The DIgital Currency Market: More Like Wall Street Than FORWX

Seasoned traders will tell you that the digital currency market shares more similarities with Wall Street than with the forex market. On the surface, this should not make sense because cryptocurrency tokens are paired with either fiat or other tokens, which means that currency pairs are traded just like in the forex market, but when we talk about sentiment and volatility, trading crypto is more like Wall Street on steroids.

We all know that the cryptocurrency market has been on the down and out over the last few weeks. We also know that this is hardly the first time we have experience such bearish sentiment. During the past six months or so, the market has had several bearish periods in the near term but overall, there have been a lot of positive news from the market that has boosted the sentiment and confidence of the trading community.

The volatility is also different because it is largely based on the currency pairs that include Ethereum and Bitcoin; while cryptocurrencies can be paired with other tokens and legal tender these days, traders and speculators have been more inclined to keep taking ETH and BTC positions instead. They continue to do this because they thrive on volatility; many of them are very active day traders who rely on technical analysis tools such as the relative strength indicator (RSI).

So, what can be done to diversify your cryptocurrency portfolio? Well, there are two major ways to diversify and this article will try to offer some suggestions on how to do it.

The first way is by trading on the OTC market with RSI guidance. You want to take positions based on the oversold RSI levels. The other way is trading on the volume pricing and exchange volume. Trading volume is based on the volume of trading at a given price by the trading system, and it can give you clues as to what other traders are doing to stay afloat as well as reap short-term profits even in a market that will take a few more weeks, and perhaps even months, to recover.