Over the last couple of years, cryptocurrencies have changed the world of finance. At present, you can find over 9000+ highly volatile cryptocurrencies on the market. Due to their popularity, investors are looking to include them in their portfolios.
But newcomers find it challenging to get lost in information when they have to select the pairs of cryptocurrencies they can trade on the Forex market.
This article looks into cryptocurrency pairs and how they function on the market. It will also help you identify the most valuable cryptocurrencies to trade.
What is crypto trading and should you start trading digital currencies?
Cryptocurrency trading is defined as the process of buying and selling digital currencies or speculating on their prices. Supposing you choose the right pair to trade, this activity can bring high returns over time.
However, not only money should motivate you to engage in this activity, but also the many other benefits you get when you invest in cryptocurrencies.
You should know that cryptocurrencies are highly volatile, and the rise of blockchain technology and cryptocurrency beyond the financial sector acts as a motivator for any investor.
No one is surprised that financial pros think that trading crypto and other activities involving digital currencies will continue to increase, no matter the stage of the pandemic.
The cryptocurrency industry is also marked by high liquidity, which is a factor that attracts investors who want to diversify their portfolios.
Trading crypto gives investors a certain degree of financial independence because they don’t rely on any financial institution to complete their operations. How many of you can imagine living in a world with completely decentralized financial systems?
Is trading cryptocurrency pairs profitable?
The primary activity among investors is trading digital currencies. It involves exchanging two different types of currencies, like traditional currencies to crypto, or crypto to crypto. For example, if you choose to sell or buy bitcoin with American dollars, your crypto trading pair is BTC/USD.
Therefore, a cryptocurrency pair is a quotation that denotes two types of currencies. Most times is a currency quoted against the other. The base currency is the first listed, and the other is the quote currency. Through currency, you can also compare the value of a currency to another because it tells you how much of the quoted currency you need to purchase the base currency.
You trade currencies in exchanges. Different exchanges allow you to trade different pairs of cryptocurrencies, and therefore you need to ensure that the exchange and broker you choose offers the cryptocurrency pair you want to trade.
If you trade with an ECN broker you should know that it doesn’t provide physical cryptocurrencies like the ones you get at a crypto exchange, but contracts-for-difference that track the price of the physical cryptocurrencies.
Now that you know that crypto trading is an investment niche you should explore if you want to diversify your portfolio, let’s check some of the best crypto pairs in the Forex market.
The most valuable cryptocurrencies to trade in 2021
To help you identify the best cryptocurrency pairs to trade with, you need to identify the most valuable cryptocurrencies.
Monero – was launched in 2014 and investors describe it as the only true privacy coin because Monero transitions cannot be made public. No one can track the source or destination of transactions.
Due to its unique structure, Forex traders find it attractive, and therefore it’s one of the best cryptocurrencies to trade.
Ripple – is also famous in the Forex world because it’s one of the oldest digital currencies in the market, and at present, the XRP token is among the largest coins by market cap.
Its on-demand liquidity allows XRP to be sent fast to facilitate currency exchange. Few know that it was initially designed to facilitate bank transactions at low costs. Even if now the leading adopters of Ripple are large financial organizations, peer-to-peer transactions are also possible.
Stellar – was described as the most promising cryptocurrency investment for 2021. It was created to facilitate transactions across borders, and it focuses on both individual clients and big financial entities.
Considering that its platform is created to facilitate transactions across borders and connects investors worldwide, it’s understandable why traders take it into account when they form pairs.
Bitcoin – is still one of the most influential digital currencies worldwide, and you may’ve been surprised to not find it at the top of the list. But because it has a large market cap and trading volume, it’s not the best option for beginners.
Despite the virus outbreak, it remained one of the best trading options. If you want to trade a pair that includes Bitcoin keep in mind that there can exist only 21 million Bitcoin. It’s expected that the last Bitcoin to be mined in 2140.
Ethereum – is the second-largest blockchain platform by market cap after Bitcoin, and this makes it one of the most valuable cryptocurrencies to trade. The fact that there is no upper limit supply on Ehtereum attracts many investors.
One of the reasons why investors love it is that it has other applications beyond trading. It allows developers to create decentralized apps and it supports smart contracts, which can facilitate commodities businesses, gaming, trading, voting, and interoperability in sciences.
EOS – is another great option for a trader who wants to increase their income in time. EOS is powered by the EOS.IO blockchain protocol and it allows buyers to create decentralized applications and smart contracts. EOS.IO was initially designed to solve the scalability and speed issues in Bitcoin and Ethereum.
Because it used innovative technology, the EOS coin offering reached a record and raised $4 billion in 2017. It maintains its reputation as one of the most attractive cryptocurrencies even nowadays.
Other cryptocurrencies that are worth considering when you form pairs are Litecoin, Binance, and Basic Attention Token.
It’s essential to research before you start trading cryptocurrency pairs because you must ensure you pick the right currencies for your trading style. Acquire as much financial education as possible and create your own strategies.