What First-Time Cryptocurrency Traders Should Know

What First-Time Cryptocurrency Traders Should Know

 

Last summer, the Albanian government effectively opened its doors to more regular cryptocurrency activity than we’ve seen in the past. The passing of the Albania “Crypto Law” by the Parliament “defined a legal framework for cryptocurrencies” and turned the country into one of a growing number that more or less support the spread of cryptos.

It’s a little bit too soon to accurately assess what effect this law has had on the cryptocurrency trade within Albania. However, it is a fair assumption that the government’s embrace of cryptos will ultimately make trade and investment in these digital assets more popular throughout Albania. So with that in mind, we want to cover some key points that first-time traders should know.

You’ll Need a Wallet

Because cryptocurrency can be traded at online exchanges or even via ATM-like machines in physical locations, many newcomers don’t realize that they still need wallets for this form of trading. To hold and exchange cryptocurrency though, you do need a wallet capable of protecting the digital “keys” that facilitate transactions. Techradar’s look at top wallets for 2021 shows that there are several popular and well-regarded options to choose from. It’s worth taking some time to research the differences and determine what you want in a wallet. But you will need to use one to trade cryptos.

Cryptocurrency is Not in the FX Trade

Given its growing legitimacy with world governments, cryptocurrency sometimes seems like a “currency” in the truest sense — which leads some newcomers to assume that it is part of the forex market. This can be somewhat confusing to check on as well because there are simply so many currencies involved in FX. That said, more comprehensive FX resources make it clear that cryptos are not involved. The market heat maps on FXCM do a good job of showcasing a broad look at world currencies that are being traded, and a close look will reveal that neither bitcoin, nor ethereum, nor any other cryptos are directly dealt alongside fiat currencies.

Crypto Markets Go Well Beyond Bitcoin

We just noted that no cryptos are included in the forex market. However, it’s also worth noting that cryptocurrency truly has developed an entire market unto itself. While bitcoin remains the most famous, prominent, and valuable digital currency, there are now dozens upon dozens of recognized alternatives that are traded around the world. The Capital’s list of important cryptocurrencies beyond bitcoin does a nice job of highlighting some of the main ones that traders are concerned with. But the reality is that new cryptos are emerging on a near-daily basis.

Cryptocurrency is Highly Volatile

It is also very important to recognize before starting in the cryptocurrency trade that these remain very volatile assets. Some have shown that they can sustain strength, and there is also hope that regulatory measures like those adopted in Albania will further stabilize prices. But for traders, price swings are still difficult to predict and can be dramatic in nature. It is thus extremely important for newcomers to the crypto trade to start off with a careful, strategic mindset.

There are many more things to learn about the cryptocurrency market than just these if you intend to trade. But for true newcomers, these fundamental facts and concepts will serve as a basic foundation for understanding this new and developing class of assets.

 


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