Trading Crypto: How to Get Started
Oct 7, 2021
By: Frank Kaberna
It’s time to sideline your opinions of crypto and take advantage of the unique opportunity in front of you. An asset class worth trillions of dollars has sprouted up and developed before traders’ very eyes. Bitcoin, Ethereum, and the rest present a market so truly singular that attempts to quantify it in terms of gold, currencies, and stocks have all been thwarted by near-zero correlations.
Now, whether the $0.8 trillion dollar valuation of Bitcoin* holds in 2022 and beyond is up for debate, but active traders are often more intrigued by the ephemeral than the permanent anyway. The road to blue chip or pink sheet status is paved with potentially profitable price action.
As many traders in the derivatives space know, casting aside your opinion in the interest of letting the market decide your position can be both liberating and stress relieving. This concept is often referred to as price action, and it can go one of two ways depending on your vibe:
Source: Yahoo! Finance (https://finance.yahoo.com/)
Contrarians might look at Bitcoin’s 2021 so far and see a mean reversion opportunity. BTC has doubled its value, come all the way back to unchanged, and then arrived at the middle of this range by the time of this writing all since the start of the year. Selling at an upside extreme and buying at a downside extreme has proved fruitful in a time where the same can’t be said for equities that have seemed to only move higher.
Source: Yahoo! Finance (https://finance.yahoo.com/)
Trend followers saw similar potential through a different lens. BTC making a new high early in the year only to top it a month later could have been read as a breakout to the upside, while the dip in the Spring followed by a further slide in the Summer could have been read as a breakout to the downside.
It’s been a bumpy path to integrate this innovative market into traditional platforms for the retail trader, but products like Bitcoin futures, Micro Bitcoin futures, and the new Small Cryptocurrency futures have recently provided a bright spot given their ability to short and price transparency.
Exchange Fees for Crypto Futures
Micro Bitcoin Futures
Small Crypto Futures
Source: CME Group (https://www.cmegroup.com/) and Small Exchange (https://smallexchange.com/)
As the asset class matures and more products pop up, contract size and fees should come down to fit the everyday person’s account. Small Crypto is a step in the right direction, and hopefully it helps the crypto holdouts to better grasp this rare moment.
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*Data from CoinMarketCap as of 9/28/21 (https://coinmarketcap.com/)
© 2021 Small Exchange, Inc. All rights reserved. Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information in this advertisement is current as of the date noted, is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. The information presented here is for illustrative purposes only, and is not intended to serve as investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Trading in options, futures, and ETFs is not suitable for all investors. The risk of loss in the trading of options, futures, and ETFs can be substantial. Trading in derivatives and other financial instruments involves risk.
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Sep 29, 2021
The Small Exchange has joined 17 securities in the crypto sector to create the first stock index totally devoted to the area. Futures on the Small Cryptocurrency* Index are due to arrive October 4th, and they expect to correlate highly to price action in both Bitcoin and Ethereum all at a smaller size and cost to existing Bitcoin and Micro Bitcoin futures.
Sep 14, 2021
It’s become clear that attempting to understand the crypto market by comparing it to popular existing indexes is as lazy as describing an athlete’s talent or musician’s sound in terms of another athlete or musician. It doesn’t get to the root. Read more from Frank Kaberna regarding the cryptocurrency market.
Aug 12, 2021
Cardano is the cryptocurrency on the move today, and there were a couple of different news items helping to drive the flow. The founder of Cardano, Charles Hoskinson, who is also a co-founder of Ethereum announced that he’d announce an exact date of the upcoming Alonzo hard fork this Friday. This will enable Cardano to house smart contracts on its network, similar to Ethereum, and this move will make the cryptocurrency more competitive from that vantage point.
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