Cryptocurrency trading is proving incredibly popular in 2024.
Bitcoin, the world’s largest cryptocurrency, surpassed $60,000 in 2024, sparking a crypto market frenzy.
In this post, Finxocap delves into the realm of cryptocurrency trading, sharing vital information and assisting all South African traders.
Cryptocurrency trading: What is cryptocurrency?
Blockchain-based decentralized digital currency is known as cryptocurrency.
Although the two most well-known varieties, Bitcoin and Ethereum, may be familiar to you, there are already over 9,000 distinct cryptocurrencies in use.
Cryptocurrency trading: How Does Crypto Work?
A digital, decentralized, encrypted medium of exchange is called a cryptocurrency.
A cryptocurrency’s value is not controlled by a single entity, unlike that of the US dollar or the euro.
Instead, a cryptocurrency’s users share these responsibilities widely online.
Although most individuals invest in cryptocurrencies the same way they would in traditional assets such as stocks or commodities, you may use cryptocurrencies to purchase everyday goods and services.
Although investing in cryptocurrencies is a new and fascinating asset class, it can be dangerous because it takes some research to fully grasp each system.
Financial institutions, including JPMorgan Chase & Co. (JPM), Tesla (TSLA), and PayPal are using blockchain technology to lower transaction costs by streamlining payment processing.
Cryptocurrency trading – Bitcoin outlook – March 2024
The price of bitcoin (BTC) broke beyond the previous top, which was $68,999.99 in 2021, and reached a new all-time high (ATH) of $69,324 on March 5.
It was a huge move that will go down in history as the first time a leading cryptocurrency set a new peak price ahead of a halving event.
According to CoinGecko data, the halving will occur in about 46 days, and miner payouts will be reduced by 50%, from 6.25 to 3.125 BTC.
As the price of Bitcoin reached a new high, Eric Balchunas, an expert at Bloomberg Intelligence on exchange-traded funds (ETFs), said that the assets under management (AUM) of spot Bitcoin ETFs surged above $50 billion.
Cryptocurrency trading – Bitcoin ETF surge
As the price of Bitcoin reached a new high, Eric Balchunas, an expert at Bloomberg Intelligence on exchange-traded funds (ETFs), said that the assets under management (AUM) of spot Bitcoin ETFs surged above $50 billion.
In particular, only eight weeks after they began trading with assets of just under $30 billion, the top ten Bitcoin ETFs currently have over $50 billion in assets.
According to Coinglass data, there have been around $521 million in liquidations in the cryptocurrency markets in the previous 24 hours, with $196.6870 million in short positions and $324.287 million in long holdings.
Bitcoin price forecast – March 2024
Bitcoin price forecast following a new all-time high
The price of Bitcoin has fallen over 2% as a result of further profit-taking after it briefly touched the psychological milestone of $69,000.
As the southbound Relative Strength Index (RSI) indicates, momentum is decreasing. When BTC passes below 70, the RSI will confirm that the market is ready for sale.
It has crossed below the yellow band of its signal line, indicating a sell signal.
Even though the market is currently biased higher, a prolonged decline might cause the price of Bitcoin to break below the $60,784 support level and eventually retest the psychological level of $60,000.
Although a break and closing below this level would jeopardize the bullish outlook’s short-term feasibility, it would probably present a perfect opportunity to purchase the dip before another rise.
Cryptocurrency trading: What is Blockchain?
An open, distributed ledger that stores transaction data in code is called a blockchain.
In actual use, it resembles a ledger that is dispersed among multiple computers worldwide.
Cryptocurrency transactions are logged in “blocks” that are subsequently connected by a “chain” of earlier transactions.
To establish a single transaction record, every bitcoin user with a blockchain owns a copy of this book.
Every new transaction that takes place is recorded, and all copies of the blockchain are updated concurrently with the revised data to ensure that all records remain accurate and consistent.
Every transaction during cryptocurrency trading is examined by a validation method, like proof of stake, in order to stop fraud.
How Can Cryptocurrency Be Mined?
New bitcoin units are released into the world through mining, usually in return for transaction validation.
Although mining cryptocurrency is theoretically feasible for the average person, it becomes more challenging in proof-of-work systems like Bitcoin.
It used to be within the reach of the common customer, but the cost has increased.
Too many people have advanced technology and gear to be competitive in cryptocurrency trading.
The mining of proof-of-work coins also uses a significant amount of energy.
