Blockchain enthusiast developer and writer. My telegram: ksshilov
Making sense of crypto markets always invited comparison to traditional assets. On the surface, crypto trading is similar to stocks, but also to the forex market. The forex market may be a more apt comparison, since crypto startups do not treat their tokens as securities.
Crypto businesses rarely issue earnings reports, and owning a coin or a token does not entitle oneself to a share of the network. Only in certain cases owning crypto coins pays out passive earnings, which are not quite the same as dividend stocks.
Forex, on the other hand, is a trade between the pure perceived value of currencies. Of course, there are a few caveats, in that fiat currencies tend to be protected and deliberately kept within a predictable price range. Only rarely do currencies fluctuate wildly, as in the case of hyperinflation.
The total market capitalization of all crypto assets is estimated at $2 trillion, of which $1T is the value of Bitcoin (BTC). However, the exact trading volume of the market is a more uncertain estimate. BTC trading surpasses $60B per day, and the trading volume of Tether is above 100B per day.
The daily volume of the forex market is more than $6.6 trillion per day, and the value of the underlying assets is actually the global GDP. So a rough evaluation of that is about $75T. The US dollar money supply is above $18T. But it is difficult to make a size comparison between the BTC market value and a fiat currency.
Тhe US dollar cannot be refused as legal tender, while BTC can have varying levels of acceptance and its price fluctuates. The realized value of BTC is much smaller in comparison to its projected value, and not all coins can be sold at that price without a crash.
So while the crypto market remains small by comparison with the forex trading volume, it is still a notable part of global economic activity. In a little more than a decade, the crypto market has gained enough visibility, with the help of social media and shifting investor attitudes.
In 2021, there are clear trends for a new investor profile emerging. Millennial investors are a unique cohort that had to encounter a series of personal finance headwinds, from stagnating wages to an overheated housing market.
At the same time, the expansion of mobile apps and social media trends meant the new investors were much more open to operate their personal finances and trying out alternative investments. Investment hubs like eToro are becoming a one-stop-shop for exposure to forex, stock trading, and for the past couple of years, crypto trading.
The top 3 traders that are getting copied on eToro are, right now, success stories in crypto and forex. In 2021, crypto is king, with Jay Edward Smith being the top copied trader. Much like a millennial investor, Smith mixes in his interests in futurology, automation and technological disruption with his stock picks and crypto decisions. Smith has relatively small positions in forex trading, making 0.08% of his portfolio. His strategy is driven by noticing social changes and trends, which can translate into market performance.
In contrast, the second most popular trader to copy, Olivier Danvel, is an old-school forex and precious metals trade. In contrast, he is more than 84% invested in forex, and just dipping his toes in crypto with a small fraction of his portfolio. So while there is a crossover in trading, forex and crypto are still two different worlds. Forex still relies on data from governments, while crypto trading hinges on information discovered momentarily by new startups.
Crypto trading is highly dependent on overall sentiment. Trackers can give information about Bitcoin sentiment. Crypto trading is highly amenable to signals, as it is also tied up with social media chatter and somewhat predictable group behaviors. While forex is a field of experts, crypto social media sentiment is a field where lack of fundamentals is replaced by direct observation of market participants and their social media presence.
As the crypto market trading volume grows, so signals become more meaningful and distinguishable from the noise. The most significant source of signals is behavior on exchanges, and there are already services like Crypto Base Scanner covering the most active market operators.
Less reliable crypto signals are also available through ad-hoc free or paid Telegram groups. This source of trading information, however, is the riskiest one, as the groups are rife with scam attempts.
Learn 2 Trade the best forex signal provider, which builds upon its knowledge of forex markets, to offer additional insight into crypto decisions. Building on its knowledge of forex signals, Learn 2 Trade is also offering the best available data on the crypto market. The platform has slowly expanded its signals to above 10,000 users. To generate the signals themselves, top traders have leaned on their experience of the forex market, adapting it to the new challenges of crypto trading.
Crypto trading is a little more than a decade old, and has gone through multiple stages. At one point, Mt. Gox in Tokyo was the only Bitcoin exchange in the world. Later, alternative coins appeared, making wild speculative gains. Over the years, crypto trading expanded and gained liquidity. There were highly suspect price moves suggestive of pump-and-dump arrangements, but the leading coins continued to deepen their liquidity and establish their dominance. Crypto prices are thus behaving in manners both similar to stock trading or forex markets.
The crypto market still does not have trading stops. For some types of decentralized exchanges, there is no market oversight and even no order books, as the trades depend on a mathematical formula and an algorithm. As such, the price moves on crypto exchanges are much more dramatic compared to forex markets. But this type of trading also produces data and patterns that can be used to create meaningful signals.
The addition of dollar-based stablecoins also means trading pairs are becoming more intuitive, with fiat-like price valuation to remove some of the complexity of the crypto market.
Perhaps the strongest argument that crypto ownership is not gambling is the willingness of companies like MicroStrategy and Tesla, Inc. to assign some of their treasuries to BTC. The listing of Coinbase Global, Inc. on NASDAQ on April 14 is yet another indicator that the crypto market has matured and has increased its cross-over into traditional assets.
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