What is Momentum-Based Cryptocurrency Trading and What Are Its Strategies?
Cryptocurrency has become extremely popular in the last few years. Since the invention of Bitcoin, the popularity of crypto has skyrocketed. Unlike traditional fiat currency, cryptocurrency is a decentralized digital currency. Many businesses are also getting into cryptocurrency. El Salvador became the first country to use Bitcoin as the legal tender in 2021. Cryptocurrency trading The inception of Blockchain has undoubtedly improved the safety and security aspects. As a result, many people are getting into cryptocurrency trading to earn a quick profit. But this asset class comes with high volatility. Momentum-based cryptocurrency trading High-frequency momentum cryptocurrency trading is becoming popular day by day. There are several valuable and beneficial momentum-based strategies for Cryptocurrency that you should know about. Having proper insight regarding this matter is essential for profit in cryptocurrency trading. Price is considered an essential indicator in cryptocurrency trading as it reflects trading volume and traders’ confidence. One has to grasp and comprehend the changes in momentum of crypto-trading properly. Concerning momentum trade, two effective strategies are (1) a cross-sectional method and (2) a time series method. These strategies have their pros and cons, and they were applied to the seven biggest cryptocurrencies as per market capitalization. Using momentum strategy in crypto trading can be helpful, and one can make a lot of profits through such strategies in a high-frequency setting.