The cryptocurrency marketplace is changing so fast, many investors and traders find it hard to keep up with the breakneck pace. Every day, new coins, websites, venture capital companies, regulations, and political forces appear on the scene. Even crypto-based news sites that follow the niche often post new content by the minute rather than the hour, day, or week. What prospective investors need to know is what the current and future price drivers are in the segment and how those factors could affect prices, the industry, and the trading community as a whole.
The easiest and clearest way to understand the whole scene is to begin by looking at what causes daily pricing movement in the alt coin markets. An even more useful trading tool, beside basic knowledge of what affects overall coin value is knowing how to use a crypto index to minimize volatility and gain exposure to multiple alt coins simultaneously, without having to purchase them separately. A cryptocurrency index serves many of the same purposes as traditional stock trading indices do. People can speculate on entire segments of the market rather than putting all their assets into one coin.
What causes the listed value of a given virtual currency to rise or fall? In addition to public acceptance, many of the individual coins are subject to the success or failure of their own advertising campaigns. Additionally, some of the larger members of the niche, like bitcoin and ethereum, experience volatility when governments attempt to enact heavy-handed regulations and laws. Still other factors include the safe haven effect, in which the investing public moves out of a falling stock market and into an asset class, like alt coins, that offers the prospect of long-term growth that’s untied from the ordinary, traditional securities exchanges.
Without a doubt, the single most relevant pricing force in the near future for the entire cryptocurrency sector can be summed up in one word: gaming. Almost unexpectedly, gamers all over the world have become a major component of the international acceptance and widespread use of alternative currencies. And, the trend is picking up steam. Consider the fact that more than half of all existing cryptocurrency in in the hands of gamers, who use the new type of money not just to buy games from online sources but also to play those games by using in-game coins.
Whether you’re a gamer or not, investing in crypto coins can be confusing if you focus on a single asset, like bitcoin or cardano. That’s where indices come into the picture. They allow prospective traders to see a benchmark value for the sector as a whole, not just individual prices of particular coins.
Traditional stock market investors have used benchmark indices for decades to lessen volatility, minimize risk, and take positions on entire sectors, niches, or the whole marketplace. Millions of cryptocurrency enthusiasts also use CFDs (contracts for difference) to avoid many of the disadvantages and inconveniences that come with direct purchase of assets. By using CFDs, or the spread betting technique, to play the alt coin markets, it’s possible to not only use leverage for enhanced buying power but to take advantage of crypto index trading as well.
It’s one thing to speak about large trends, but the reality of buying and selling alt coins comes down to individuals. How do everyday investors make decisions about which coins to buy, how much money to spend, how long to hold the assets, and whether or not to use an index? In addition to the many millions of gamers, who use their virtual currencies for both in-game purchases, buying individual game products, and making routine retail purchases, there are also huge numbers of others who simply use cryptocurrency as a means of exchange in online and brick-and-mortar stores. It’s becoming nearly impossible to point to just one or two common uses of alt assets because public and institutional acceptance is accelerating faster than many predicted.
Many coins allow uses to stake within their accounts. Staking is a form of leaving your coins on the site’s wallet, much as you’d do with fiat money in a bank-based savings account. For those willing to leave those amounts in place, outside of personal wallets, interest rates can range from five to twenty-five percent, depending on the coin. But, for so many who are drawn to the exciting world of crypto coin investing, the goal is to simply make a profit in the short-term or long-term. That’s one reason behind the growth of crypto savings accounts, the use of alternative coinage for retirement accounts, and buy-and-hold activity among large numbers of people.
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