Anyone who invests in financial instruments such as stocks, raw materials or cryptocurrencies wants to realize a profit on the sale. For many investors, a daily look at the price data is part of a recurring ritual. Of course, they hope that the prices of their investments will develop in the desired direction. Supply and demand have a strong impact on performance. Even normal traders cannot have a direct influence on price developments.
However, institutional investors and large speculators have this option. If the market capitalization is not very high, as in the area of cryptocurrencies, a few larger orders are enough to steer the price in a desired direction. The guide deals with the topic of cryptocurrency courses. How do they come about and what advantages can the investor or trader use?
- Supply and demand determine price
- Not all coins are traded against the USD
- Many cryptocurrencies become exchanged for Bitcoin
- There are different prices / prices between the exchanges
- Price setting by brokers for crypto trading
Table of contents
- Cryptocurrency prices: Volatile markets cause rapid price movements
- When the imagination is back in the market
- Buy cryptocurrencies: Speculate on a positive price development
- Where do cryptocurrency prices come from??
- Price formation on a cryptocurrency exchange
- What determines the price of a cryptocurrency?
- Price and execution of orders
- Benefit from rising and falling crypto markets
- CFD crypto trading with brokers
- CFD trading is mostly done over the counter <12 9>Different pricing models for the broker
- Cryptocurrency rates on the smartphone
- Conclusion: Rising and falling cryptocurrency rates for trading profits
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Cryptocurrency prices : Volatile markets cause rapid price movements
Bitcoin? - Wasn't there a lot of hype in 2017 that caused the price of the cryptocurrency to skyrocket up to 15,000 euros and was followed by the rapid fall in 2018? All the ups and downs have made investors more and more uncertain. Bitcoin set out in 2019 to find its way back to its old strength. Interest in cryptocurrencies is increasing sharply and some of those interested in crypto are again watching the price trend with fascination. Bitcoin tripled in value within a few months. In August 2019, is this the opportunity for investors to get started now?
A doctor who views the market price as a cardiogram would rate the situation of Bitcoin as stable at the beginning of 2019. For him, he moves on a resting pulse. After the rapid price movements up and down since July 2017, it appeared that the market-leading cryptocurrency wanted to calm down. Another description of the situation would be that interest in the Internet currency has declined significantly and is about to expire. But it only appeared as it was soon to show. The price literally exploded from April 2019.
From less than 4,000 euros, the price of Bitcoin rose to 10,000 euros by the end of June 2019. A similar course explosion from two years ago is likely to be remembered by many crypto-interested parties. Not only is the world's leading cryptocurrency reporting increasing interest, numerous other digital coins are also rising in price.
When the imagination is back in the market
Feeling If the stock markets are clearly on the upswing after a downturn, investor circles quickly speak of the fact that the imagination is back in the market and that entry is worthwhile. At the moment where the events on crypto exchanges apply or the imagination in the Bitcoin market is back, new price targets for all possible cryptocurrencies are immediately called.
Some forecast a performance of EUR 50,000 and more within Bitcoin the next few months until 2020. Others see the digital coin at half a million euros within the next ten years. This kind of prediction should be treated with great caution. Hardly any market observer is able to explain the current price development conclusively. It is hard to prove absolutely anything that is spread in the wisdom of the public.
Some say that a weakening US currency or the Fiat currency crises in Cyprus and Greece led investors to gold and Bitcoin. Others believe that few major purchases or euphoric future forecasts are driving prices up. A look at investor behavior shows that some speculative processes are virtually independent. Once the courses have started to rise, it keeps going up. At some point the breakeven is reached and they fall again. Here, too, it can be observed that once prices fall, the value of the financial instrument falls.
It should be noted at this point that hardly any other market, such as that of cryptocurrencies, is characterized by non-transparency and is therefore susceptible to manipulation, The big Bitcoin price increase in 2017 was probably the result of a manipulated market rather than the result of an orderly trade.
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Buy cryptocurrencies: Speculate on a positive price development
The warning of cryptocurrencies is part of the zeitgeist of many economists because they are not stable with regard to value storage. The crash after the price increase in 2017 cost millions of people a lot of money, sometimes more than that. This does not mean that cryptocurrencies can be the financial industry of the future.
