New investors looking to get into the cryptocurrency market are finding it hard to decide when the best time is to do so. Since there are a lot of factors that shape the price of cryptocurrencies, deciding what is going on can be tough. Besides the core factors that drive the price of a cryptocurrency like supply and demand, speculators play a very important role. These speculators are trying to influence the price of a certain cryptocurrency by purchasing it at discounted prices and selling them when the prices go up. Mainstream media tends to portray these speculators as a source of instability. Most of them have no idea what they are really doing and tend to create much more volatility than is healthy for the market.
Many people who are unfamiliar with the cryptocurrency market have heard that a large portion of crypto assets are kept in wallets. In reality, only a small portion of all cryptocurrency assets are kept in wallets. In fact, most cryptocurrencies have more total trade volume than all wallet assets combined. The total number of assets is much higher than the number of actual users. The problem with this is that people think that the price of cryptocurrency is solely based on how many coins there are and how many traders actually hold them. In reality, price movements often occur because speculators start buying cryptocurrencies at one price and selling them at another in order to try to manipulate prices.
In the past year we have seen many cryptocurrencies go up in price by hundreds of percent thanks to a large amount of buy pressure. The growth that has occurred has been largely due to speculators. The reason why there has been this sudden increase in demand is because the market caps have gone up drastically as well. There are a lot of cryptocurrencies that have a market cap greater than $1 billion and the total market cap for all cryptos is around $300 billion. That means there are a lot of traders buying cryptocurrencies at high prices in hopes that the price will go up even higher. The crypto tax software india will make all this possible to calculate like speculation, tax avoidance and less regulation.
Since cryptocurrencies are considered to be a high risk, high reward asset class, most of the money that goes into them tends to be from traders looking for quick profits. There are many people who are looking for ways to earn a little extra money on the side or just see cryptocurrencies as a fun way to gamble. These people tend to stay away from cryptos until they see one go up in price and then they jump on it and start buying it in hopes that they can sell it at a higher price. There is actually nothing inherently wrong with this approach if you understand what you are doing but many people become over confident and lose most of their money.
Binocs is a cryptocurrency tax software and Portfolio Management platform which is built to make cryptocurrency trading easier. You can generate your own Portfolio in a few minutes and start tracking it. There is a variety of useful analytics and charts that you can use to better manage your investments. You can also view the current performance of your portfolio right on your dashboard.