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Navigating the traditional stock market isn’t always as easy as professionals make it out to be. Understanding what the terminology means, how to read graphs, and when to buy or sell takes substantial patience and practice. Now, imagine how difficult it is to learn all of that and add complex technology to the mix. It’s little wonder, then, why newcomers are that much more intimidated by crypto charts.
Fortunately, crypto’s recent entry into mainstream finance has inspired creators and education platforms to create content and tools designed to help beginners understand crypto-specific trading strategies, price movements, and analysis tools like charts.
Why Crypto Makes First-Time Investors Nervous
Traditional markets have something that crypto markets often lack: stability. The volatility that affects nearly every cryptocurrency to some degree is what drives its rapid price swings, often serving as the main deterrent keeping prospective investors away from crypto.
Additionally, since cryptocurrency is closely tied to technologies like blockchains and decentralized platforms, first-time investors often feel like they need to learn the equivalent of a bachelor’s degree in computer science to navigate crypto-specific terminology and complex interfaces.
Social media hype is perhaps one of the lesser-known barriers to entry, but it exists all the same, creating cliques around certain tokens and spawning misinformation that causes beginners to stop before they ever start. For the beginners who do make it onto crypto markets, they often arrive unprepared because the advice they receive through social media isn’t always reliable.
Lastly, crypto’s unique relationship with risk, custody, and utility puts it far outside the boundaries of traditional finance, and for the less technologically-inclined, concepts like trustless systems and DeFi platforms can be overwhelming to take in all at once.
Foundations for Crypto Beginners: Market Movements
For better or worse, there are mountains of videos, articles, and courses dedicated solely to understanding each component of cryptocurrency and the technology it’s built on. Should an investor or trader find that they want to remain in the crypto scene long-term, then a deep dive into the available literature would be helpful. Beginners only really need to know the fundamentals, namely what moves market prices and which tools are best for getting started.
Crypto markets do share some similarities with traditional ones, especially now that crypto is seeing increased adoption from major institutions. For instance, supply and demand drive prices up or down based on how much of a certain coin is available and what people are willing to pay for it. To produce value, each currency has a set capacity for how many coins there can be in its ecosystem, thus creating supply and demand.
Macroeconomic factors and news headlines also have an increasing influence over crypto market movements. An article points out that “when banks and payment companies begin to incorporate cryptocurrency into their options, they can experience big boosts. It adds credibility and brings more money into the market, and mainstream acceptance shows that digital assets are being seen as more than just speculative investments.”
Foundations for Crypto Beginners: Crypto Tools
Now onto tools. It’s worth mentioning that items like digital wallets, blockchains, and exchange platforms could have entire books dedicated to them, but for the purposes of learning the basics, simple definitions will do.
Digital wallets are devices or programs where investors keep their funds. These wallets can be hot or cold. Hot wallets connect to the internet, while cold wallets do not. This distinction makes hot wallets more convenient, but they are less secure because internet access can make them vulnerable to hacking. Cold wallets, on the other hand, offer more security.
Blockchains are decentralized, distributed databases that store records across networks in such a way that makes the chain immutable, transparent, and resistant to fraud. In the context of crypto, these ledgers provide a secure record of transactions, making it so that only users or the program itself can access their data.
Finally, exchanges, otherwise known as exchange platforms, are websites where users can buy, sell, trade, or convert currency. Here, a user could sell their Bitcoin for USD, convert it into Ethereum, or trade it with another user for some other currency. Exchanges vary in accessibility, beginner-friendliness, transaction fees, and security, so it’s good practice to research a platform before sticking to it.
Educational Resources for the Next Generation
Sometimes reading about various crypto tools and macroeconomic factors that affect market movements simply isn’t enough to fully digest the information, which is why the crypto community has steadily grown a wealth of shared knowledge through workshops, explainer videos, and community-led tutorials.
For a more hands-on approach, some beginners may prefer learn-to-earn apps that reward participation, encouraging users to make a habit of learning on a regular basis. More recently, decentralized autonomous organizations (DAOs) have started funding open-source education for global access, meaning nearly anyone with an internet-capable device can access these programs and get started on their cryptocurrency journeys.
Cryptocurrency is a challenging sector to break into, but that difficulty is what makes that eventual understanding all the more worthwhile. By doing some basic research on the tools needed to get started and obtaining a general understanding of how crypto markets work, even beginners can take part in one of today’s most exciting developments in the tech industry.
Investing involves risk and your investment may lose value. Past performance gives no indication of future results. These statements do not constitute and cannot replace investment advice.
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