Blockchain technology, which can be used to implement the decentralized processing of financial transactions, for example, has sensible application options. The value of Bitcoin could also multiply because the number of pieces is limited regardless of increasing demand. For normal investors, the time has certainly not yet come to exchange all of their money in cryptocurrencies. It will be more than 120 years before the last digital Bitcoin will be mined.
If someone still wants to buy a cryptocurrency and speculate on a positive exchange rate development, they must be able to cope with a possibly greater loss without too many tears, Only really unnecessary money should be invested. Especially with cryptocurrencies, extreme and rapid exchange rate fluctuations of 30 percent or more a day are not uncommon. If the price goes down so quickly, it takes patience and luck until the purchase price is reached again. There is no guarantee. The price can also drop to the bottom.
Where do cryptocurrency prices come from?
A well-known saying goes: The market determines the price. Supply and demand are inextricably linked when it comes to pricing. This applies equally to trading in stocks, gold, crude oil or cryptocurrencies. The market lists prices at which a seller is ready to sell. If hardly anyone is interested in a product, the seller has to reduce the price accordingly in order to attract buyers. It is different when the demand is high. The seller can keep the price high because enough buyers are ready to pay.
If stocks or other comparable securities are introduced on one of the regular trading venues, the first official price is the result of an agreement between the publisher, the exchange operator and the one behind it a standing company or an investment company. The same applies in a similar form to the cryptocurrency exchange rate when the digital coin or token is officially traded on a decentralized crypto exchange for the first time.
Shares such as cryptocurrencies can be issued or initiated by the respective companies or initiators with and without participation in the exchange and provide appropriate prices for it. The first Bitcoin were exchanged among coin holders in 2009, but have not yet been traded on any stock exchange. It wasn't until February 2010 that the first crypto exchange office opened its doors online. A short time later, the first payment was made with Bitcoin. Bitcoin was then valued at $ 0.35 at the end of the year.
Bitcoin exceeded the value of one dollar for the first time in February 2011. Bitcoin recorded its first strong price rises in 2014 to around 950 US dollar rose. Bitcoin's price has been above the $ 2,000 mark since May 2017. In the same year, there were known to be real exchange rate explosions, and not just with the world's leading cryptocurrency. A look at the current cryptocurrency prices makes it clear that the market could be in a similar upward movement in 2019. Numerous providers from Exchange to Broker list courses in a mobile app. They are available for download free of charge in the well-known Google Play and Apple stores.
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Price formation on a cryptocurrency exchange
Today almost every start of a cryptocurrency is preceded by an ICO (Initial Coin Offering) similar to the IPO. An ICO is in no way comparable to a share issue because there are significant differences. ICO is mainly used by start-ups in the crypto industry to raise capital. Cryptocurrency companies issue coins to customers against fiat money as cross-platform means of payment or tokens that are tied to certain trading venues and are associated with special rights (equivalent) or can be pure donations. If they are to be exchanged for other currencies or used as a means of payment, they must be placed on an exchange.
The first official rate of a digital currency is determined on a cryptocurrency exchange based on supply and expected demand. In the further future, the prices reflect the real market situation at the respective trading location.
What determines the price of a cryptocurrency?
The price of an internet currency such as Bitcoin or Ripple is tied to a base currency (fiat currency) such as US dollars or euros. The symbol for the bitcoin rate based on the euro is BTCEUR, based on the US dollar it is BTCUSD. It indicates which foreign currency markets Bitcoin is trading in in this case. Unlike fiat currencies, there are no official prices for cryptocurrencies.
It is normal for Bitcoin to trade on the exchanges at a price that is slightly different from the average. Especially with crypto exchanges, the spread between the prices of the same cryptocurrency and base currency can be very large.
On the www.coinmarketcap.com website, you can easily see the different prices of the respective crypto exchanges. The deviations are between one and five percent. On the home page of Coinmarketcap, prices of the top 100 are listed in a cryptocurrency overview as the average price of the exchanges. The crypto portal omits most of the Asian crypto exchanges in their price calculations, since they are characterized by strong price deviations and manipulations cannot be excluded.
There are numerous digital coins or tokens not available against fiat currencies such as the US -Dollar or the euro are traded. Then double conversion is necessary. For example, from US dollars in Bitcoin and then in another coin or token.
