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How to Choose the Correct Crypto Pair on the Stock Exchange?

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Among the most trendy topics to discuss in business and friend circles is cryptocurrency. A digital currency without any physical form attracts traders and investors worldwide. Undeniably, every crypto expert must know about crypto pairs. What does this term stand for?

Crypto or trade pair consists of two cryptocurrencies that you exchange for each other. Usually, the more popular one becomes the base currency and defines the value of the other. There are several types of such trade pairs:

  • Cryptocurrency and cryptocurrency;
  • Cryptocurrency and fiat currency;
  • Cryptocurrency and stablecoin.

Stock exchange participants are free to pick the crypto trade pair. Although the process appears easy, there are numerous details to consider. People study the science of creating pairs to:

  • Buy cryptocurrencies that you can only purchase for other digital coins;
  • Expand the crypto portfolio.

To enjoy the triumph, traders make thorough preparations before the trade. Find out their professional secrets down below! Here are several aspects of crypto to remember.

Price

Undeniably, the exchange rate is the key factor for a crypto pair. The price of a digital currency defines whether the deal is successful or not. Typically, traders have a general idea about the value of a cryptocurrency. Yet, accidents still happen and turn the situation upside down. At least, being in the know is easy with the BTC price HTML widget! Fresh info is always at your fingertips.

Building the advanced trade strategy starts with picking a popular crypto pair, like:

  • BTC/ETH;
  • ETH/LTC;
  • BTC/LTC;
  • USDT/BTC.

However, this is only the beginning. Even if you land your choice on the good-looking pairing, price shifts are inevitable. First, study the number of coins or tokens on the market. Remember, unexpected emissions make the price sharply drop. Similarly, the mining process can negatively affect exchange rates too. For instance, miners retrieve around nine hundred BTC per day. Conversely, staking makes the value of a digital asset go up.

Next, the rumors about cryptocurrency upgrades do them a favor and increase the price. No wonder, since the developers promise better speed and quality, which attracts more investors. On the other hand, the currencies that lack those advantages are going to plummet.

What is more, social media causes instability in stock exchanges as well. As soon as an influential person purchases or sells coins, the rest of the people do the same. Things get even more complicated when a whole government drastically changes its opinion on crypto.

As you can see, picking the digital currency with good price prospects is crucial for trading. With this in mind, experts constantly do thorough analyses and calculations.

Trade volume

Let’s say that a trader chooses a crypto pair of currencies with a stable price. Moreover, all the factors prove that the price is going to increase. A beginner would say that the situation is favorable. Yet, there is another indicator that makes tables turn, and this is trade volume. What is trade volume on a crypto stock exchange?

Briefly, the amount of coins that people trade over a specific time is the trade volume. The last twenty-four hours usually represent the situation on the market. Markedly, there are several permanent leaders by this indicator:

  • BTC;
  • USDT;
  • ETH;
  • BUSD.

Positions of the mentioned assets change from time to time, but the general pattern stays the same. Hence, both beginners and experienced traders select these currencies for their trading pairs. Out of a couple of thousand cryptocurrencies, only a dozen get to the top ranks. Imagine, that you decide to deal with a coin that has a high value, but low trade volume. You have a high chance of waiting too long to complete the deal.

At the same time, picking an asset with high value and sufficient trade volume is a wise strategy. To begin with, such coins have a lower risk of depreciation. Besides, their place in various ranks reflects the attitude of society. Naturally, when most countries allow digital currency and encourage its use, trade volumes peak. Citizens experience the fear of missing out and quickly use cryptocurrency for trades.

In the opposite situation, traders underestimate unknown tokens or coins. As a result, people would rarely use them in crypto pairs.

Liquidity

One more equally important factor when trading crypto pairs is liquidity. Shortly, if a cryptocurrency is available for purchase at a stable price, this asset has high liquidity. In other words, the faster you can purchase the wanted coin for the wanted price, the more liquid it is.

Surprisingly, liquidity has a tight connection with the previous indicator, trade volume. The correlation is straight, with the volume growth digital assets become more liquid. As an illustration, ETH, BTC, or USDT are easy to purchase. This advantage comes from the enormous size of daily trade.

Logically, the rule works the other way around for the less famous cryptocurrencies. In case the coin is mostly unknown, you have low chances of making a good deal. For the start, low liquidity usually equals being new on the market. Such circumstances are normal since fresh coins and tokens only begin gaining popularity. Consequently, listing on major stock exchange platforms is just in plans for such currencies.

In addition, trade pairs with low liquidity bear certain dangers. When a company issues a few new coins, this currency becomes defenseless against scammers. Such people buy coins in bulks, to resell them later and cause a price rollercoaster on the market.

Under those circumstances, traders might avoid the newly emerged cryptocurrencies at all costs. However, giving up on them isn’t the only solution. If a company builds a proper marketing strategy, the currency has all chances to be on top of the charts! Then, people would be excited to use it in crypto pairs.

Final thoughts

In conclusion, choosing the correct crypto pair depends on numerous factors. The conditions are going to vary in different countries or stock exchanges. Changes might even happen overnight! Still, carefulness is key when picking trade pair. If you analyze all the possible outcomes, the chances of winning are higher!

Written by Marcus Richards

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