The accessibility of trading cryptocurrencies has increased significantly with the emergence of centralized exchanges like Binance or Coinbase. Users can easily deposit dollars into their accounts and start trading immediately.
However, despite the improvements in user experience, engaging in cryptocurrency trading remains a complex endeavor, and achieving profitability is even more challenging.
To begin with, the cryptocurrency market operates non-stop, 24 hours a day. Merely managing orders for eight hours a day is insufficient, as missing opportunities or experiencing substantial losses due to overnight market crashes is highly probable. Moreover, the challenges faced by active traders are compounded by the occurrence of high volatility. This poses a significant obstacle for traders who are unable to manually activate stop losses when the market undergoes substantial declines, especially when they are not physically present in front of their screens.
Another challenging aspect is the management of emotions. Since the crypto market is relatively new, it heavily relies on investor sentiments and emotions. Making decisions based on emotions rather than factual analysis is a major cause of failure for traders. The influence of FOMO (Fear of Missing Out), fear, greed, FUD (Fear, Uncertainty, and Doubt), and other factors significantly impact trader behavior and affect investment performance.
Moreover, choosing where, when, and how much to invest remains a daunting task for traders. New projects are launched and listed on centralized exchanges on a daily basis, making it difficult to keep up with the rapid pace of developments. Additionally, despite the increasing availability of data, conducting thorough due diligence is still a challenge, as information can often be misleading or incorrect, or simply too much. Despite a considerable demand for portfolio managers and funds to guide crypto investment decisions, only a limited number of individuals can do so. The majority of people still rely on tips from friends and family, as well as news sources, to determine their investment choices.