According to a recent survey by Consumer News and Business Channel (CNBC), about 8% of Americans have invested in cryptocurrency.
Even though the prices of Bitcoin and other digital currencies have been volatile in recent months, the overall trend has been positive. As more people become aware of and interested in cryptocurrency, they are looking for ways to trade it.
Imagine if you could make a return on your investment every single day. Sounds too good to be true, right?
Well, that’s what day trading in cryptocurrency can offer you. Of course, risks are involved, and you need to be disciplined in your approach, but if you can master the art of day trading, investing in this burgeoning asset class can be extremely lucrative.
Here are ten reasons why day trading cryptocurrencies is worth your time and investment.
1. Potentially Huge Returns
The cryptocurrency markets are notoriously volatile, offering great opportunities for day traders to make quick profits.
If you’re patient and do your research, you can find entry and exit points that allow you to ride the waves of price movements and maximize your profits. For instance, you can buy USDC when the price is low and sell it when it rises.
A solid plan and knowing when to take profits are important, so you don’t give back all your gains. However, if you time it right, you can make a significant return on your investment. The most important thing is to have a strategy and stick to it.
2. 24/7 Trading
The cryptocurrency markets never sleep. You can trade digital currencies around the clock. This benefits those with day jobs who can only trade after work or on the weekends. With cryptocurrency, you can trade whenever you want. This flexibility is one of the reasons why day trading in crypto is becoming increasingly popular.
Also, you must be mindful of the different time zones when trading internationally. The reason is that some exchanges are in different time zones, so you need to be aware of the opening and closing times. However, you can use a cryptocurrency trading bot to automate your trades and take the guesswork out.
3. Low Barrier to Entry
In the past, day trading was the domain of professional investors and Wall Street firms. However, the rise of online brokerages and trading platforms has lowered the barrier to entry. Now, anyone with a computer and an internet connection can start day trading.
What’s more, you don’t need a large amount of capital to get started. Some platforms allow you to trade with a minimum deposit of just $100. You see, starting small and increasing your investment is always best as you become more comfortable with the process and platform. However, the low entry barrier is one reason day trading in cryptocurrency is becoming more popular.
4. Leverage Trading
Leverage is a loan that a broker gives you to amplify your trades. This means you can trade with more money than you have in your account. For instance, if you have $1,000 in your account and use the leverage of 10x, you can trade with $10,000.
Leverage can be a great tool to increase your profits, but it can also amplify your losses. So, it’s important to use it wisely and not overleverage your account. Trading may involve risk, so you must know the potential downside.
5. You’re in Control
When you day trade cryptocurrency, you’re in control of your investment. You decide when to buy and sell. This is different from investing in a traditional asset, such as stocks or real estate, where you have no say in when to buy or sell. Also, you’re subject to the volatility of the markets. However, if you have a solid plan and stick to it, you can minimize your losses and maximize your profits.
Remember, you’re in control of your investment, so don’t let emotions get in the way of making rational decisions. The simple rule is to buy low and sell high.
6. No Intermediary
When you day trade cryptocurrency, there is no intermediary. You’re directly buying and selling digital assets on a decentralized exchange.
This cuts out the fees you normally pay to a broker or middleman. It also makes the process more efficient as there is no need for third-party approval. And that is the best part of trading crypto; you can buy and sell assets without anyone’s permission.
7. Decentralized Exchanges
Speaking of decentralized exchanges, these are another reason to day trade cryptocurrency.
A decentralized exchange is a platform that allows you to trade digital assets without the need for a third party. This means you’re in control of your investment, and there is no one else to take a cut off your profits. Furthermore, decentralized exchanges are more secure as they’re not subject to hacks or government regulation.
8. Tax Advantages
In some countries, day trading is considered a business. This has tax advantages as you can deduct your losses from your taxes. Of course, you should always consult with a tax advisor to see if you qualify for this treatment. As such, this benefit may not apply to everyone.
Pro Tip: Taxes are a complex topic, so it’s best to seek professional advice before making any decisions.
9. Potentially Higher Returns
The cryptocurrency market is still in its early stages. This means there is more growth potential than other, more established markets.
For instance, the stock market has an average annual return of 7%. In comparison, Bitcoin has had an annual return of nearly 200% over the past five years. As per, past performance is not indicative of future returns. However, it shows the potential for higher returns when trading cryptocurrency.
10. You Can Beat the Market
You’re not subject to the market’s long-term trends when you day trade cryptocurrency.
This means you can buy and sell as the market fluctuates. As such, you have the potential to make money even when the market is going down. Although, this takes a lot of skill and experience. However, it’s possible to beat the market if you know what you’re doing.
There you have it. These are some reasons day trading in cryptocurrency is worth it.
As it seems, day trading is not for everyone. It’s a high-risk activity that requires skill and experience. However, it can be a great way to make money if you’re up for the challenge. Make sure you research and understand the risks before getting started.
DISCLAIMER: This article is for informational purposes and should not be taken as financial advice. Always consult a financial advisor before making any investment decisions.