Crypto volatility is precisely the feature that makes the cryptocurrency market attractive to investors and traders looking for quick, sizable, and realistic returns.
While crypto is definitely more volatile than traditional financial assets, there are still occasional periods of inactivity or stagnancy in the market (particularly that of large cap cryptocurrencies). But then, that is just a temporary situation that picks up quickly over time.
You, as a pro trader, can put the volatile nature of the crypto market to your advantage, particularly in making quick gains. Here are a few tips worth consideration.
The biggest benefit of the crypto market lies in its independence from external regulation or interference. This is precisely the reason behind massive price swings and wide spreads between several exchanges.
Even when a crypto asset has come to a standstill, you can take advantage of price variation across multiple exchanges to make some good profits.
Pick a coin you like. Then go through various exchanges to check out its price. When you come across an exchange selling the coin at a discounted price, snap it up. Once done, find another exchange where you can sell the coin at a price above the market value. When you find one and happy with the price on offer, sell the coin. That’s it – some nice profits made in a few simple steps!
Also, don’t forget that you will have to pay some commission fees to both the exchanges. So, always consider this amount into your profit calculations.
Interest on Deposits
With the growth in crypto popularity, some trading platforms are paying interest on any crypto you hold with them.
While arbitrage can definitely contribute in earning more profits, it is also hard to bear free money for doing simply nothing.
Although, interest on deposits does look pretty lucrative, it is also very unsafe to hold your crypto assets with an exchange because of security threat. This is why we always recommend people to hold their crypto with an offline wallet like BlockBanc that comes with a host of security features, and backup and restore facilities (in case the device gets misplaced or stolen). Better be safe than sorry.
The market picking up
We are all aware of the saying “What goes up must come down.”
The opposite is also true. Volatile assets do not really stay stagnant forever. Their prices will again go up and down, and again back up.
So, you should always make sure to stay in a position to take advantage of that return in terms of monetary gain. Keeping a track of the market cap will benefit you tremendously in such a situation.
Even if the crypto market seems subdued to you, there are always some ways to make money if you really know what you are doing. For example, arbitrage is a plan that can never fail – particularly when you factor in the commission amount of both exchanges before making the sale.
With the perfect balance of knowledge, effort, and risk, you can surely shine in the crypto trading world. Good luck!
Download and use the BlockBanc app to learn more about crypto. Here’s the entire guide for you with all details.