Introduction: Investing is Hard

For a newcomer wanting to be part of the cryptocurrency experience, they would be confused if they headed into an exchange like Binance or Bitfinex. But how exactly do you "trade"? Why does the price fluctuate a lot? and how exactly do you buy any cryptocurrency?

For this instance, we'll be using Bitcoin Cash as our main example.

!Warning!

Cryptocurrencies are a very young class of assets sold in every stock market and exchange available. This, in return, will cause problems like fluctuating prices and even the bull/bear runs everyone talks about. These two will be explained in the best possible detail as a non-expert alongside other details about trading in general.

History

The history of the markets can be traced back to the ancient days of bartering, where people would trade for a specific set of items for another. As more people arrived, bartering became the father for modern markets, and thus currency has arrived since we cannot simply carry all our goods together and we needed a way to show how much we truly owned.

Until it was 1971, and then you know how history went.

The following articles will describe how Market Trading works from the perspective of a regular person, which meant that I am not an expert in economics. Further study is required.

Supply and Demand

To begin, here is a video I would want you guys to watch about why prices fluctuate, and that is due to supply and demand.

By simply looking at the thumbnail, one graph might be familiar. That is called a supply and demand curve, and all markets have it. Usually, the supply curve dictates how many items are on the market based on their price, and the demand curve dictates how many people want to pay the products at their desired price. The point where these two curves meet is called equilibrium, and where exchanges typically show the most ideal price.

We just showed how the market works.

Trading

Trading can be as simple as buying your Bitcoin Cash from a website like Bitcoin.com or other exchanges, but the proper term here is buying, as you need something like an exchange to sell them. Trading requires a seller and a buyer. The seller holds parts of his assets while the buyer holds up the same amount of value in a different kind of asset, usually a medium of exchange. The price is determined by the demand for the item and its available supply.

If you buy something, its price will rise due to its supply diminishing. If you sell it, its price will lower due to an overabundance of supply.

Bitcoin Cash is a type of asset everyone knows as Cryptocurrency, and as such, the global markets treat every piece of BCH as a market stock.

Stock Markets

Stocks are the total shares of a certain company, or in our case, Cryptocurrency. It meant that every person holding even a few satoshis of Bitcoin Cash therefore can move the stock market, where the stock runs came from, as those who have most of BCH can control the price. When that happens, those with the most Bitcoin Cash, called whales, can cause a market trend.

Market Trends: Bull vs Bear

In the crypto space, everyone expects Bitcoin to have a bull run. A bull run, or bull market, is a trading market trend where people would start to buy into an asset, raising the asset's prices in the process. These happens when people had lost hope due to a bear run. Bear runs happen due to pessimism and fear of value depleting, therefore selling whatever they had.

Bull runs happen when something happens to a specific asset that promotes its growth. In reverse, bear runs happen when something affects the asset itself.

An example of both bear and bull runs can be seen right at the price of Bitcoin and Bitcoin Cash.

Following the pandemic announcement, a massive stock market crash happened in all parts of the world. We felt this as well because Bitcoin was hit the hardest, from +10,000 to -$5,000. The bull market trend began, losing values all over every market. Bitcoin was in $4,000 to $9,000 for a few weeks during those times.

On the other hand, an example of a bull run is the Bitcoin Halving event, which had began a few days ago. During this event, Bitcoin rose to +$11,000 and is struggling to reach $20,000 levels.

Support and Resistance Levels

Bitcoin and other coins, like Bitcoin Cash, has a peculiar market with long support and resistance levels. These levels are part of another subject called a market analysis, and this subject is the reason for the market predictions people create.

The support level is a level within the market where the price will hold in a massive sell-off/bear run. If you had noticed the daily Bitcoin markets having consistent low points and sudden highs, the low points are called a support level.

The resistance level, on the other hand, is the level within the market where the price will attempt to hold back from a sudden buy-off/bull run.

For Bitcoin, the current resistance level is somewhere within -$12,000 while the support level is by +$10,000, resulting in varying prices where the price hits $12,000 for a few minutes before crashing back to $11,000.

Similarly, Bitcoin Cash has its resistance level within $310 and its support levels being +$290.

End: Expect Bearish Markets until Bullish Community

Bitcoin Cash is going through a massive change once August 15 arrives, as Bitcoin ABC will release the code and reveal what travesty they had made with the IFP. Due to this, ABC will be under heavy fire until November 2020 arrives, where BCH will undergo its bi-yearly hard fork upgrade. Until then, trust your wallet. You don't need to trading with exchanges.

This is Rowan, signing off.