What you should know before trading with cryptocurrencies

Thanks to the popularity of these digital assets, millions of people from all around the world have invested in them and are keen on starting the process of trading but here are the things you should look out for

Trading with cryptocurrencies has become extremely popular. Not only that, but it managed to change the lives of many average people from all around the world. Studies have shown that there may be as many as 100,000 millionaires from trading Bitcoin only and there are hundreds of cryptocurrencies on the market.

Thanks to the popularity of these digital assets, millions of people from all around the world have invested in them and are keen on starting the process of trading, which they hope will eventually lead them to a profit. With that being said, we wanted to mention a few things that you should know before you dive into this world.

Most cryptocurrencies are extremely volatile

The first thing that you should know is that most cryptocurrencies have a high volatility rate. That means that their price can rise or drop daily. Bitcoin is one of the cryptocurrencies that have the highest volatility rate. Its value can go up or down by the thousands each day. Not only that, but after it broke the record in 2017 and reached over $19,000 in value, its price plunged by 80% in around 10 months, which is a massive drop.

But, it is worth mentioning that between the period of December 2020 and April 2021, Bitcoin went from $20,000 to over $60,000. Dealing with the volatility rate is a massive challenge and you need to find ways to overcome it.

Trading sites can help you maximise your profits

Speaking of overcoming the volatility rate, reputable trading platforms can actually help you to some extent. Once you visit website and register, you will see that some use advanced AI systems that scan the market and collect data about your cryptocurrency.

This data is then used to predict its future price. The higher the profitability rate of the trading site is, the more effective its AI system is. However, it is worth noting that it does not guarantee you a profit.

Which are the best cryptocurrencies?

These days, there are hundreds of cryptocurrencies on the market. But, as you may have concluded, not all of them are worth investing in as they are not all profitable. Only a handful are dominant and extremely profitable.

The number one spot goes to Bitcoin, which is the first cryptocurrency to ever be made. Bitcoin’s value is $40,000 and this digital asset has massive future potential as experts believe that it can rise to $500,000 by 2030. Not only that, but El Salvador recently became the first country in the world to legalize Bitcoin.

The second-most dominant cryptocurrency on the market is Ether. The one thing that makes Ether so unique is that it has its own network which is known as Ethereum. The network also supports NFTs and the process of mining is very fast as you can verify a block in around 10 seconds. Ether’s value is around $2,000.

Finally, the third spot goes to Tether. Even though the value of this cryptocurrency is $1, it is not subject to massive changes as it is known as a stablecoin.

Consider using Stablecoins

The main reason why you should consider using stablecoins such as Tether is that as the name of the cryptocurrency suggests, they are extremely stable and pegged to a fixed external value. Tether is fixed to the US dollar, but some external commodities can be gold, oil, or other minerals. The reason why they are tied to commodities is so that their value will always be in check.

Hence, they are not subject to volatility and since they can be easily turned into FIAT currencies, you should consider using them.