Trading cryptocurrency and traditional assets – what’s the difference?

There is a revolution in the money market

Newcomers are strengthening their positions in the financial markets: the cryptocurrencies are taking their place among the products of broker companies and in portfolios of investors and speculators. I want to cover what is going on in the crypto markets, how to open your crypto business and whether a traditional trader can profit in this climate.

In the market of money, this is nothing less than a revolution. When both supply and demand on cryptocurrencies appeared, a new market was born. And there is great turmoil in store. Turmoil translated into the language of money means that this is the tool which you can profit on right now, without even going into discussions about its mission and significance. I forecast that Bitcoin can overcome the threshold of $10,000 over the next year and that it’s irrational to sit on the sidelines and watch how others make money on it.

Trading cryptocurrency and traditional assets – what’s the difference?

On the one hand, it seems the same technical analysis is applicable to the instruments of the cryptocurrency market. On the other hand, the market is completely new. There are millions of unique factors affecting it, especially technological ones. Very few people understand the essence of it from floor to the ceiling. And so far there is much to be explored. Or the authorities will begin to regulate the sphere tightly.

Remember the events of the late June this year: the rate of the Ethereum fell sharply on a false report of the death of Vitalik Buterin, the creator of the cryptocurrency. During the day Ethereum lost about 15%. What should happen in the traditional market, for us to see a similar drop or rise as shown by Bitcoin right now? A war?

Let’s talk about numbers. The capitalization of the derivatives market, including Forex, forward, CFD is $ 1.2 trillion. Cryptocurrency capitalization has a long way to go to reach the numbers. Sure enough, some projects will be closed, someone will lose money, someone will earn. We need to understand the key point – this is a new world, new technologies, new exchanges and new money. And you cannot escape this. No matter what you call it – bubble, hysteria, hype, or something else.

What’s in store?

No doubt, the market will grow further. We expect a threefold increase in trading volumes before the end of the year. Given the number of new ICOs that are taking place now and are scheduled for this fall (and among them there are also quite large ones), of course there will be new tokens and new currencies. The growing popularity of the market and the potential for its growth will attract new participants here. In the nearest future, we should expect the beginning of the market legalization in Western countries and further spread of blockchain technology. It will penetrate into all spheres of our life, from healthcare to construction.

In the financial sector, more crypto-exchanges will keep coming to light, and brokers will finally pay more attention to this market.

BTC-e won’t scare

An important element of the whole cryptosystem is crypto-exchanges. The recent problems associated with the BTC-e shut down revealed many problems related to the security of client assets.

The emergence of new exchanges is quite important. This is part of healthy competition, the development of the industry, and the movement towards greater transparency. Restaurants continue to open, although there are already a lot of them. There is plenty of demand for all participants. If we consider this from the business point of view, there are about 200 stock exchanges in the world. And there are about six thousand Forex brokers. What looks more promising?

You will have to compete anyway and in any industry. It’s important what technologies you give, what services you provide, how well you conduct your business to protect your customers from difficult situations.

How to make the choice between liquidity providers?

Look at the offered technology and the past experience in this area. Also consider if you get enough attention to you as a customer. We faced an interesting case. Recently, one of the major liquidity providers announced the launch of cryptocurrency products. The next day, several companies came to us to get crypto products. We asked “Why did you choose us?”. The answer was simple: “They are too big, therefore, firstly, they are too expensive, and secondly they have already ruined their reputation, and you have unsoiled name.”

Communicate with colleagues, attend professional events. This way you will gather as much information about the work of possible providers as possible. Carefully monitor who fulfills a function similar to yours and avoid developing obsolete technologies as a solution.

– Written by Artur Azizov, B2Broker CEO

Featured image from Pixabay

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