Getting into the world of cryptocurrencies is not an easy feat. It is certainly an admirable one as it is a new industry and very alluring. But the fact is that new frontiers come with new challenges that will cause people to grow and become better versions of themselves. At the very least, they must go ahead and improve their knowledge in the trading and blockchain technology sector.
Don’t worry, you can learn everything day by day and step by step. As long as you understand the fundamentals such as the fact that the digital asset realm is not as steady as the traditional financial realm and that is where the gains come from over the short term and the long term. Of course, understanding how to acquire and keep digital assets for the long term is also another aspect of this process.
But when you are ready, you will move on to the aspect of crypto trading pairs. This is the main focus of this post. We will dive in depth into the world of trading pairs and how they matter to you in more ways than one.
Let’s learn more about these cryptocurrency pairs and what they mean to you.
Crypto Trading Pairs and Options
The first thing to remember here is that the cryptocurrencies do not generally pair against government issued currencies such as the dollar or the rupee. No, digital assets usually are paired with each other. What does this mean? If you are wanting to trade bitcoin, ethereum, or another digital token, you will likely deal with two digital vehicles. The first is the one you want to trade, and the other is what you are looking to get.
Remember that this new emerging industry might not have trading pairs that include government currencies at first but will continue to integrate them as it evolves. Speculation hubs all over the world understand the importance of government based currencies as they are widely used in the world today. It might be expensive to opt into this at first but will likely lower in costs over time.
But at the current moment it will continue to be largely denominated in digital assets. Thus, delineating the value of your assets will happen through the digital asset value of a bitcoin or an ethereum. Many speculation facilitation entities such as exchanges will strive to provide several options to let you understand your current position in the way you want to understand it.
The most prominent trading pair is bitcoin for a variety of reasons. It is one asset that has significant volume, it has trust, and will draw several groups of people to it each day. As more people gravitate to the emerging industry and first purchase bitcoin, it will see more volume and likely more value over time and keep its lead.
But as noted above, we will see other premium assets such as ETH and LTC and even DOGE that will be present as a key pair based on the situation. Groups of investors may choose to allocate value in ethereum or in dogecoin because they can tend to be more stable.
But why else do you need to have a pair besides general trading purposes? One point is because you want a foundation to speculate other digital assets and currencies. The concept here is that one will need to acquire the foundational currency to get other digital currencies that they want. The reason why they would do this is because speculators seek to make gains by dealing with the right pairs and earning the right gains.
For instance, when you notice the color green on the trading platform with bitcoin as the base in your pair, then you will understand that you have a nice little gain against your BTC. The more that your other asset went up against bitcoin, the more you could pocket and gain if you would execute the transaction.
How To Select a Trading Pair
Selecting a trading pair is one the most crucial aspects of the speculation process when interchanging on digital asset hubs. Why? If you are able to select the right ones, then you can make a fortune or at least a tidy little gain and do that consistently.
What should you evaluate when you are setting up a trade? There are several components here that many should deal with and think about as they seek to stay profitable in their venture.
What are these factors and components?
Remember to start your journey by taking a look at your respective digital asset hub such as a Binance or Coinbase and understanding if they will have the right crypto assets you hope to deal in. The more assets that are present on the digital asset hub, the better it is for you so that you can diversify into later on if you choose. Different exchanges have different rules and may regulate on a stringent level to stay in compliance with local authorities.
For instance, people might know that several digital asset hubs went and de-listed privacy coins because of regulatory agency pressure. That is why many people will go through the list of coins and tokens before really starting the journey.
How do you find this information?
The place would normally have a list of all assets that are present and that might be present in the future to make it as simple as possible for you. To check what they will have just navigate over to the site and check out their different tabs, most will have it on the homepage or a click or two away. Further, check out their pairs and the total quantity of pairs.
For instance, if you were looking to make trades with ETH and Numerai, you would see ETH/NMR to have the full equation. The quantity of pairs will differ from each platform based on their status and level of acceptance to tokens. Yet, remember that they all want to stay competitive and will have several respectable pairs for you to trade with to make your gains. Remember that they want to make sure that all of their assets are able to have some volume so they will have the main assets to trade with all other coins and tokens.
