Crypto exchanges make money. However, the losses in the past two years have made people skeptical. Why? In 2018 winter came, and crypto losses came with it. Most new investors lost over 70% of their inputs.
It was only a year before in 2017 when people were partying and displaying their gains all over the web. And they can be forgiven because the profits made investors millionaires within no time.
How do you make crypto exchanges profitable?
Manage Your Expectations
First, learn to manage your excitement. Alex Kruger, a former banker, believes the 2018 losses, and the subsequent dip, happened because people became detached from reality, making wild projections after the 2017 returns. Cryptocurrency exchanges are unpredictable, and that's the reason the huge losses did not wipe crypto off the market.
Every year crypto has its fluctuations, but losses from hacking or fraud are on the rise. And the consolidation of your digital wallets and cryptocurrency exchanges is advisable. Secure your transactions and watch out for scammers.
CipherTrace reports that in 2018 $1.7 billion went into thin air in the crypto industry. A further $4 billion (or more) was stolen in 2019 through scammers, hackers, and other crimes. Always research on security measures before investing.
Bitcoin halving is also another trend that crypto enthusiasts anticipate. Bitcoin cuts its supply by half to prevent price increases and ensure scarceness. The last two halvings happened in 2012 and the next in 2016. Experts believe the 2016 halving contributed to the meteoric 2017 rises. It is 2020, and if the trend remains the same, you should be looking forward to another halving come May.
Will there be an upsurge afterwards?
Blockchain and Crypto Coins
There is a significant advantage when newbies educate themselves on the ins and outs of crypto exchanges. It is essential to start by learning more about blockchains and the best currencies on the crypto market. There are reliable sources of information but desist from following the masses through those social media' predictions'.
Blockchain is the value beneath the growth of any cryptocurrency. And even in 2020, few people can profess full knowledge of how blockchains or even crypto work. But knowing more about it helps.
Do you want a safer bet? Choosing the best crypto coins is the way to go. The most stable currency will be leading at the market cap (Bitcoin in 2020). Their volatility is lower, and they are valuable for more extended periods.
Of course, the bottom ranking ones offer lesser restrictions and more liberties. So, this is a case of quick high-risk high-reward versus overtime stability.
Altcoins and Exchange
Bitmex, Bittrex, Binance, and Poloniex are popular choices for altcoin trading. Altcoins (Bitcoin/Etherium alternatives) do not provide the same confidence, but you may find a hidden gem there. Take your time to confirm their reputation, and it may save you from the hype and speculations that surround most altcoins.
When signing up to an altcoin exchange platform, find out the number of altcoins you will be exchanging and their commission. Also, ensure that their security is robust.
Using Stop and Limit tools is an excellent way to curb your losses. It is easy to throw the proverbial good money after the bad in case of losses. Most experienced investors consider 60% gain a success (it's quite a task to achieve 100%) and know when to hold on.
Market Order, Stop Order, and Limit Order are tools that will help you check the excesses.
Stay Within Your Means
You've heard it for the umpteenth time, and you are throwing your arms up the air, but it must be repeated. Prudent investment and never going beyond your means is crucial.
Anecdotes from the above mentioned 2018 crash saw people lose money they didn't have. Cash from lenders, mortgages, or loans disappeared. Yes, crypto exchanges make money, but are you factoring in the losses?
Keep Up With the News
There are advanced trading strategies that may help you make profits from crypto in 2020. Staying on top of cryptocurrency news is one way to do it since mergers or other developments can give you an edge. But that said, fake info may also be your undoing.
Also, if you can crunch complicated statistical approaches and economic trends, you can use the technical strategy to stay ahead of the pack.
Or choose the easier sentimental analysis strategy which relies on psychology. How do people react to certain phenomena? What is the current atmosphere around certain currencies? And voila!
When it comes to crypto trading, in-depth research is needed. Yes, there is good money in this industry. But maybe these keys to the castle will open Pandora's Box for you. Vigilance, shrewdness and moderation is the way to go if you plan to grow your fortune while managing your losses.