Since the emergence of cryptocurrencies eleven years ago, cryptocurrency trading has been one of the community’s favorite activities. Which has found that buying and selling cryptocurrencies to take advantage of price variations is very lucrative. However, with hundreds of virtual currencies on the market, what are the differences between trading with Bitcoin and Altcoins? The answer is given at a TradeON Summit 2020 event.
The differences between crypto assets
Thus, within the framework of the event “Crypto Trading Strategy in 2020 – Bitcoin vs Altcoin Trading”, representatives of three of the world’s largest cryptocurrency exchanges shared their opinion on the fundamental differences between Bitcoin and altcoins. Featuring a panel consisting of Danish Chaudhry CEO of Bitcoin.com, Joel Edgerton COO of BitFlyer, and Nimrod Lehavi CEO of Simplex.
The conversation between these important personalities of the crypto world began by talking about the fundamental difference between Bitcoin and the different altcoins in the market. Analyzing in the first place their quality as financial assets.
And in this sense, the three guests agreed that there is a significant gap between Bitcoin and the many altcoins circulating in the crypto market. Well, the quality in the technology, the community and the liquidity of the BTC market is much bigger and more important than that of all the other altcoins combined. Which makes the world’s first cryptocurrency a much stronger product.
While for its part, the world of altcoins is extremely diverse. Counting within it with very valuable cryptocurrencies such as Ethereum, Binance Coin and the other altcoins that are part of the top 10 crypto assets in the world. As with the so-called shitcoins, virtual currencies without much value beyond any eventual interest as a speculative instrument.
Bitcoin vs Altcoins in the minds of traders
Of course, the fact that there are differences and dangers between altcoins does not mean that they are not interesting for traders. Thus, BitFlyer’s COO Joel Edgerton clarifies that for traders the main thing is not the technology or the community behind cryptocurrencies, but the possibility of making money with crypto assets.
It being clear then that, the main elements analyzed by traders when starting to operate with a cryptocurrency is its liquidity and variations in its price. This does not mean that exchanges do not have an important responsibility when listing or not an altcoin.
This was made clear with the intervention of Danish Chaudhry, who clarified that although some exchanges listed any altcoins without any discrimination. On Bitcoin.com they were careful not to include shitcoins even if they promised a speculative rise at some point, which could generate profit for some traders. Well, at the end of the day, it was preferable to work with solid cryptocurrencies like Ethereum, Bitcoin Cash and of course Bitcoin.
Which is not such a big problem in Nimrod Lehavi’s vision. For those exchanges who are used to listing and promoting shitcoins that end up being scams for their users, they will simply get a bad name and end up dying.
What about leverage?
Meanwhile, when it came to talking about leverage within the crypto market, the opinions agreed on the essentials. Well, as Joel Edgerton put it “leverage is like water, we need water to survive, but too much water will drown us“
Thus, Edgerton criticized some exchanges that offer exaggerated leverage of 250X or more to their users, which ends up turning trading into a game of chance rather than an investment. Well, with such high leverage, any movement in the market will lead to the liquidation of the position, and potentially to the ruin of the investor.
However, at the end of the day for a growing market like Bitcoin and altcoins, the existence of leverage is a necessity. Since, as Chaudhry made clear, at the end of the day it is leverage that attracts a good portion of cryptocurrency traders to the market in the first place.
The future of regulations
Finally, when talking about regulations in the market and the new financial products offered by exchanges such as future contracts. The speakers highlighted the value of self-regulation within the crypto market. Well, unlike the traditional financial market, when it comes to trading with Bitcoin or altcoins, the user has a much greater responsibility. It is up to the exchange to warn of the risks of the different financial products.
This does not mean that there is not or should be a higher degree of government regulation for exchanges. An element that could provide greater security to investors, and therefore promote the maturation and adoption of cryptocurrencies globally.