![]() In this section, we are going to cover another key element of being successful at cryptocurrency trading, order book and stop losses. Conversely, a higher mining difficulty suggest that a cryptocurrency is harder to mine this results in supply growing at a slower rate, therefore resulting in upward pressure on the price. A lower mining difficulty indicates that a cryptocurrency is easy to mine this results in an increase in the rate of supply, and therefore, downward pressure on its price. Mining Difficulty – Mining difficulty is simply a measure of how hard it is to be the next person that gets to add a block to the blockchain, and receive the reward for doing so. Getting a clear view on the sentiment surrounding a cryptocurrency allows you to screen the useless cryptocurrencies that are unlikely to experience any movement in price. ![]() If you invest in a cryptocurrency that has had no real coverage, it is likely that your position will stagnate, or even worse, decline in value. This is where it becomes important to read recent articles on a cryptocurrency you intend to take a position in. ![]() Therefore, it becomes key that any position you take is well researched and has a positive market sentiment surrounding it. Market Sentiment – As a cryptocurrency trader, it is likely that you will switch between multiple positions at a high frequency. And so, Ethereum can be said to have high utility and therefore be seen as valuable. This novel use of blockchain technology as a sort of app store, as opposed to a medium of exchange, has been perceived by some to be very useful. Using Ethereum as an example, people believe it be useful because of the platform that it provides in allowing people build decentralized applications on top of. The more useful a cryptocurrency is, the more likely it is to be perceived as valuable, and therefore, the more likely it is to be bought. Utility – In this context, utility simply means the usefulness of a cryptocurrency. This low supply, when weighed against the staggering demand Bitcoin has seen in the past few months, is believed, by some, to be the reason for Bitcoin’s surge in price. With a circulating supply of 16.7 million coins, the number of bitcoins available is quite low when compared to its peers. Bitcoin is the most well-known, and therefore, the most sought-after cryptocurrency. Supply & Demand – Starting with the fundamentals, supply and demand is a factor that certainly affects the price of a cryptocurrency. These factors include, but are not limited to: The main intention of this section is to explore some of the factors that affect the price movements of a cryptocurrency. Some of these concepts will be unique to the cryptocurrency market, but some will have been abstracted from more traditional investment markets. In this section, I am going to introduce you to some of the basic economics of cryptocurrencies. The four main areas I'll cover today are: Depending on the reception this guide gets, it is my intention to release more guides, with more advanced techniques. ![]() In this guide, I will provide readers with the basic tools necessary in order to get started on their journey in cryptocurrency trading. 22 Shares The Ultimate Beginner's Guide to Cryptocurrency Trading ![]()
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