Are you still figuring out if cryptocurrencies hold a place in your investment portfolio? Or are you a confused trader, wondering if cryptocurrency trading holds any advantages? At Cryptohopper, we understand your uncertainty regarding cryptocurrency trading and investments – it can be a lot to take in.

In this article, we decipher why an increasing number of traders are keen on making investments in the cryptocurrency market, along with what benefits and potential cryptocurrency trading accords to any investor.

A Brief Glimpse at the Cryptocurrency Markets

The cryptocurrency market, incepted with Bitcoin, consists today of more than 5,500 cryptocurrencies and a total market capitalization of nearly $280 billion. A recent study found that the market is expected to grow with a compound annual growth rate of 56.4% from 2019-2025. The study credits the drivers for growth in the adoption and popularity of cryptocurrencies as growing venture capital investments, rising adoption, and favorable government regulations.

Moreover, the number of blockchain wallet users have exponentially increased in the last few years. From 9 million users in 2016 to 50 million users in 2020; traders have taken the front seat with cryptocurrency investments.

The increased participation of traders, institutional and retail, has subsequently raised the trading volume. The total trading volume in the cryptocurrency market has increased to $8.8 trillion in the first quarter of 2020. The total market turnover grew nearly eight times in comparison to Q1 2019. With an increase in cryptocurrency users and the volume of cryptocurrency trading, supportive infrastructure has also been boosted. More than 300 cryptocurrency exchanges exist in the market today.

The market statistics and future predictions seem to point in the same direction: the cryptocurrency market continues to thrive along with a rise in the number of cryptocurrency traders. Why? What are the exclusive benefits of trading in cryptocurrencies?

Leveraging Cryptocurrency Trading and Investments

The cryptocurrency market is now acknowledged by major media houses like Bloomberg, which have included cryptocurrencies as a part of financial coverage. Cryptocurrency market movements, prices, and events are now globally covered and acknowledged by media and high profile investors.

Parties ranging from institutional investment players to ivy league universities are leveraging cryptocurrency investments. Why? Because there are unique advantages to cryptocurrency trading which traditional markets fail to provide.

1. Cryptocurrency trading is cost-effective

Any traditional market, including forex and stock markets, require an intermediary to process and manage trades. These intermediaries are accompanied by high transaction fees. Cryptocurrencies can directly be traded on a peer to peer network without the need of middle man. Even if a cryptocurrency exchange is involved, the transaction fees are much lower in comparison to other markets.

2. Fast execution of trades

Cryptocurrency trades are faster and far more convenient. It takes seconds to place and execute a trade. While stock markets take 3 days for funds to become available, cryptocurrency funds are available instantly. A trader doesn’t need to wait for days to receive digital currencies in their wallets.

3. Cryptocurrencies are accessible

Trading in cryptocurrencies requires minimal operational hassles. A trader can create a digital wallet and place trades using an internet connection and mobile phone. Additionally, cryptocurrency trading is not bound by location or geography. Anyone can place trades from anywhere across the globe, 24/7, 365 days a year.

4. Growth in cryptocurrency investments

Investments in crypto assets have yielded unparalleled growth in the past. Bitcoin has not only been named as the best investment of the decade, but has even surpassed traditional investment vehicles like gold. Because cryptocurrency markets are relatively new, and owing to its growing prevalence, investments in cryptocurrencies can yield unprecedented returns. However, at the same time, cryptocurrency markets are highly volatile. Any trader should perform thorough research and understand the markets before making any decision on trading or investments.

5. Passive Investments

There are various modes of gaining passive returns on cryptocurrency investments. This includes mining, staking, or simply placing trades using robots. Any beginner can leverage these means to create different streams of passive income from cryptocurrency investments

6. Cryptocurrency trades can be automated

The services industry surrounding cryptocurrencies is booming. Autobots are one of the tools that can be leveraged to automate trading in cryptocurrency markets. These bots constantly survey the market conditions, perform statistical analysis using advanced algorithms, and place trades on behalf of a trader. Because markets are highly volatile, a trader can gain significant returns with robots executing trades within seconds.

Cryptocurrency Trading Tips

Statistical analysis and future predictions reveal that cryptocurrency investments hold great potential. While the market holds possibilities of huge returns, a trader should not invest without considering multiple factors.

Here are some of the tips that any beginner should take into consideration before divulging in the cryptocurrency markets.

  • Knowledge – Cryptocurrency trading works on different functionalities in comparison to other markets. Before diving into trading, conduct thorough research on methods to store crypto, how to trade digital currencies, and other factors.
  • Understand markets – Cryptocurrency markets are highly volatile. This can be used to a trader’s advantage or can make a trader susceptible to losses. Hence, try to understand market conditions and what are the different factors affecting them before making an investment.
  • Choose a reliable platform – While numerous exchanges and platforms are available to place cryptocurrency trades, not all of them are secure and reliable. Therefore, investigate different features that a platform offers along with regulation and security factors.
  • Draw an investment plan – Create a strategy that includes investment amount, stop loss, limits, and profit targets. Do not indulge in trades without any investment plan in place. The investment strategy minimizes the risk of losses and helps a trader in avoiding mistakes.
  • Invest what you can afford to lose – An evergreen tip that is valid in any market. Markets are volatile and a trader can incur losses. Do not risk the money you cannot lose.

While trading in cryptocurrencies can yield big returns, it is also susceptible to vulnerabilities like the security of your crypto tokens. A trader should perform due diligence, employ the best tools, draw an investment strategy, and understand risks before indulging in the markets. If you do your research, then the risk can be well worth the reward!