Published on September 1st, 2021
Although it is an exciting journey for one, exploring the cryptocurrency world can also be challenging—especially for starting crypto traders. There is a lot to understand before you can start trading these risky crypto-assets, including how to exchange them and how to properly store them. One approach to learning in crypto trading is about crypto-to-crypto trading pairs.
A cryptocurrency pair is a pair of cryptocurrencies that are combined to make trading on a digital currency exchange easier. It is represented by a dash (—) or a slash (/), which separates the two coins. BTC/ETH, for example, denotes a Bitcoin (BTC) and Ethereum (ETH) pair. Using this combination, a trader may purchase BTC using ETH or sell Bitcoin for ETH.
Many elements play a role in deciding on a cryptocurrency pair. One of the most important is when the desired trading platform has listed the pair. In this article, we will look into these factors that you need to consider when choosing the right pair for you.
Understanding Cryptocurrency Pair
A cryptocurrency pair is represented by a quotation. In most cases, one currency is compared to another. The base currency is stated first, while the quote currency is listed second. You may compare the value of different currencies using currency. It indicates how much of the quote currency is required to purchase the base currency. Bitcoin (BTC) and Ethereum (ETH) are some of the most popular base currencies. We will have this further discussed later on.
Example: If you want to buy or sell Bitcoin using US dollars, your trading pair will almost certainly be BTC/USD. BTC/ETH is the crypto trading pair you will use if you want to buy or sell Bitcoin for Ethereum.
Crypto pair listings vary per exchange. As a result, you must double-check that your desired pair is available. Furthermore, certain digital currencies cannot be simply exchanged for other digital currencies. As a result, you will need to exchange a few pairings before you can acquire your chosen cryptocurrency—and this trading approach is called complex arbitrage trading.
What Are The Commonly Used Base Currencies?
A base currency is a means of expressing the agreed-upon worth of various assets. You will probably need to hold one of the base currencies listed in a pair before you can trade lesser-known crypto on an exchange. Below are some of the widely-used base currencies:
- Bitcoin (BTC)
Bitcoin is your best choice if you want the most flexible base currency. This is by far the most popular combination, and it may be used to swap nearly any asset. As the world’s largest cryptocurrency, it is also available in most trading apps like Bitcoin Loophole.
- Ethereum (ETH)
The few tokens that cannot be traded for Bitcoin are usually exchanged for ETH. This is because the majority of them are Ethereum-based ERC20 tokens. Currently, Ethereum is one of the crypto giants, ranking as the second-largest cryptocurrency by market cap.
- Tether (USDT)
Despite the fact that it receives some criticism from enthusiasts, this currency is the most popular trading pair in its class. This is a USD-tied cryptocurrency that will always be pegged to the value of one dollar for each of these tokens.
- Litecoin (LTC)
It is a cryptocurrency that uses the Bitcoin protocol as its foundation. It is a peer-to-peer network made up of a series of connected transaction blocks. The project’s primary goal is to create a payment method that is more convenient, faster, and less expensive than existing national currencies.
How To Choose The Right Cryptocurrency Pairs For Trading?
It is critical to consider all of the aspects of your possible transaction before selecting a pair. Ask yourself these questions:
- Does Your Preferred Trading Platform Offer The Specific Base Currency You Want To Trade On?
You may simply discover this by looking at their market listings. When choosing a crypto-asset, look for anything that will serve as a symbol for the other currencies in the equation, which would likely look as BTC/LTC if you want to trade Bitcoin and then its coupled currency should be Litecoin.
- Have You Considered Their Liquidity?
The capacity of a currency to be quickly exchanged for cash or other currencies is known as liquidity. The more liquidity alternatives you have, the easier it will be to sell your digital currency. Because demand has an impact on liquidity, it is critical to seek cryptocurrencies with strong demand.
Important note: Be reminded that the cryptocurrency market can be highly volatile. If you are new to cryptocurrencies, it is always a good idea to conduct some research before trading or investing in your aimed cryptocurrencies for pairing. Bitcoin Loophole is a great place to start if you are searching for a user-friendly trading platform. A handful of well-known cryptocurrencies like Bitcoin, Ethereum, Litecoin, EOS, and XRP are available here!