As a beginner to the complicated, but exciting and potentially lucrative, world of Bitcoin, cryptocurrencies, non-fungible tokens, DeFi and blockchain technology, you might be daunted by the ocean of information.
Which cryptos are you going to buy and on which exchange? Which strategy should you use for making your crypto trades? How should you store your gains—as fiat currency or cryptocurrency? How much fiat currency and cryptocurrency should you keep on the crypto exchange, and how much should be in some kind of bank account or digital wallet type of cold storage? Here are some answers to those questions and more. Some of the best day trading crypto tips are never a waste of time when learned and applied afterwards.
Best Cryptocurrency Exchange
Before you can even buy a crypto, you need to choose some type of cryptocurrency exchange. Choosing the best Cryptocurrency trading platform depends on your geography and your priorities: low trading fees, high ease of use, good customer support, access to a variety of cryptocurrencies, and the option to use a variety of payment methods as well margin trading.
For traders who prefer low fees and are based outside the United States, Binance might be the best choice. Unfortunately, people living in the United States don’t have access to Binance or any derivatives trading platforms like Bitfinex and BitMex. For those living within the United States, Kraken might be the best alternative, especially for those who enjoy margin trading.
However, a BitLicense is required for a cryptocurrency exchange platform to operate in New York State and to service those living within New York State. Currently, New Yorkers do not have access to trade on Kraken, Gate.Io, Etoro, Bittrex, Huobi Global, KuCoin and many others. New Yorkers do have access, however, to Gemini and Coinbase, which owns Coinbase Pro and GDAX, to which New Yorkers also have access. Robinhood also has a BitLicense, but some traders might not feel comfortable with the controversy regarding Robinhood’s response to social trading and the GameStop drama. PayPal also is an option for New York traders, provided that those traders don’t mind paying a fee of 2.5% every time they buy and sell cryptocurrencies. For new traders using a lump sum trading or buy-and-hold trading strategy, PayPal’s ease of use makes up for the high commissions. Also, PayPal traders need to be comfortable with only having access to a limited variety of cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. Moreover, Tensumo can also be another great option to find the best platforms to buy crypto.
Bitcoin, Altcoins, or Both
Bitcoin is by far the oldest and most successful cryptocurrency in the crypto exchange market and has the largest market capitalization with the highest trade volume. Therefore, in the crypto world, Bitcoin is the biggest market mover. When Bitcoin goes up, other well-established cryptos with relatively large market caps tend to move up with Bitcoin: Ethereum, Litecoin and Bitcoin Cash. When that happens, a lot of the cryptocurrencies with smaller market caps, often called altcoins, tend to go down. However, when Bitcoin goes down, a lot of these alt coins tend to go up. Altcoins, therefore, are often a hedge against Bitcoin.
Moreover, because these altcoins are newer to the market than Bitcoin, they have innovative case uses that have the potential meet some unsatisfied need in the market and cause the altcoins to spike up. Using cryptos for applications and high-speed crypto transactions can be done with Ethereum and Cardano. Using cryptos for the gaming industry can be done with altcoins like Enjin Coin, Chain Games, Chain Guardians, Ethernity and SuperFarm. The gaming industry has also created a demand for a crypto asset that is not a cryptocurrency, non-fungible tokens (NFTs), meaning strange commodities like virtual art and virtual real estate. Using cryptos to own fractionalized shares of real estate can be done with the crypto, LABS. In a DeFi world, the variety of cryptocurrencies and crypto assets are endless, and so are the opportunities for yield farming, depending on what you have in your portfolio.
Exit Strategy
The best profits are useless to the new trader without a strategy to take those profits. For day-traders and those using a dollar cost averaging trading strategy, low fees are important because a high volume of cryptocurrency trades are required to take profits on schedule. Even if you employ a lump sum or a buy-and-hold trading strategy, the need to remove your profits from the crypto exchange platform, whether they are in cryptocurrencies or fiat currency, is crucial. Fiat currency is best stored in some kind of bank account, and cryptocurrencies are best stored in one of the digital wallet options. Good luck to new investors and advanced traders alike!