THE BASICS OF THE CRYPTOCURRENCY MARKET FOR BEGINNERS. PART 1
“You can’t predict the market, but you don’t need it to make money.”
We are starting a series of articles where we will tell readers about the basics of the cryptocurrency market, crypto exchanges, as well as about the main methods and techniques for analyzing price movements.
Cryptocurrency trading attracts more and more traders from classical financial markets because it allows you to get a larger profit in a short period of time. For example, the British fintech startup Revolut reported a 68% increase in the popularity of cryptocurrencies among its customers.
For many fresh traders, investing in crypto assets becomes a difficult task. The abundance of complex professional slang and mass coverage of cryptocurrencies in the media is not always the best way to scare off inexperienced investors from the cryptocurrency market.
Nevertheless, with a set of certain experience, knowledge and skills, novice traders will be able to confidently enter the world of cryptocurrencies and significantly increase their starting capital in a short time. Do you want to know how? We will tell you about this in our series of articles.
Defining a trading strategy
Many experienced traders will agree that the best rule of trading in financial markets is never to invest more than you are willing to lose. This is the golden rule of any successful trader. In the cryptocurrency market, this rule is especially relevant, because due to the high volatility that is characteristic of crypto assets, you can both quickly increase your capital and quickly lose it.
As in the case of any other financial sphere, you should start getting acquainted with the crypto world by choosing your trading strategy. Answer the question — are you an investor or a trader?
The first strategy involves the acquisition and long-term storage of an asset to make a profit as a result of an increase in its price.
A trader makes a large number of transactions within a short period of time to maximize profit. Traders are interested in high price volatility. They don’t care about the current value of the asset, since traders can earn both on the growth and the fall of the market using margin trading.
At the same time, you should understand that trading requires much more time, skills, and knowledge. And the use of margin trading can lead to a complete loss of your investment. According to statistics, 90% of traders lose their money. In the cryptocurrency market, given the specifics and high volatility of cryptocurrencies, this percentage is even greater.
In the case of long-term investment, the probability of making a profit is much higher. For example, since the appearance of the first cryptocurrency — Bitcoin in 2009 — the cryptocurrency market is constantly growing and reaching new ATH (all-time high). At the same time, successful investment requires much more time and patience than trading to make a profit.
You should realize that the market is growing not constantly but in cycles. After the growth cycle, a decline cycle follows, then growth again.
Financial market cycles
So in 2017, Bitcoin reached a value of $20,000 from $9,000 in just a few days, followed by a long and strong drop in the entire cryptocurrency market. Bitcoin reached its bottom at around $3,500, and the total market capitalization of the crypto market fell from $800 billion to $100 billion.
Bitcoin reached its new ATH in April 2021, when the exchange rate reached a record $65 thousand, and the market capitalization grew to $2.5 trillion. So it took more than 3 years for the market to recover and new growth.
Now the cryptocurrency market is again in the correction stage. The Bitcoin exchange rate dropped to $40 thousand, the market capitalization fell to $1.6 trillion.
Nobody knows how long the correction phase will last. However, many experts agree that the cryptocurrency market will reach new record heights in the future. But it may take years to do this. This is a significant disadvantage of the investment strategy — investors must be prepared for a long wait before getting a high profit.
Answer the question: are you ready to wait for several months or even several years before making a profit, or do you want to make short-term transactions and make a profit now, but with a higher probability of losing your money?
If you have chosen an investment strategy, there are also many pitfalls here, and if you miss them, you can lose a significant part of your investment.
The strategy of investing in the cryptocurrency market, like in any other financial market, requires a thorough analysis of the assets you are going to invest in. Among the factors that you need to evaluate when investing in crypto assets are:
- The stated goals and objectives of the project, its market capitalization, trading volume, and the uniqueness of the product. If the token has a low trading volume and it does not have any unique value, its growth in the long term is unlikely.
- Далее ваNext, you need to study the project team. The project team is no less important than the token itself. The development team and their skills should be at a high level. Check out the social networks and personal profiles of the project team members.
- When investing in digital assets, you should consider the risks. Even the most popular and stable crypto assets, like Bitcoin, can be prone to significant price fluctuations. For assets with a smaller market capitalization, the volatility can be even greater.
Conducting an analysis is always necessary before investing in any assets. Using the rules described above will allow you to avoid the mistakes of most novice investors in the crypto market.
In the context of these criteria, the QRAX project is an excellent tool for beginner investors.
QRAX is a form of digital online money based on Blockchain technology that can be easily distributed around the world, instantly and with reliable confirmation of transactions by the network within one block (about 60 seconds).
To start investing in QRAX and earn money, does not require large investments. The QRAX network is based on the latest algorithm of the PoS protocol version 3.0, which uses staking instead of mining. You will not have to buy expensive equipment for the constantly complicated mining process.
The PoS algorithm used in QRAX allows you to get income in a passive mode using coin staking. You just store coins on your wallet and get income!
The profit in the QRAX network
In addition, QRAX has a referral program that allows you to earn even more passive income by inviting partners to your network. To invite a partner to your network, it is enough to send him 1 coin from your wallet. Your income is formed depending on the “Assets sum” indicator, which includes the balance of the wallets of all your referrals. You can build an unlimited width structure with a depth of up to 100 nodes. The potential amount of passive income in the QRAX network can be 21% per month!
In the following publications, we will talk about various types and elements of the price movement chart, cryptocurrency exchanges, as well as consider trading strategies, indicators, and other tools for cryptocurrency trading.