How the cryptocurrency market started:
Bitcoin is the worlds first blockchain cryptocurrency created. As the awareness of Bitcoins technological innovation spread, it motivated a plethora of business opportunists to create their own cryptocurrencies and blockchains solutions. These crypto blockchain projects, referred to as Alt-coins, created a marketplace to amass capital funding through ICOs.
The market exploded in 2016-2017 without any regulatory oversight which exposed retail investors and novice traders to the high risk & high reward dynamics that play out in an ungoverned trading environment.
There are now over 2K cryptocurrencies led by Bitcoin that form a vibrant 24 hr nonstop global trading marketplace. Some cryptocurrency blockchain projects try to compete with bitcoin utility as money, while most projects address specific market segments.
Due to business growth in cryptocurrency eco-space - governments and financial institutions have now recognized cryptocurrencies as a new asset class (digital assets) which are projected to increase to over Trillion dollar market capitalization in the coming decades. Therefore regulatory actions (AML, KYC) are being applied in this sphere, to enforce tax and anti-money laundering laws. Also, many altcoins identified to be securities are being subject to fines for not abiding by security exchange laws. There are also may crypto blockchain projects that have yet to prove their viability. As many projects fail or shutdown by regulators, many more get launched.
The cryptocurrency market stills remains relatively unregulated, with many scams and shady trading practices still taking place - regardless, innovation continues with promising projects that are legitimizing this space. The potential of this market has not gone unnoticed - financial institutions eagerly wait for legislative approval to begin offering crypto investment products.
Bitcoin Blockchain is unique:
Bitcoin holds a unique position in the cryptocurrency market. Bitcoin is considered the king of cryptos - it has the most liquidity and market share. Within the cryptocurrency market, Bitcoin is used as unit of account - as all altcoins are priced in bitcoin.
It is important to note that Bitcoin is the most decentralized blockchain from all existing crypto/blockchain solutions. Many regard Bitcoin to have the best long term store of value in the crypto space. Often market participants trade cryptocurrencies with a goal to accumulate Bitcoin not fiat.
Stock market exchanges have introduced Bitcoin futures trading (CBOE, ICE, BAKKT) and Bitcoin ETF products are pending approval. The financialization of Bitcoin has only begun.
Cryptocurrency market is highly speculative – it is well known to experience wild price fluctuation within min/hours. It is new market with a relatively small market cap, such that crypto related news or announcements can easily produce market moves.
The volatility is also driven by leverage trading, which has gotten very popular on cryptocurrency exchanges. There are plenty of amateur traders that take on risky leverage positions or fall prey to pump and dump schemes and other manipulations and frauds that exists in this environment.
Skilled traders take advantage of this volatility - while others get burned. Despite the high risks, there are plenty of price prediction hype, analytics and fundamentals that continue to attract new participants into the market.
If you are interested in trading cryptocurrencies, it is highly suggested to learn technical analysis and money management skills.
If you are interested to invest in cryptocurrencies then you must begin to with Bitcoin education. Bitcoin education. It will help you understand the technical and economical fundamentals needed to evaluate the value of other cryptos.
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