As an illustration, the annualized rate of electricity consumption for Bitcoin mining is currently 127 terawatt-hours (TWh), which is more than some countries’s entire electricity consumption.
In a proof-of-work system, mining cryptocurrency is not feasible for the common individual.
In a proof-of-stake model, validators are selected at random according to the amount they stake, so less powerful processing is needed.
To join, you must, however, already be a Bitcoin owner. You have nothing to stake on the network if you don’t have any cryptocurrency.
Cryptocurrency trading: Top 10 cryptocurrencies
- Bitcoin (BTC)
- Ethereum (ETH)
- Binance Coin (BNB)
- Tether (USDT)
- Solana (SOL)
- Cardano (ADA)
- XRP (XRP)
- Polkadot (DOT)
- USD Coin (USDC)
- Dogecoin (DOGE)
Cryptocurrency trading – How else can you use cryptocurrency?
Although you can use cryptocurrency to purchase a variety of goods and services, especially with Litecoin, Bitcoin, or Ethereum, you can also use cryptocurrency as a substitute for stocks and bonds as an investment choice.
How to Make Secure Purchases with Cryptocurrency
Depending on what you’re attempting to buy, using cryptocurrency to execute secure transactions can vary.
You’ll probably need a cryptocurrency wallet if you’re attempting to make a payment with cryptocurrency.
A “hot wallet” is a particular kind of wallet that is a software application that communicates with the blockchain and enables users to transfer and receive cryptocurrency that has been saved.
Keep in mind that transactions take time since they need to be verified by a process.
Top Cryptocurrency Trading Exchanges
Exchanges for cryptocurrencies, like Coinbase, allow users to buy cryptocurrency.
They provide trading for a number of the most well-known cryptocurrencies, such as Dogecoin, Ethereum, and Bitcoin.
However, they could also have certain drawbacks.
To make a purchase, you’ll need to verify if your exchange accepts the appropriate cryptocurrency pairing.
For instance, you can purchase Ethereum on Coinbase Exchange with your stash of USD Coin, a cryptocurrency stablecoin
Is cryptocurrency trading regulated in South Africa?
The FSCA determined in October 2022 that cryptocurrency trading assets, often known as “a digital representation of value,” are financial products subject to FSCA regulations under Section 1(h) of the Financial Advisory and Intermediary Services Act.
Every Bitcoin service provider must be authorized by the FAIS before conducting business in the sector and applying for a license.
Existing vendors have to apply by the beginning or end of 2024.
Cryptocurrency trading: Is it safe?
Cryptocurrencies have developed a reputation as risky investments because of significant investor losses caused by fraud, hacks, faults, and volatility.
Although the underlying cryptography and blockchain are generally secure, the technical complexities of using and storing Bitcoin assets can pose a significant risk to new users.
Big News for cryptocurrency trading – Bitcoin halving
While national central banks keep a close eye on the availability of fiat currencies, the entire supply of Bitcoin remains set and unchangeable.
Bitcoin will only ever exist in 21 million units. There are currently less than 2 million Bitcoins left to be created after more than 19 million have previously been mined.
A Bitcoin protocol will halve the amount of new coins that miners can earn later in 2024.
One of the reasons the most popular cryptocurrency in the world is viewed as a store of value more equivalent to gold than Forex is because halving plays a part in regulating the amount of new Bitcoins that are issued.
Cryptocurrency Trading: Bitcoin Halving – How Will It Work?
Mining is the method by which all Bitcoin transactions are verified by a decentralized network of validators.
When they are the first to utilize intricate math to add a set of transactions to the Bitcoin blockchain as part of its proof-of-work process, they receive 6.25 BTC.
6.25 BTC is currently worth roughly $193,750, which provides miners with a respectable incentive to continue adding blocks that keep Bitcoin transactions flowing smoothly.
Roughly every ten minutes, new blocks of transactions are added, and after every 210,000 blocks, the Bitcoin code mandates that miners’ rewards be cut in half.
That occurs about every four years during times when there is typically more volatility in the price of Bitcoin.
Cryptocurrency trading – When will the next Bitcoin halving take place?
According to the Bitcoin algorithm, halving occurs when a specific number of blocks are created.
Although the exact date of the next halving is unknown, experts predict it will happen in May 2024.
That would mean the previous one was almost exactly four years ago.
Experts claim that the somewhat predictable nature of Bitcoin halving was intended to prevent a significant shock to the network.
That doesn’t imply, however, that the next halving of Bitcoin won’t spark a trading frenzy.
