If you haven’t been living under a rock for the past decade, you have most certainly heard about cryptocurrencies. Bitcoin is a name that has become widely known throughout the world, something even its mysterious founder, Satoshi Nakamoto, couldn’t have imagined. In the initial years, the concept of cryptocurrencies did not receive much attention and many people believed it would die out eventually. However, gradually the outlook began to change, particularly in 2017 when Bitcoin truly stepped into the limelight. Today, even most of the critics have realized that there is something these digital currencies have to offer.
As a matter of fact, many people are now regarding virtual currencies as the future of money, something that has become the need of time in the light of the global coronavirus pandemic. Demand for cryptocurrencies has reached an all-time high and it is not just retail traders who are increasing; institutional investment is also on the rise. One way you can trade cryptocurrencies is to actually buy the digital asset, but this can be a tad complicated because you have to have a wallet for storing the crypto.
Instead of going down this route, you can consider trading crypto CFDs. This is when you speculate on whether your chosen cryptocurrency will increase or fall in value, without having to purchase the digital asset. There are certain reasons to consider using this option. What are they? You can check them out as follows:
Even though the crypto market is not as old as the other financial markets that exist, it has experienced a great deal of volatility because of the massive short-term speculative interest it has seen. For instance, between the period of October 2017 and October 2018, the price of Bitcoin went as high as $19,378 and $5,851. The volatility of the crypto market is what actually makes it more exciting. Even during the peak of the COVID-19 pandemic, the crypto market was experiencing a huge surge.
Due to these rapid price movements in a day, traders will have a horde of opportunities at their disposal to go long or short, but you should remember that it also has its risks. The volatility of the market makes it beneficial for everyone to trade crypto CFDs, but there are risks involved, so it is best to have a risk management strategy in place, so you keep losses at a minimum.
Cryptocurrency market hours
The crypto market is usually operational round the clock i.e. 24 hours a day and seven days a week, as there is no centralized governance. Crypto transactions can happen directly between individuals all over the world through the use of crypto exchanges. However, there are times when the market is adjusting to ‘forks’ i.e. infrastructural updates. Since cryptocurrencies can be traded 24/7, it provides people with the perfect opportunity to trade in their off time. They don’t have to quit their jobs to trade these volatile digital assets and can simply do so when they have time on their hands.
Quicker account opening
If you decide to actually buy cryptocurrencies, you will have to use the services of exchange, which means you first need to create an account with them. Next, you also have to have a digital wallet where you can store the cryptocurrency you buy. This process can be time-consuming and restrictive. However, when you decide to trade crypto CFDs, you will not need access to the exchange directly because you will be using a brokerage that will be exposed to the underlying market. This means that you don’t have to set up or manage an account on any exchange. This helps you in setting up and starting crypto trading quickly because you mostly just have to fill out a form on a broker’s website and provide some verification.
Ability to go long and short
Buying crypto means you are getting it upfront in the hope that its value goes up and helps you profit. But, when you are trading on the price of a cryptocurrency, you have the option of taking advantage of markets that are rising in price as well as falling. This is defined as going short.