Prices and execution of orders
A disadvantage of cryptocurrencies is that of other assets like stocks, gold or crude oil less liquidity. There are significantly fewer market participants, so there may be larger price differences in price execution. This is the case when large positions are moved. If the Bitcoin price slips down from one minute to the other, a larger sell order is often to blame.
Rapidly rising prices are the result of suddenly rising demand, which can be triggered by a correspondingly large buy order. If cryptocurrencies are traded at market prices, the actual execution price may differ. Providers sometimes have a direct influence on pricing. There are also delays due to the technical conditions of certain networks.
How to measure demand?
With the help of Google Trends data for the search term "Bitcoin", an increasing number can be found Measure demand for new crypto prospects. An increase in public interest is the result of an increasing price. It can accelerate inflation. A price rises to keep rising. Reports of rising Bitcoin prices fill the main pages in the media, which attracts a large number of uninformed speculators and sets the price surge in motion. The consequences are usually a bubble, followed by a Bitcoin crash. This scenario has already been realized twice with Bitcoin and is more than likely in the future.
Important: Cryptocurrency buyers should know that pricing takes place where demand and supply meet. In relation to Bitcoin, this means that a majority of the offer is controlled by first-time users and Bitcoin miners. If the market were affected by an oversupply, the price would fall. This applies in the same way for all large owners.
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Benefit from rising and falling crypto markets
The high volatility need not mean a disadvantage for crypto investors due to the low liquidity of the internet currencies. On the contrary, they can also use falling courses for their profits. Anyone who buys cryptos and puts them in the wallet has increasing prices in view. Price setbacks have a negative impact, at least temporarily. If the currency falls back to zero, a total loss is even possible. Risks and opportunities of a different kind show themselves to traders in crypto trading.
Investing in cryptocurrencies is not only possible as a direct purchase, but also in other ways, for example mining, ICO and trading on crypto exchanges and with the crypto broker. Trading cryptocurrencies via a decentralized crypto exchange requires certain conditions. The most important requirement for participating in crypto trading is that the trader already has one of the top cryptocurrencies. He has to get Kryptos in advance on a suitable marketplace and, taking the cryptocurrency rates into account, is currently spending some money depending on the purchase volume or number of pieces.
Trading coins via crypto exchange:
- Many cryptocurrencies tradable
- Low trading fees
- Opening an account is time-consuming
- Trading with an unregulated provider
- No absolute protection against hackers
CFD cryptotrading at the broker
For all those investors who want to profit from the performance of cryptocurrencies with a small capital investment, but don't put Bitcoin in the wallet, for example trading derivatives such as CFDs on cryptocurrencies or Bitcoin futures contract (future) are two alternatives.
Investors can simply invest in cryptocurrencies via CFD (difference contract). Regulated brokers offer them the opportunity to conclude contracts for a small price. Small price means high possible profits with very small capital investment and mostly cheap fees. Because with most brokers, long or short trades can be carried out using a lever. In CFD trading (contract for differences), the investor only purchases the contract instead of the actual cryptocoins. It is not necessary to hold real coins.
The CFD contract ensures quick execution and even large-volume positions can be easily traded. Trading CFD leverage and speculating on falling prices is very easy with CFDs. Cryptocurrencies can be traded 24 hours a day, 7 days a week. In addition to the pairings with US dollars, other cryptocurrency pairs with euros are available.
Trading cryptocurrencies via CFD:
- Trading on a regulated and licensed trading platform
- Fast account opening & Deposit
- Short & Long Trades possible
- High leverage possible
- No real coins
- No wallet required
Trading with CFDs may seem simple at first glance, because the trader only has to make a buy or sell decision for an underlying. A click on the corresponding button is sufficient to trigger the order. CFDs are still complex financial instruments that promise high profits but in turn involve the risk of a total loss.
Trading with leverage is very risky and is only suitable for experienced traders. Most inexperienced traders suffer a loss. The risks are expressly pointed out on reputable broker sites. For about 75 to 90 percent of all retail investor accounts, trading CFDs is associated with the loss of money.
