What Are Crypto Trading Pairs? How Do You Choose Them?
Cryptocurrency is a trending topic in the new generation which are more repentant towards the technology.Crypto trading pairs are the fragments of the whole crypto trade. Crypto trade is basically the buying and selling of cryptocurrencies. To trade with cryptocurrencies, crypto trading pairs are required.
Unlike the Shares and bonds, where-in the trade takes place only with the fiat currencies, crypto trading incorporates fiat currencies along with other cryptocurrencies. To make it simple, a trading pair constitutes two parts, one which you wish to purchase, and the other mentions the currency against which you wish to purchase.
Lets dig deeper into the topic to understand each and every aspect!
- What are Crypto Trading Pairs?
- How the values of the pairs are determined-the Working!
- Benefits of Crypto Trading Pairs
- How Can I Choose Crypto-Pair Wisely?
- Best Cryptocurrency Pairs to trade in 2020
- Base Currency for Trade
What are Crypto Trading Pairs?
As said, crypto trading pairs are a part of a crypto trade, where the cryptocurrencies are bought or sold. While purchasing or selling a cryptocurrency, you would require a currency to buy and to convert after you sell. Selecting a currency for trading is termed as Crypto Trading Pairs.
For an instance, if you are a newbie and want to purchase a Bitcoin(BTC) using fiat currency, let’s consider the U.S.Dollar(USD). Therefore this trade will include the trading pair of BTC/USD. Further after your purchase, if you wish to sell your BTC to purchase other cryptocurrency, say Ethereum(ETH), then this trade would include BTC/ETH as the trading pair.
Whenever you trade cryptocurrency on an exchange, you’ll require a trading pair. Usually, traders use BTC to trade against other cryptocurrencies. But many other trading pairs can also be used instead of BTC. A certain value of cryptocurrency is displayed. This is that value which is compared to the price of Bitcoin. Alternately, how much of that cryptocurrency you can get for one Bitcoin.
How the values of the pairs are determined-the Working!
Each cryptocurrency in the crypto space has its own unique value which is referred to in the U.S.Dollar. For eg, Bitcoin is priced at $10,818 at press time whereas ETH is priced at $350.
Therefore, the USD is considered as the base and the amount of cryptos that can be bought with the mentioned amount is displayed.
For example, if you have a whole bitcoin which is worth approximately $10,800. You wish to sell half of your BTC to purchase ETH, then the amount of ETH that can be bought with $5,400 is displayed. Hence, with half of your bitcoin, you can purchase nearly 15.4 ETH.
Always note that when an asset is listed on an exchange, it does not mean you can directly trade it for other cryptocurrencies on that exchange. In such cases, you need a “pass-through” currency for trading to work. Suppose you’re not sure which currency to trade for, then it is always best to trade Bitcoin.
Benefits of Crypto Trading Pairs
Crypto trading pairs include many benefits, some of which are listed below,
Traders can get exposed to different cryptos to trade with. Usually, people prefer to trade with the base currencies like BTC and ETH. In the due course, the other cryptocurrencies are left neglected.
Therefore, trading with different pairs can forecast the possible profit using other crypto pairs instead.
Each region in this space has its own popular currency. For instance, BTC is the most popular crypto in the most of the crypto space but in China EOS has the major share and BTC enjoys fifth position.
As mentioned earlier, different investment options with various cryptocurrencies are displayed. Hence a trader or a big investor can explore different options which can fetch more profits for his investments.
He/she can compare profits with different cryptocurrencies and decide the crypto pair
which can attract more profit.
How Can I Choose Crypto-Pair Wisely?
Whenever you wish to choose a crypto pair for trading, it is important to consider a few factors:
- Make sure that the exchange you choose allows you to trade on that specific base currency.
- To find this out, you can visit this exchange in question and then view their market listing.
- While you select an asset, you should also see something that denotes the other currency that creates an equation.
- The number of pairs that the exchange offers varies with the platform. But most of the exchanges will have at least three options.
- It is very important to identify the correct base currency you need before you can proceed.
Best Cryptocurrency Pairs to trade in 2020
The digital currency completely backed by the USD in the ratio 1:1, USDT has the highest trading volume. Therefore the trading paris with USDT are very popular in 2020.
The most preferred cryptocurrency, Bitcoin with the USDT, i.e. BTC/USDT is considered as the most traded pair. Other popular pairs are USDT/XRP, USDT/ETH, USDT/EOS.
If you have $100, you can easily convert it into 100 USDT in any of the exchanges and start your trade.
Base Currency for Trade
The base currency is a common trading pair on exchanges. Basically, for crypto-only exchanges, it is necessary to have one of these base currency pairs before your trade. Typically, Bitcoin and Ethereum are the ones that almost all exchanges include. Along with these, the exchanges also have their own base currencies.
There are a few popular Base currencies that are available on all exchanges:
Bitcoin is one such asset that is available on all exchanges and it can also be exchanged for every asset. Bitcoin is one of the most versatile base currencies.
Ethereum accounts to be the second most popular base currency. If there are tokens that are not tradeable for bitcoin, then they can be exchanged for Ethereum.
Another popular pairing currency is Litecoin, which most of the exchanges support. Litecoin offers faster transaction times and much lower fees.
Summarizing the whole story, Crypto trading pairs are used to trade cryptos. The pairs include the currencies which you are willing to trade. The pairs play a vital role to determine the profits and also help to analyse the risks included in the market. Hence, comparing various crypto pairs before jumping into investment is always a better option for any trader.
Basically, a pairing will establish a baseline for trading other coins or tokens. Also, to trade in one of these markets, you should own the base currency to purchase new currencies. If there is a green blip, which describes gain on the chart for Bitcoin pairing, this indicates the asset has increased in value against Bitcoin price.
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