What should you know about cryptocurrencies?

eXcentral is expanding the number of assets and markets available for traders to invest in every month. One of the highest growing markets, if not the highest growing market, over the last 10 years is the cryptocurrency market. Being new, there are still individuals unaware of what cryptocurrencies and their characteristics are. As part of this blog we are going to look at all the information beginners require to consider and possibly invest in the Crypto Market.

Cryptocurrencies should be viewed simply as a digital currency with no physical form. Therefore just like normal currencies the asset’s price based on supply and demand. A cryptocurrency is based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities, even though there are currently procedures in place to possibly regulate the cryptocurrency market in certain regions. 

What should you know about cryptocurrencies ?

Market size – the market size of cryptocurrencies in general, over the last 2 years it reached as high as $2trillion. In terms of Bitcoin which has the largest market share, exceeding $70billion, peaking at $3billion per day. As you can see, this is a growing market and the reason why traders are taking cryptocurrencies as a serious alternative to regional traditional currencies. 

The World Economic Forum estimates that by 2027, around 10% of the world’s GDP will be stored on blockchain technology. Some banks have already started using the technology, such as Santander, to enable them to make faster and safer internal payments.  

Volatility – traders should be aware that out of all the assets in the financial trading markets, cryptocurrencies are known to be the most volatile. This is one of the main characteristics of this market. Certain traders are looking for volatility and big price movements, for these traders, cryptocurrencies would be ideal. However, for traders cautious of large movements in the price and high volatility, the market should be looked at with care.

Are they more trustworthy than traditional currencies? – there is no right answer to this question as it depends on the individual’s opinion. However, what is certain is that cryptocurrencies are not regulated and are more volatile. This is why traders can benefit from CFDs as they allow them to trade the price movement of assets without owning the underlying asset. 

Although in some regions such as South Africa, Nigeria, South America and Turkey cryptocurrencies are growing more popular as their local currencies are continuously depreciating. Hence why individuals are opting to partly store their capital in cryptocurrencies as they distrust their regional currency and at times even their government. 

Over the Last Week 

The cryptocurrency market was actively growing, and only on Friday, the strengthening of quotations slowed down. Currently, Bitcoin is trading at $11,300.00 (+11.1%), Ethereum is at $390.00 (+8.4%), and Ripple, which again regained its third place in terms of capitalization, is trading at 0.2985 (+13.9%). 

Tether is around 1.0019 (+0.04%), and Bitcoin Cash is around 291.00 (+18.2%). The total market capitalization has grown from $300 billion to $329 billion. The share of Bitcoin in the market increased to 62.2%.

Ethereum – the latest 

Last week, Ethereum prices were actively growing and exceeded 400.00 during the weekend. Against the background of liquidation of long positions, the price corrected to the level of 320.00, but now it has won back almost all of its positions. Ethereum continues to be supported by the anticipation of the Ethereum 2.0 network launch and the growth of the Decentralized Finance (DeFi) sector. 

This week, the market is awaiting the launch of the final version of Medalla public testnet. If it functions smoothly for three months, then in early November the developers promise to launch the zero version of the Ethereum 2.0 network. The growth of the DeFi sector, most of which is built on the Ethereum blockchain, also supports the asset. 

In July, the trading volume in this sector exceeded USD 4.3B. In anticipation of the Ethereum 2.0 launch, developers continue working on network security. Ethereum Foundation is currently recruiting specialists who will study cybersecurity issues and prevent critical network errors.

At the moment Bitcoin is currently forming its sixth wave within the ascending triangle after having lost momentum towards the end of July, whereas ethereum has only lost momentum yesterday and has started increasing in value again this morning. 

Hopefully after reading this blog you are more aware of what cryptocurrencies have to offer for traders. We work to keep our blogs balanced and keep traders aware of all aspects of the asset and market in general. Cryptocurrencies are unique and one of the few assets on which traders are able to witness large movements and such high volatility. If you have further questions regarding cryptocurrencies feel free to speak with one of our account managers for more information.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.42% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

This material is considered a marketing communication and does not contain, and should not be construed as containing investing advice or a recommendation, or an offer of or solicitation for any transactions in financial instruments or a guarantee or a prediction of future performance. Past performance is not a guarantee of or prediction of future performance. eXcentral does not take into account your personal investment objectives or financial situation.

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