The business world is full of opportunities to earn money. Most of these opportunities, however, require potential profiteers to invest some money first. It is just the way the world of finance works — no risk, no return. There is no such as a sure bet. That’s why investors take calculated risks, especially while investing in cryptocurrency.
We are in the middle of a cryptocurrency boom where the price of coins is skyrocketing. The world’s obsession with innovative digital currencies is at an all-time high and many budding investors are putting a great deal of money into blockchain. However, many people are taking bigger risks than they intend to when they invest in certain coins. What they need is a clear strategy.
Finding the right cryptocurrency depends on many factors, most of them beyond your control. What you can control, however, is how quickly you can adapt when those factors change. For example, staying on top of cryptocurrency exchange rates is one way you can be sure you are in a position to react quickly if you need to. The good news is that most investment applications and APIs like Coinlayer help you keep your finger on the pulse of the crypto market.
So let’s take a look at how you can keep on top of cryptocurrency exchange rates.
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Why Should You Know About Cryptocurrency Exchange Rates?
All the currencies in the world have an exchange rate. It is the value of the currency in respect to other currencies. The US dollar, like the Euro is a base currency. Its value is often what other currencies and their performance are judged against. Exchange rates in the cryptocurrency world are no different. In fact, cryptocurrencies are commonly evaluated against the US dollar.
Cryptocurrency exchange rates are important when you have physical money and want to purchase cryptocurrency. The same goes for converting your crypto to cash. But exchange rates are also important when you want to exchange one cryptocurrency for another. The exchange rate determines how much of one cryptocurrency another cryptocurrency can buy you.
Many things determine the exchange rate of a cryptocurrency. Cryptocurrency enthusiasts have seen prices soar or drop during the current boom due to factors as unexpected as a celebrity tweet. The amount of the cryptocurrency “minted” also adds to its exchange rate. If a coin is relatively scarce and in high demand, it is bound to have a higher exchange rate.
Cryptocurrency exchanges play a massive role in fixing the exchange rates of the coins on the market. There are two main kinds of exchanges:
- Centralized: A centralized exchange is a platform to buy, sell, or exchange cryptocurrencies. These platforms also provide you with wallets to hold your cryptocurrency assets. While centralized platforms make cryptocurrency dealings easy and efficient, they are at constant risk of attack. If your account is compromised you could easily lose your savings. That is why should store huge amounts elsewhere to be safe.
- Decentralized: A decentralized exchange is more in line with the original philosophy of cryptocurrency. No central authority or company is in control of a decentralized exchange. They run across a network of computers instead of on private servers. Decentralized exchanges don’t have custodial wallets and encourage you to hold your cryptocurrency assets in private wallets with private keys. These exchanges cannot be subject to outside regularization.
Generally speaking, both kinds of exchanges affect exchange rates throughout the cryptocurrency world through a sort of mutual agreement. There have, however, been instances of some exchanges tampering with exchange rates. That is why you need a dependable information source like Coinlayer to bring you accurate rates consolidated from multiple sources.
How Can Cryptocurrency Exchange Rates Affect Your Profits?
Both new and experienced players trade digital currencies — many even profit off of them, especially recently. Some experiment to gain knowledge and slowly build their trading portfolio, some use their years of market trading knowledge. Regardless, everyone shifts and adapts their strategy according to the market. The only constant between traders is the cryptocurrency exchange rate. It is the one thing that is the same for everybody.
An intimate understanding of the cryptocurrency market is integral to profiting from it. You also need to understand exchange rate fluctuations and how they can hurt or grow your earnings. Only one thing is certain, cryptocurrency exchange rates often change rapidly and can end up leaving your previously effective strategy in shambles.
Factors That Affect Cryptocurrency Exchange Rates
Recent times have shown just how the cryptocurrency market can take a turn around and the exchange rates to rise or fall. Factors like global politics, social media hype, and changes in exchange rates of physical currencies can induce stark changes in cryptocurrency exchange rates. Investors who see them coming or who are in a position to act immediately are the ones that save their assets or profit.
To avoid your strategy and earnings from being affected by sudden changes in the cryptocurrency exchange rates, you should look into automating the processes. Using powerful tools and frameworks like Coinlayer for such automation lets you trade at the right time and save yourself from huge losses.
Should You Get Cryptocurrency Exchange Rates From Anywhere?
Since accurate cryptocurrency exchange rates could potentially make or break your fortune, and accurate information source is mandatory. By using flaky information sources, you may be setting yourself up for disaster. You could be receiving inflated or wrongly calculated prices. Imagine a scenario where you were losing money and you didn’t even know it due to the wrong information.
In addition, a number of volatile external factors affect cryptocurrency exchange rates. That is why you want a source that provides you with a constant stream of information that allows you to adjust your strategy accordingly. You certainly don’t want to miss an opportunity to make thousands by buying or selling the right coins because you didn’t get the memo.
By trusting a dependable information source for your cryptocurrency exchange rates, you can be sure you always have the right prices. Sure, you could use cryptocurrency investment applications, but you could also use a robust API like Coinlayer. It gives you trusted cryptocurrency exchange rates in a flash due to its robust back-end.
How Coinlayer Helps You Get Accurate Cryptocurrency Exchange Rates?
When you trust Coinlayer as your primary cryptocurrency exchange rate provider, you get data coming from not just one, but over 25 trustworthy exchanges. Exchange rates reach you at blazing speeds due to Coinlayers robust cloud-backed infrastructure. You can always be sure your cryptocurrency strategy is based on dependable, accurate, and consistent data.
If you do choose a cryptocurrency API, you also need to be sure it has critical security features in place. Coinlayer uses industry-grade encryption to keep your communications safe and secure. You can also review historical cryptocurrency exchange rates on demand so you make more informed strategic decisions. Finally, if anything goes wrong or you need help in some way, coinlayer also provides a dedicated support portal that you can hit up.
Feel like you want to include an efficient cryptocurrency exchange rate API into your strategy? Go to Coinlayer to see what wonders it can bring to your cryptocurrency profits.