A Google search for the term cryptocurrency trading produces over 25 million results. If anything, this means that cryptocurrencies are a hot topic for people all around the world, nearly ten years after its inception. Due to its continued growth, the crypto market is now filled with scams and problems that prevent its adoption on the mainstream, especially for newer investors.
Top 7 Crypto Trading Problems Some Fail To Realize
Here are the top 7 problems that come with cryptocurrencies and what to do about it.
Another name for price manipulation is buy walls and sell walls, which are started by a group of individuals in the crypto market, referred to as whales. In crypto trading, price manipulation is the number one cause of the volatility of crypto markets. New investors always seem to be on the wrong end of this activity.
Many inexperienced people won’t be able to read the signs of the buy wall, and instead, see it as a favorable price. Driven by ignorance and flawed logic, many will think that the price will increase, so they rush to buy. Unfortunately, this eventually leads to more pressure on small-time investors, who find it hard to enter the market at a specific price range. While the whales, or significant investors, can carry out the manipulation of the market without spending too much money.
When the price moves in a whale’s favor, the whale can then choose to move their position and shift the price range again.
Forex And Binary
Another problem with cryptocurrency trading is the problem of Forex and Binary options. At the present moment, many Forex companies like EToro and FXPro have listed crypto trading as an option for their platforms.
These crypto listings often come with a get rich quick mentality that draws thousands of inexperienced investors, who then end up losing most of their money within minutes. Unfortunately, most forex traders fail to understand that forex brokerages do not cater to the open market. Instead, they prey on the assets of unsuspecting investors, who use them as counterparty.
While some traders believe that governments regulate the Forex market, often they forget that the regulator simply throws in a disclaimer, which amounts to nothing more than just a few words of warning. After collecting one’s identity information and confirming whether they comply with applicable laws, the website owner can do what they want with their site.
Some people already consider the Forex Retail Industry as an unfair step to people on the wrong end of the deal. To eliminate the problems with Forex, traders should not use platforms that they cannot withdraw their digital assets from.
Scams And Ponzi Schemes
In trading crypto, you can usually tell whether a project is a scam or not, as they will always guarantee a set amount of profit. The market has numerous investments platforms such as mining, and coins that promised more than they can deliver. These are apparent scams to look out for and Ponzi schemes out to take people’s money.
In a Ponzi, it’s just a matter of time before people find that the website is no longer available and the amount of money gone in an instant. In a Ponzi, you earn some of your investment back only to lure you back into the scam to invest more. This is what eventually leads to a crash of the whole system and will leave you with nothing at the end. So, if you see a website advertising guaranteed profits, then you can be sure that it is the same thing as a Ponzi.
Fake news is a severe problem for cryptocurrencies, as these stories can be picked up by editors in social media channels and distributed to a huge audience. Often, these stories are not fact-checked and may even contain intentional errors to sway the public’s opinion about a certain type of coin. This activity is also known as shilling.
The problem gets worse if the audience is not informed about cryptocurrencies, especially when it comes to determining the legitimacy of a specific platform. Often, there is no way of knowing if a platform is running a legitimate operation or if it can be trusted at all.
Another common complaint of cryptocurrency trading is the delays in almost every transaction. Most platforms are slow to use, all the way from registering an account to making a sale. Most trades need to be mined for a trade to go through, which raises costs for people even higher, on top of the commissions the platforms make to stay in business.
Experts have identified these scalability issues as one of the key hindrances to the adoption of cryptocurrencies on a larger scale. As more people join the blockchain, it gets slower, and transactions are often stuck in the queue waiting for approval. This then adds up to investors and makes the whole process difficult and unprofitable for every trader.
Transaction delays are just some of the numerous problems that affect the quality of user experience for cryptocurrency trading. This means that it’s important for traders in the crypto market to develop solutions to combat the problem, especially for issues of scalability.
No Price Uniformity
If you’ve traded before, then you should know that the price of individual crypto assets is rarely the same across different platforms and at different time periods. Traders need to come up with price charts to conduct investment analysis and to see their overall trading strategies.
But with the price variation of one cryptocurrency across numerous exchange platforms, it is difficult to create the right price charting. Also, the volatility in the crypto market makes everything worse. This is because the market is still growing and it is a relative thing to most people. This makes it advisable for investors to get as much help as they can before they make a final investment decision.
ICOs have become a popularized method for raising funds in the crypto market. But some ICOs are simply scams that are nothing more than a crude snatch n grab for the person’s money. There is presently no regulation in the crypto market, which lets scammers take advantage of people’s trust. Until there are more regulations in the crypto market, this problem is likely to subsist.