Crypto trading has many advantages over regular stock markets. Cryptocurrencies are volatile and the crypto markets are always open. Moreover, a lot of cryptocurrencies are still in their infancy, meaning there’s a lot of room for growth. However, trading is a tricky business and it comes with its own set of risks.
But like any other asset, it can be simplified by the measurement of risks and rewards. Keeping in mind that this article is not investment advice, let’s proceed to the task at hand. In the following article, we’ll present to you the risks and rewards involved in trading Cryptocurrency. So that you can make a better judgment before making any investment.
Like any other asset, cryptocurrencies come with their own set of risks. Let’s explore them.
We know what you must be thinking. We just mentioned high volatility as a rewarding factor in Crypto, then why is it mentioned here? The thing is, due to this high volatility, the price can swing in both directions. We can see huge profits as well as huge losses.
A lot of countries put huge taxes on Cryptocurrencies because of their high volatility. This makes trading crypto risky in those countries as it can empty your pockets quickly in case you book more losses than profits.
A market shakeout happens when a lot of whale investors leave their trade positions together in a given asset which leads to a sharp and quick decline in the asset’s value. This is very common in the cryptocurrency market and can lead to sudden losses.
The Crypto market is immature and has plenty of scams. The market is open to all and allows all kinds of people, and for this reason, we have lots of coins with shady companies behind them that are looking to run away with your money.
The rewards of trading Cryptocurrencies
Cryptocurrencies come with a huge set of rewards and for this reason, they are particularly popular for trading.
Plenty of Opportunities
As already mentioned, the Crypto market is in its infancy and currently, we have more than 10,000 Cryptocurrencies in the market. Every other day we see a new Cryptocurrency in the market and many of these projects have a high chance of growth. This provides a wide array of opportunities and a lot of chances for growth.
Unlike the saturated stock market that barely sees any price action, cryptocurrencies are very volatile. They can spike up to 10 times their original valuation in a matter of a few days. Many of the coins have gone almost 50x their original size and this is one of the biggest rewards of the cryptocurrency market.
Security of Payments
Cryptocurrencies are built on top of blockchain technology and so, they are inherently secure. Whenever you trade any Cryptocurrency, the record gets stored in the blockchain permanently and by no means it can be erased. This makes trading Cryptocurrencies safer than trading regular stocks.
Around The Clock Trading
The biggest advantage of trading crypto is that the markets never close. Cryptocurrencies are mined and transactions are recorded in real-time. This means we don’t have to wait for any stock exchange to open and close the trading day. We can trade Crypto 24/7 without the worry of having to close our trades before a deadline.
Variety of Trading Options
Cryptocurrency exchanges are much more advanced than stock exchanges and provide a variety of trading options. We can do spot trading, margin trading, and futures trading among many more. We can use futures trading to make huge profits on small investments and this is another factor that makes Crypto rewarding.
It is clear that cryptocurrencies come with high risks and rewards. For newbies, Crypto investments can be especially risky. Anyone that’s new to the market, should read more about the technology and learn its uses before making investments. Cryptocurrencies sure have risks but they can be greatly reduced if one does proper research and takes caution before making an investment.
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