TradingCrypto

What is cryptocurrency trading?

Pepperstone
Trading Guides
6 Sept 2022

What is a cryptocurrency?

A cryptocurrency is a digital currency (non-physical) that can be used to make transactions. The virtual currency uses cryptography instead of a centralized authority to secure transactions. Cryptocurrency trading is executed via dedicated exchanges and brokers.

The birth of cryptocurrency trading?  

Although Bitcoin (BTCUSD) was the first mainstream cryptocurrency, David Cahum, an American cryptographer, looked to develop eCash in 1983. He proposed a token currency that could be transferred privately, securely and digitally between parties. The transactions would be encrypted and untraceable.

Figure 1 Bitcoin

How can I invest in cryptocurrency?

Cryptocurrencies and cryptocurrency trading have come a long way since then. Now it is possible to quickly buy and sell various cryptocurrencies. This is either on a dedicated exchange or through a spread betting or CFD broker.

What are the top cryptos available to trade?

Deciding which cryptocurrencies to trade can be a minefield. As of the 20th of July 2022, there are over 20,000 cryptocurrencies in circulation.

 However, there are some major considerations to make when deciding which product to trade.

Liquidity

 You will often hear traders talk about liquidity. As a rule, the more popular and traded the product, the more ‘liquid’ it will be. This means that there will be more traders participating, leaving orders in the market to fill their positions. This high liquidity means that it is easier for a trader like you to buy or sell an asset at their preferred price.

The high liquidity also results in a lower spread, reducing the difference between the price you can buy (offer) and sell (bid) an asset. This reduces your cost to trade.

 In cryptocurrency trading the newer and less known cryptocurrencies are like AIM listed companies of the FTSE exchange.  There are fewer participants, and the spreads tend to be much larger than their FTSE100 peers.

Top 5 cryptocurrencies

It is difficult to list the top 5 most popular cryptocurrencies as this can vary depending on breaking news or the volume of chat on forums like Reddit.

According to data from ConMarketCap.com, as of the 25th of August 2022 the largest cryptocurrencies by market capitalisation are:

  1. Bitcoin Market Cap $413 billion
  2. Ethereum
  3. M
  4. arket Cap $208 billion
  5. Tether Market Cap $67 billion
  6. USD Coin (USDC) Market Cap $52 billion
  7. Binance Coin
  8. Market
  9.  Cap $49 billion

Can I trade cryptocurrencies through Pepperstone?

Yes. Cryptocurrency trading is available at Pepperstone. Pepperstone currently offers twenty different contracts to give you exposure within the cryptocurrency market.

Most of these products are available to trade 24 hours a day, 7 days a week. For a full list of cryptocurrency products, click here.

*It should be noted that higher leverage can work for you as well as against you. For more information, please click on the link.

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.

Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.