5 reasons why trading in cryptocurrencies is better than trading in stocks | KnowTechie
Over the last decade, the global economy has been observed moving towards a complete digital eco-system. People are inclining more towards paperless processes, be it an investment or a money transfer. The digital payment sector has witnessed a new and promising invention cryptocurrency as well. Many experts reckon that this will play a crucial role in building the global economy in the coming years.
While many people still trade in stocks, experts say that cryptocurrency is a better alternative. If you are confused about investing in stocks or cryptocurrency, here are 5 reasons why the latter is a better option for you:
The volatility of Cryptocurrency
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Being so new, the cryptocurrency market has witnessed a lot of short-term speculative interest. This is cryptocurrency has experienced significant volatility.
For instance, the bitcoin price rose to $19,378 after October 2017 and then fell down to $5851 by the end of October 2018. On the other hand, other cryptocurrencies were much more stable. However, it has to be taken into consideration that any new technology receives a lot of speculative interest.
However, the fact that this market is so volatile is exactly what makes it interesting. These huge ups and downs in price give traders many opportunities to earn an immense amount of profits. However, this also means that there is a greater risk involved with this type of investment. Hence, it is extremely important to do thorough research on the cryptocurrency market so that you understand how things work and develop a contingency plan in case things go south.
Cryptocurrency market hours
As it is a decentralized currency, no centralized governance over it. Also, all transactions are done directly between people on cryptocurrency exchanges across the world. However, there are time to time infrastructural updates and the market may stay down.
With the help of IG, it is possible to fiat currencies in exchange for cryptocurrencies. For instance, the US dollar – between 4 a.m. Saturday and 10 p.m. on Friday (GMT).
Liquidity is the measure of the time taken and efforts made to convert cryptocurrency into cash while making no impact on the market price. For faster transaction times, and better pricing, Liquidity is considered very necessary.
Since transactions in cryptocurrencies are done in multiple exchanges, their market is believed to be illiquid. This means that the market prices may face a huge impact even because of comparatively small trades. This is why the cryptocurrency markets are considered to be so volatile.
Once can go both long or short
While buying a cryptocurrency, the asset is bought upfront and is expected to increase in value. However, while trading on the cryptocurrency price, one can take advantage of the markets both when the price is falling and rising. This is referred to as going short.
For instance, if you believe that the market of coffee is going to fall and create a short CFD position on the coffee price, and the coffee market value falls against the currency, you will make a profit from that trade. On the other hand, when coffee’s value rises against the currency, you will incur a loss.
Simple and convenient for people
An average person always looks for investing in places where there are fewer complications and high returns. Traditional investments such as bonds, stocks, etc. are often considered very complicated, tiring, and time-consuming. In many cases like the real estate industry, the amount of money that a person needs to invest is very high and almost impossible for many people. They do not have such a significant sum of money to get started.
Cryptocurrencies have thankfully helped in eliminating such issues. Both joining and investing in it is simple. Unlike its other alternatives, one does not have to visit institutions, read and sign papers, and go through unnecessary trouble. For investing in cryptocurrency, all one has to do is open an account, manage a digital wallet, and keep a track of all the assets without putting much effort into it.
There are many trading platforms where one can trade cryptocurrency. However, it is always important to ensure that the trading software used is a reputed one like thebitcoincode.io so that one can expect high returns and zero risks at all times.
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Just another guy who likes to write about tech and gadgets.