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CFD trading is mostly done over the counter
Anyone who is intensively concerned with the topic of cryptocurrency courses will encounter a wide variety of prices and explanations for them. This is due to the cryptocurrency financial instrument. In addition, the trading location is an essential factor for current crypto exchange rates, for example of Bitcoin or Litecoin. On the one hand, trading in cryptocurrencies takes place on unregulated stock exchanges and exchanges. On the other hand, CFDs are traded over-the-counter or OTC.
Cryptocurrencies are offered and requested differently on each trading venue. This results in different prices or coin prices. If you want to invest in Bitcoin and Co., you have to choose your exchange carefully, also for security reasons. This also applies to trading with crypto derivatives.
Serious CFD brokers who address German trading customers are generally in the possession of official regulations. Customer deposits are subject to statutory deposit insurance. Complaints about possible fraudulent or customer-unfriendly practices can be passed on directly to the higher-level supervisory authorities. If you trade with an offshore broker in the Caribbean or South Seas, you do not necessarily have to realize a loss, but you have very bad cards in the event of a problem.
Different pricing models for the broker
Cryptocurrency rates appear at the CFD broker as buy and sell prices. The difference between the two prices is the trading fee (spread fee) calculated by the broker. In other trading models, the broker calculates a commission instead of a spread. When buying or selling a crypto CFD over the counter, the trader's direct partner is the broker. This offers its customers a certain market model for trading.
Most brokers act as market makers and take the opposite position to the trader instead of the market. The DMA "Direct Market Access" market model is used far less frequently. The advantage of DMA trading is that it allows traders direct market access and trading based on real market prices.
For a CFD trader, the offered prices of the cryptocurrency pairs are not the only decisive factor. The execution prices are more decisive. Short-term financial instruments such as CFDs can only be traded profitably if the difference between order price and execution price is very small.
All leading CFD brokers with regulation provide their customers with a demo account free of charge to get to know the trading platform and to try out CFD trading to disposal. Inexperienced traders in particular should familiarize themselves extensively with crypto trading. Anyone who is too quick with the first real money trade will have to pay tuition unnecessarily. A trader's career can end very quickly. A few false trades are sometimes enough with small account capital and high leverage.
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Cryptocurrency rates on your smartphone
Trading platforms, often with a MetaTrader4 interface, offer CFD brokers to their customers free of charge. They can be used on desktop PCs (web traders, download traders) as well as on mobile devices (mobile trading app). For most Kroptobrokers, courses in a cryptocurrency app can be called up on a smartphone at any time. Current applicable trading prices can of course be found directly on the trading platforms. A major advantage of a cryptocurrency app is that users have a constant eye on the market. This is where cryptocurrency rates can be tracked live.
Traders get access to their account balance and account changes in real time and euros. Traders can place, change or close trades in real time if necessary. Cryptocurrency exchange rates are available in euros and US dollars. A number of charts and indicators are integrated in the mobile trading apps, as can also be found in web applications. The demo account offered by the broker can also be used in the app.
Very active trading professionals prefer trading on a PC to trading on a smartphone. Especially when a trader is committed to scalping, he needs the perfect trading environment for super-fast trades. The largest possible number of displays and high-performance computers are therefore preferred.
Conclusion: Rising and falling cryptocurrency courses in trading for profits.
If you want to successfully invest in crypto payments, you have to deal with a variety of questions and topics. Which marketplace or exchange should crypto coins be ordered from? How is the course created and how well can course developments be tracked and analyzed? How should you invest in Bitcoin and Co.? There are different options from direct investment to derivatives trading.
After some time of stagnation, the Bitcoin price will move to a high level of around 10,000 euros in mid-2019. For some experts, this looks like a bubble again. Crypto trading is an alternative.
Traders who use CFD trading to speculate on cryptocurrency prices have the advantage that they can benefit from rising and falling prices. With volatile financial instruments such as Bitcoin & Co. in particular, successful bets on falling prices can mean high profits. Exchange trading is not a one-way street, this applies particularly to the highly volatile cryptocurrency trading.
It is good that CFDs have suitable financial instruments that can be used profitably in all market developments. To do this, you need to know how to use them correctly. With all given profit opportunities, the risk of loss must always be kept in mind.
Every beginner should open a demo account to learn how they can benefit from cryptocurrencies.
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