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The lack of proper regulation and the decentralized nature of the cryptocurrency market made it very appealing for people who were looking for an alternative to the established financial institutions.

The downside to this is that all cryptocurrencies are prone to sudden shifts in prices due to various factors, like news stories, political changes and overall public perception. So, here’s how to stay afloat in a largely unregulated market.

Blockchain News

As of recent, Blockchain has been appearing in the news with increasing regularity. The whole process is decentralized and does not require an authorized entity to oversee it.

In other words, Blockchain, the technology that allows Bitcoin and other cryptocurrencies to exist, is like a public ledger that adds a level of transparency and safety to the unregulated market.

How to Stay Afloat in the Cryptocurrency Market

However, the same things that make this market great are the ones that causes certain conundrums to the average persons who want to enter it. Besides the fact that the market is prone to violent fluctuations, beginners might find it hard to stay afloat because approximately 1,000 people own 40% of the Bitcoin Market.

Therefore, every trader needs to develop certain strategies if they want to make a profit out of this emerging market. The strategies can be of a technical nature, or simply being wary of scams and possessing a keen understanding of how the market functions.

Understand the Nature of Cryptocurrency Market

The first thing every trader needs to understand is that, despite its name, cryptocurrencies are not treated as a currency per se, but more like a commodity, and investment opportunity that might turn profitable on the long run.

Its volatility is not necessarily a disadvantage. Smart investors can use this characteristic to their advantage by the old technique of going short, as in, betting that its value will go down to make a profit thanks to its fall. One way of doing this is by learning how to use metatrader 4. This tool will not only help you perform transaction in an efficient fashion, but will also provide you with a history of all of your transactions.

Don’t Overly Diversify Your Portfolio

The surge of Bitcoin has led to the release of other alternative cryptocurrencies to create a healthy competitive environment. As wise as it is to increase the size of your investment portfolio, do not diversify too quickly.

A good approach is to do your research and opt for the digital coins with largest distribution, trading volumes and high market capitalization. Diversifying too quickly is akin to a house of cards – one weak link and it could all fall down.

Be on the Lookout for Scams

After a while, you might intend to seek new investment opportunities and choose a coin that does not have the same mainstream appeal like Bitcoin, but you feel like it has huge potential. While this could turn out to be a good strategy, you might fall for a scam.

When it comes to new altcoins, a cautious approach is recommended because currently, the market is developing at such a high speed that most newly created digital currencies are not good long-term investments. As a result, pump and dump schemes are appearing with increasing regularity. If you find a new altcoin, chances are it belongs to a company that pre-mined it and can only be traded through their own closed platform. That same company can subject the coin to value manipulation.

Conclusion

The cryptocurrency market is considered to be the equivalent of 19th century’s California Gold Rush. People are rushing to this emerging sector in hopes of getting rich overnight, and many of them are either getting scammed or quit after losing their investment. But by using blockchain, understanding the nature of cryptocurrencies and being on the lookout for scams, you could manage to stay afloat in this unregulated market and eventually make a profit.

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