The cryptocurrency market is undergoing a few tumultuous times lately after the recent changes in China and regulatory crackdowns from different governments around the world. The uncertainty has brought about FUD phenomena where investors are afraid to initiate trades in fear that their money might be lost in an instant, with no recourse at all.
Though this has caused many investors to panic, there are also many who are planning to take advantage of this time by buying low and selling high in the future when things finally settle down.
For hedge funds that want to trade cryptocurrencies in the spot market, they need to know that liquidity is very thin in this area because it’s still not big enough for major players to get in.
Spot trading on Bitcoin Evolution is only available to the most liquid cryptocurrencies like Bitcoin, Ether, Monero, and Litecoin. However, there are numerous ways to get around this where liquidity can be found by either implementing any of the major exchanges into your existing trading systems or developing your own cryptocurrency spot market maker bot that can act as a market maker.
The first approach would be the easiest where it’s as simple as calling existing APIs on exchange websites. However, you would need to ensure that your API function is compatible with the changing interface and code of the exchanges so there won’t be any errors when executing trades on their website.
Alternatively, if you don’t want to use already established exchanges and implement trading systems to trade cryptocurrencies on your own, you can purchase or develop trading bots that are compatible with the cryptocurrency exchange of your choosing.
Is Spot Trading Effective?
While the volatility in cryptocurrency prices can be considered a hindrance to some types of investors, it is a boon for others. The problem that many retail traders encounter when they buy cryptocurrencies is that there isn’t a constant supply of buyers and sellers.
This creates an opportunity where you can take advantage by buying low and selling high when the market settles down. However, don’t get the wrong idea of this article because we aren’t trying to encourage you to gamble with your money and bank on spot trading for quick gains.
The reason behind us pointing it out is because if you have an existing cryptocurrency trading system, moving some of your capital to spot trading could boost profitability by generating better returns to your overall portfolio. However, there is a need to remind you that this is an extremely risky bet and only those who have the stomach for it should consider this type of trading.
Cryptocurrency Exchanges
Cryptocurrencies are basically tradable commodities in their own right but some exchanges also act as a broker where they can fulfill both purposes. There are also other brokers out there that are solely dedicated to spot trading cryptocurrencies where you can choose from, but the risks involved with them are significantly higher because they aren’t regulated, which means you won’t be entitled to any investor protection if anything goes wrong.
Cryptocurrency Brokers
As mentioned earlier, there are unregulated brokers out there who offer spot trading of cryptocurrencies for fiat currencies like the dollar, euro, pound sterling, Japanese yen, and others. Their business is straightforward; they essentially match buyers and sellers of cryptocurrency where you pay a commission on every trade that’s fulfilled.
Summary
In summary, it’s important for you to know that there are different types of cryptocurrency traders out there and you need to know where you stand when it comes time to make a decision on what type of market strategy will yield the best results.
Though this is a risky maneuver, making a shift from long-term trading to spot trading could boost the overall returns on your investments if done correctly.
