How Does Crypto Work?

Let’s first find out what is cryptocurrency? Cryptocurrencies are funds that are not issued and are not controlled by central banks. The emission of crypto coins is encrypted in their algorithms at the stage of their development. The supply can be limited or unlimited. It works the same as in every market – the higher the supply, the lower demand, and vice versa. Actually, the demand-supply balance plays a crucial role in crypto trading. Other factors that affect the digital market:

• The overall situation in the world’s economy. Crisis, war, inflation – all these affect the crypto field, for it impacts people’s ability and readiness to invest.
• The news background. Such events as cryptocurrency exchange bankruptcy can shake the market and cause prices to drop. An example is a situation with the FTX exchange.
• Technology underlying a crypto project. That may be a platform with no use cases or a project with many partners and advanced technologies.

One of the most common ways to use digital coins is crypto trade. It implies buying and selling digital coins at different prices. With the increased volatility of the crypto market, traders make money in the shortest and long-term perspectives.

Let’s look at the most common trading methods.

How Does Trading Work?

Having enough experience and understanding of how the crypto market functions, you may succeed in training. Depending on the frequency of trades opened, there may be the following methods:

1. Buy-and-hold: you buy crypto and do not sell it for many weeks or months. That is a long-term investment, which gives enough time to think and analyze the next step. After all, you may buy coins at the market drop and just hold them until the market trend changes to bullish. Then sell coins and receive several zeros of profit.
2. Swing trading: takes a couple of weeks. That is something between the buy-and-hold and other strategies.
3. Day trading: you buy and sell assets within one day. It requires a lot of attention.
4. Scalping: short trades that occur just a couple of minutes and no more than 15 min. This strategy requires high concentration and attention to the process as well as quick reaction.

Traders often use bots. They are programs installed on a crypto exchange that do your work for you. For example, you bought BTC and want to sell it when its price reaches $25 000. So you set the bot for this action, and it automatically sells BTC when it comes to the needed mark.

To try how crypto trade works, you may use the WhiteBIT exchange. It allows for demo trading, so you can try every strategy and see which suits you best.