum from lending entities like banks, friends, insurance companies, etc., This is why many investors have started buying and selling digital currencies. Are you interested in cryptocurrency trading like bitcoin? If yes, here is a list of reasons for traders choosing to buy bitcoin, Ethereum,or other cryptocurrencies.
- Volatility
- Market hours
- Improved liquidity
Volatility: The market of cryptocurrency is still fresh yet it has gained the volatility feature due to the huge speculative interest of short-term investors. This can be proved by the change in prices of bitcoin between the years 2017 and 2018. Other digital currencies have been found to be more stable but the frequent technological advancements have created a speculative interest.
Believe it or not, one of the main reasons for the popularity of digital currency is its volatility. The rapid price changes a day give the traders the opportunity to go short or long with a higher risk. A simple suggestion would be to develop a risk management strategy after intensive research in the financial field.
Market hours: There is no specific time to trade. You can enter the medium and start trading at any part of the day. The market is open 24/7 because of the absence of centralized governance. You can directly trade with another trader from any part of the world using the cryptocurrency exchange. However, you may experience downtime due to forks or market adjusting to the infrastructural updates. With good financial entities in place, you can benefit from trading cryptocurrencies against fiat currencies.
Improved liquidity: As you know, liquidity is nothing but an aspect to convert a cryptocurrency into cash, without affecting the market price. Liquidity is considered important because it facilitates better pricing, increased accuracy useful for technical analysis, and faster transaction times. Usually, the market for cryptocurrency is illiquid due to the fact that transactions are distributed across several exchanges which signifies that small trades can hugely affect market prices. This element is considered the main reason for volatility in cryptocurrency markets.
However, when you take the opportunity to trade cryptocurrency CFDs with reliable trading platforms, you may have the benefit of availing of improved liquidity due to sourcing of prices from multiple venues. This simply means that your trades can be quickly executed at a lower cost.
Faster account opening: Buying cryptocurrencies is not enough, you need an exchange account where you can use the digital wallet to store your digital currency. This process is easy if you pick the right platform for trading.
Bottom line
From the above, it is evident that the decision to buy bitcoin,Ethereum,or other digital currencies is beneficial for traders as the cryptocurrency market is volatile, offers 24/7 transacting, and improved liquidity. That being said, you can prefer to choose any digital currency based on your convenience and financial goals.
