The global cryptocurrency market is forecasted to reach $5.15 billion this year. Many factors are behind this market expansion, including growing acceptance and usage of distributed ledger technology. Younger generations have also favored cryptocurrency trading over regular trading, such as stocks and bonds, mainly because cryptocurrencies are decentralized. However, the cryptocurrency market is a complex business, and people have to learn dozens of terms before they begin their journey.
Understanding The Crypto Market
All good financial traders have to understand key terminology to understand market movements. For example, traditional traders must know the difference between trading stocks, bonds, and commodities like gold and oil. Likewise, stock traders must watch and analyze different price charts to understand how these movements will impact the broader economy. For instance, traders will monitor and analyze the DXY chart to see how the value of the US dollar compares against other major currencies like the Euro and how the strength of this value will impact the economy. The US dollar and Euro are examples of fiat currencies traded in the traditional financial market, and a strong US dollar tends to increase the trade deficit.
On the other hand, cryptocurrencies are virtual currencies that trade on exchanges like Coinbase or Bitstamp. However, similar to traditional trading, crypto investors need to know the difference in benefits of trading Bitcoin or altcoins. Altcoin is a generic term that describes any virtual currency that isn’t Bitcoin, such as Ethereum and Cardano. Likewise, crypto traders must still compare price movements and conduct technical analysis like traditional traders. Technical analysis is a tool that traders can use to analyze the market, focusing specifically on price movements.
For crypto traders, looking at the prices of different virtual currencies and crypto exchanges will give insight into where the market is heading. That said, crypto traders should also conduct fundamental analysis. Fundamental analysis is another valuation tool focusing on economic, legal, and industry conditions. These conditions, such as increases or decreases in government regulation, have a considerable impact on the crypto market, so crypto traders must stay on top of this.
Beginner cryptocurrency traders should also understand the difference between a bear market and a bull market. When people are bullish over a cryptocurrency, the market price is heading up, and market perception is positive. Bearish is the opposite, referring to a cryptocurrency with a downward price trend and negative market perception. At specific points in a bull market, a cryptocurrency may reach its all-time high, which refers to the highest price the virtual currency has ever been given.
The cryptocurrency market is expected to expand at a CAGR of around 12% between 2023 to 2030. Across the world, there is an increasing usage of cryptocurrencies to pay for everyday items in industries like retail. Still, the popularity of virtual currencies remains high in the trading world. For this popularity to remain, traders must ensure they understand how the market works so they can react in the right way depending on increases or decreases in price.