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All About Crypto Investing Strategies and Types of Crypto Traders

Bitcoin is the first modern cryptocurrency, invented in 2009 by Satoshi Nakamoto, an anonymous person or group of developers. There were several former attempts to create virtual coins, such as David Chaum’s proposal to create electronic cash in 1983 and the subsequent eCash, Bit Gold, B-money and Hashchash. These were very influential in Bitcoin’s creation.

Cryptocurrencies have quickly grown in notoriety and popularity, with 6.1% of Brits owning digital coins in February 2022, according to crypto market statistics. This shows a surge since 2018, when only 3% of the British population held cryptocurrencies. Today, you can use Bitcoin to pay for goods and services at sellers and retailers, and usually, the brick-and-mortar stores that accept it display the message “Bitcoin Accepted Here”.

It’s best to be informed about crypto, trading strategies, the types of crypto investors that exist and check Bitcoin price USD before investing to ensure you make the most out of your digital coins.

Keep reading to find out exciting and valuable facts that successful entrepreneurs would tell you about cryptocurrencies.

Crypto investing strategies

Bitcoin is highly volatile, so an investment strategy is crucial before buying  crypto. If you want to buy Bitcoin, it’s best to go through these steps to ensure you’re a good trader:

  • Understand how the crypto market works
  • Evaluate the level of risk you’re comfortable with
  • Keep in mind that Bitcoin and other cryptocurrencies are highly volatile.

A successful crypto trader knows that risk and reward are intertwined and that risk management measures assess the likelihood of negative outcomes. The latter include range, standard deviation, R-squared, Sharpe ratio and beta, and you are taken to evaluate hazards and ensure the higher priority are eliminated wherever practicable. A good trader shouldn’t ever run away from risk since this and potential returns are positively correlated. The greater the risk you take, the bigger your reward is if you come out on top.

Some common types of crypto trading strategies are:

Scalping. It’s a popular trading strategy that generally allows you and investors to profit from small price movements at frequent intervals.

Day trading. If you’re a day trader, you enter and exit positions on the same day and aim to capitalise on intraday price movements.

Swing trading. Our medium-trade strategy sits between position trading and day trading strategies and gives you more time to consider your next steps.

Position trading. This means you know how volatile the crypto market is, and you’ll hold your stocks for a long time, months or years. You can evaluate market price trends and historical patterns or let time tell what value your investment will have in the future.

Arbitrage trading. If you’ve been practising buying crypto from one market and selling it in another, you’re an arbitrage trader.

Types of crypto investors

As it grows, the crypto market’s adoption ranges from hobbyist supporters to financial and government institutions. New investors are entering the market, and each type of trader brings a new perspective. Examining these different types of crypto holders means shedding light on these emergent technologies and highlighting the palette of demographics. Let’s look at some of the most common types of crypto investors.

Hodlers

They’re the core proponents of crypto that populate the polarising Twitter arguments and won some of the best returns in 2017. This term derives from a grammatical error on a Bitcoin post that had a misspelling of the word “holding”. These investors are sometimes called the “revolutionaries” of crypto, and many consider them fascinating investors. They endure market swings since cryptocurrencies are volatile in prices and are genuine believers in the potential of Bitcoin and other virtual coins.

Curious Millennials

Gen Z and Millennials approach investing differently than older persons. With the evolution of digital media and mobile apps, they are more enthusiastic about the idea of a digital future. The younger generation imagines a blockchain-based revolution and makes it the most popular asset in the portfolio of crypto demographics. Many youngsters don’t wholly grasp Bitcoin or other currencies, but they’re fascinated by them and make efforts to understand them better. According to surveys, roughly 43% of Millennials and Gen Z consider crypto could replace the US financial system in 2019. In the United Kingdom, at the end of March 2022, approximately 58% of Brits aged 18-24 have invested in crypto, and 52% of them had subscribed to the view that cryptocurrencies are the “future of finance”.

Financial institutions These are highly anticipated to be newcomers to the crypto scene. Financial pundits and banking executives are warming up to the concept of blockchain, Bitcoin and other currencies.

For example, one of the most valuable investment banks globally – JP Morgan Chase, reportedly wants to merge its Quorum Blockchain with ConsenSys (the company that backed up several prominent Ethereum endeavours). Crypto derivatives are exploding as VCs pour money into DeFi, regulators are taking cryptocurrencies increasingly seriously, spot trading volumes reach new highs, and Bitcoin holds the most significant share of the market capital.

Professional traders

They’ve long been some of the earliest proponents of cryptocurrency. Professional traders, whether arbitrageurs or swing traders, love market volatility because it increases the chances of profits and loss. They double as Holders occasionally and some of them are former quantitative analysts from Wall Street. These traders account for serious portions of spot and derivatives volumes and are likely responsible for the latest progressive developments in crypto derivatives.

The common investor

The bulk of retail investors is the typical investor that looks for ways to diversify their portfolio with Bitcoin or your friend that can’t stop talking about his crypto wallet when you hang out.

If you’re not one of the investors above, you find digital coins exciting and don’t know what to do with the money you’ve put aside, maybe it’s time you invested in crypto. It’s best to go for the most popular coins, like Bitcoin, since it’s the most traded cryptocurrency globally, and use common sense when you buy virtual currencies.

All these investment strategies are exciting, but if you don’t know what type of investor suits you, know you can be a part of multiple categories. If you’re starting with investing in crypto, reading about technology and objectively assessing your strategy will help you.

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