Exchange Bitcoin vs Cryptocurrencies
Bitcoin is traded in pairs versus other cryptocurrencies. Read on to find out how it all works.
How do I trade Bitcoin vs other cryptocurrency pairs?
Bitcoin vs other cryptocurrencies are traded on exchanges in what has been called the most dynamic trading market in the world because it is available 24 hours and seven days a week. It’s a non-stop trading action.
How do crypto pairs work?
The main idea is to think in cryptocurrency pairs.
Etherium can be traded versus Bitcoin in a pair called ETH/BTC, for example. Polkadot can be traded for Bitcoin in a pair called pDotn/BTC. Other pairs can include cryptos like Monero (XMR), Ripple (XRP), Stellar, Ethereum (ETH) and Litecoin (LTC).
These and many other cryptocurrency pairs are traded on large and independent exchanges like Coinbase and Bisque.
Cryptocurrencies can also be traded against fiat currencies like the EURO or USD.
What is the crypto pair’s relationship?
Trading pairs have a value relationship to one another.
You can value Bitcoin against another cryptocurrency, like Litecoin, by asking how many Litecoins does a Bitcoin buy and vice versa, also known as buying power.
A stronger Bitcoin has more buying power. A cryptocurrency’s strength or weakness is partly determined by investor demand. Investor demand is often determined by how much fear investors have about the world economy and there may be a flight of capital into cryptocurrencies when the economic conditions look ugly. Demand can also be affected by the market’s greed when there is a strong trend and investors trade intensely on the trend.
Choosing a cryptocurrency pair often comes down to the trading strategy. Some traders prefer to focus on less than five pairs, in which case it’s often a good idea to research which pairs are the most liquid because there is more likelihood of catching opportunities.
If your strategy is to diversify, it might be helpful to think in terms of a portfolio of cryptocurrency pairs.
Bitcoin is the oldest and most well-known cryptocurrency and is often used as the base currency in many trading pairs on the exchanges. Before trading against Bitcoin it is best to remember that it has a habit of bouncing back unexpectedly and tends to go through periods of intense volatility.
Investors often ask themselves about Bitcoin versus other cryptocurrencies because Bitcoin has been called a safe haven and is used as a standard to compare to other crypto values. Like the USD, Bitcoin is now considered to be a viable base currency with a high trading volume and adoption around the globe.
Which is the most stable cryptocurrency?
By now, cryptocurrencies are accepted as a financial instrument in many jurisdictions. There are even currencies called stablecoins whose value is based on a standard asset like Gold or the USD, which is used as collateral to stabilise the cryptocurrency.
Below are the top three most talked-about stablecoins.
Diem
Diem was formerly known as Libra and was Facebook’s brainchild. When launched, it will be backed by the USD. Diem faced obstacles from regulatory authorities but may launch by the end of the first quarter of 2021.
Tether
Tether (USDT) is a stablecoin linked to the USD. It is known as one of the oldest stablecoins on the market and one of the largest by market capitalisation.
USD Coin
USD Coin is linked to the USD and is considered to be a strong rival to Tether.
Learn more about exchanging cryptocurrencies
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