Identifying Crypto Opportunities in the Coronavirus Crisis
At this stage in the fight against Covid-19, the future is unclear. No one knows how long the economies are going to be in free-fall and so far in 2020, cryptocurrency trading has proven to echo the instability of other markets. Exchanges have seen the withdrawal of 10% of all Bitcoin, indicating a shift for many to longer-term holding strategies. Any attempt to look ahead at 2020 cryptocurrency trading for the second half of the year needs to acknowledge that we have a long road ahead of us and even if people in many countries are back in their offices by the end of the summer, the repercussions of the pandemic are going to continue for years.
Without a doubt, when we look back on cryptocurrency trading in 2020, this period will be defined by the varied investor responses to the coronavirus. There are some who have chosen to wait for the storm to pass HODLing, while others have gone short. There are those who see this as promising buying opportunity for stablecoins and Bitcoin in particular.
These conditions are ripe for crypto traders to exploit as digital assets can serve as a hedge against the consequences of quantitative easing. It is therefore no surprise that during coronavirus, transaction volumes have skyrocketed.
The two words we will come to associate with 2020 cryptocurrency trading, particularly for Q1 and Q2 is risk and opportunity. Rapid market fluctuations mean greater exposure, yet they also offer the chance to make highly lucrative moves. If you want to invest in cryptocurrency the best time to trade depends on your risk tolerance and the type of trading strategy you implement.
A common strategy, widely used by professional traders and investment firms is crypto arbitrage. It is generally considered to be one of the lowest risk crypto trading strategies and its popularity is due to the fact that it enables investors to exploit the volatility of the digital markets, while mitigating most of the exposure. For cryptocurrency traders in 2020, at the peak of the coronavirus crisis, this provides an excellent way to take the reins of their finances, with far less likelihood of making a bad situation worse.
Crypto arbitrage is actually relatively simple. The trader generates a profit by taking advantage of the price inefficiencies that exist between the various crypto exchanges. This involves purchasing a cryptocurrency at the lowest possible price on one exchange and then quickly turning around and selling the coin on another exchange for a higher price, before the price inefficiency is resolved.
The risk here is minimal but the returns can be substantial when an automated system is used that can execute a high volume of arbitrage trades simultaneously. In fact, with rapid advances in AI technology, for cryptocurrency trading in 2020, a sophisticated machine learning bot, with its enhanced speed and efficiency is a must if you want to successfully implement a crypto arbitrage strategy.
Let’s take one of the crypto arbitrage industry’s best known licensed platforms as an example. ArbiSmart has an automated arbitrage system that scans over twenty exchanges at once. Once the investor has signed up and deposited, their part is done as the bot takes over, looking for the lowest buy price and highest sell price, instantly executing transactions on the investor’s behalf. This is worth mentioning, because in these uncertain times, with many looking for alternative revenue channels, the coronavirus may be creating a whole new wave of first time crypto traders, who would do well to use a fully regulated, automated system instead of blindly diving into the exchanges with little to no experience.
No one would wish to characterize this unprecedented situation as cause for celebration. However, with cryptocurrency trading, 2020 presents some undeniably lucrative opportunities. Due to the coronavirus crisis the digital currency sphere is gaining attention among veterans as well as those taking their first steps as investors. While we still have no idea how long it will take for the coronavirus crisis to end, many people may be able to salvage some personal financial security from these difficult circumstances, making a little lemonade from coronavirus lemons.