Fiat and Crypto Purchases To Enter The Game
Several companies enable fiat on ramps that let people acquire cryptocurrency through credit cards or maybe direct dollars to crypto conversion in some form or fashion. But of course this might be more expensive at first, depending on how you decide to do it. Yet, a wide swath of these digital hubs have not rolled out this option as of yet. As such, you will have to go through specific platforms to conduct your initial purchase of digital assets before transferring it out to others that have your specific pairs and options.
Always think about your base digital asset such as bitcoin or ethereum before you continue your speculative journeys. It is essential to think about this to see which one might appreciate by itself over time, even as it is just dormant and by itself without a pair.
What is the Role of Liquidity in Crypto Pairings
The base asset should always have a significant portion of liquidity. You want to always be in on the action and this is only possible if you have a foundational asset that many people will hold, buy, and sell at all times. Thankfully, an asset such as bitcoin meets this criteria and trades 24/7 across the world at all times. As such, it is one asset that many people will gain exposure to when they enter the industry.
A few people are enamored by other digital tokens and may start out with dogecoin or others that started out a little after bitcoin but they will find hassles in liquidity. Sure, these other ones might have aspects such as faster transactions, minimal costs, and efficient finalizations. But they might not always have the respective liquidity one needs to do quite well in their trading journey. The foundational asset will have a significant portion of activity whereas the secondary token will usually have less volume.
Remember that if one does not have as much action then participants usually will account for this by pricing the coin a bit higher than it genuinely is. You do not want to go and overspend on an illiquid asset when other opportunities are present in the market. This is an issue because you want to preserve your capital and continue to make the right gains over time.
Do not diminish your capital by not paying attention to these subtle but important aspects in this process. Further, this is why you should always have several exchanges in mind so that you can optimize your speculative experience.
Different groups might have different interests and so you can see more liquidity for some obscure coins in one place and have little movement in others. There are digital asset aggregator platforms that enable you to notice all coins but respective volumes and overall activity as well.
As such, with tools like those, you can have the right information and make your trading pair decisions accordingly as well.
Benefits of Different Pairings
Trading pairs depend on you and where you see profit but it is essential to remember a few things in this life. The first is that depending on which ones you choose, you might have a disadvantage due to lack of overall action.
Prices may vary from one platform to the next with wide variance based on your choice. You might have scalping opportunities or other trading strategies to implement based on the market activity and overall variance.
Your situation will change based on your parameters and the opportunities that are presented by your trading pair.
Prominent Base Digital Assets
There are several base digital assets now because of the overall evolution of the market.
Bitcoin
Many turn to bitcoin due to the fact that it is the oldest, most trustworthy and most reliable asset in the sector. While they might scoff at the fees sometimes they understand that it is flexible and it serves you well at all times.
Always remember that there are fees present with asset transactions in different ways from taxes, to withdrawal, to transaction fees. Be careful with how you make your trades.
Ethereum
In most situations, this will be the next highly liquid and most traded asset due to its renown and wide community. Many interact with ETH even those that might not have a pairing for BTC. It has a growing developer community and it is expanding it regularly.
Of course, ETH might have similar expenses as BTC and might have clogged networks. This aspect can create similar issues overall but it is a great complementary asset.
Market participants also prefer to use litecoin, doge, and tether.
Conclusion
In the end this journey depends on your destination and what you are most comfortable with over the long term. Ask yourself what are you trying to do and what do you aim to get out of this objective? You will also want to know where you see the opportunities and understand your speculation strategies and overall plan.
Comprehend the nuances and details such as the potential price correlation between pairings and how they might translate to your success. You might notice correlation and deviation at different times. This aspect is but one of the elements that one should watch out for when looking at cryptocurrency trading pairs and choosing strategies.
The way is not going to be easy but it can be quite rewarding if you make the right moves, apply passion and enthusiasm, and learn from our mistakes. Remember that it will not always be simple. Consistency is what pays off in the end and creates the most value. The best professionals understand that is about staying true to the end objective and having a systematic approach that occurs over time.