In the fast-moving, volatile world of cryptocurrency investing, having an edge can make the difference between putting on a winning or a losing trade. An excellent way to get an edge as a crypto trader is to be the first to react to market-moving news.
The crypto asset markets are heavily headline-driven. A regulatory announcement from a major crypto economy, a large-scale exchange hack or the discovery of a vulnerability in a blockchain’s code can send prices tumbling fast. Conversely, the announcement of a new asset listing on a leading cryptocurrency exchange, can quickly impact prices positively.
Hence, closely monitoring the daily newsflow is a top priority for active crypto traders as fundamentals are only secondary market drivers in this new digital asset class.
Altcoins can offer big profit opportunities
Nowhere do headlines dictate price movements as much as in the altcoin market. Low market capitalizations and comparatively low daily trading volumes regularly cause massive price jumps and drops, sparked by positive or negative news about the digital asset at hand.
There are also opportunities in smaller cryptocurrencies that many investors are missing out on as these assets receive little news coverage — even in the crypto media. Most media outlets tend to cover bitcoin and the 15 altcoins with market caps of over one billion dollars, while altcoins with market caps above $100 million – which offer substantial profit opportunities – tend to receive less coverage.
Moreover, small and micro-cap currencies and tokens are hardly ever covered and thus function in rather inefficient markets, which, in turn, can create profit opportunities for traders.
Market-irrelevant media coverage doesn’t help traders
Both blockchain and traditional financial media regularly publish content that is not relevant to active traders. While ‘how to’ guides, product reviews, and investment tips are popular among novice investors and those wishing to learn more about digital asset investing, pro-traders care about news that moves markets.
Free crypto news aggregators that list all published articles from dozens of blockchain media publications and financial news outlets are often cluttered with misleading sponsored posts, press releases, and other non-market-moving content. Hence, it takes traders more time to sift through these aggregators to discover the most relevant headlines.
Moreover, advertising relationships with specific cryptocurrency products or services may lead to bias by media publications as it is unlikely that a media company will report negatively about the advertisers that are filling its pockets. While such conflicts of interest are usually highlighted by media companies using disclaimers at the bottom of articles, these biases are not always made clear to readers, which, in turn, could affect their trading decisions.
This bias can be seen in the coverage of Bitcoin Cash (BCH). Media publications run by Bitcoin Cash proponents are clearly looking to "spread the gospel" about "their" coin and effectively do not report about anything negative about the Bitcoin fork. Conversely, crypto media outlets run by Bitcoin maximalists will often not cover price-positive news about Bitcoin Cash such as new BCH-based products or services that are gaining traction.
Some traders build their own Tweetdecks and RSS feeds to stay on top of headlines and to avoid misinformation or irrelevant content. However, these tools are limited by their users’ knowledge of the cryptocurrencies, tokens, and sources they want to track, which means they may miss out on small and micro-cap altcoins they could profit from.
Real-time news gives traders an edge
Being among the first to receive market-moving news is imperative for active crypto traders. Moreover, the ability to quickly disseminate and react to fresh headlines can make the difference between making or losing thousands within minutes.
A case study by Cryptocurrency Newsfeed shows that when the CFTC Subpoena against Tether (USDT) was announced on January 30, 2018, the price of bitcoin (BTC) dropped by over $500 within 30 minutes. Those traders, who reacted immediately to this news flow and sold BTC, were able to save $500.
Source — Cryptocurrency Newsfeed
Moreover, those trader who entered after the price drop at the $9,800 price level, were able to profit as the price of bitcoin moved back up above $10,000 as the fear surrounding this news subsided.
When Bittrex announced that it listed 0x (ZRX), the price of the digital token jumped by 35 percent within 15 minutes. Major exchange listings tend to cause price jumps for altcoins as that means they more investors gain access to the particular asset, which could result in more buyers going forward.
Traders who caught this news early were able to get in at a price level of $1.08 and were able to cash out at any point on the way up to the $1.40 mark, where ZRX ended up after the news spread.
On April 26, 2018, the Hyperpay Digital Wallet announced the integration of several new digital assets to its supported list. One of these assets was Aeternity (AE). Subsequently, the price of the AE token rallied from $2.60 to $5.61 over the course of two days, netting traders who acted immediately on this news a whopping 116 percent profit provided they closed the trade out at $5.61.
Subscribing to an unbiased, advertising-free real-time news service, such as Cryptocurrency Newsfeed and services like it, can make a real difference for crypto traders seeking to exploit daily price volatility to generate a trading profit.
By being among the first to see market-relevant headlines for over 3,000 cryptographic assets, traders can discover new potential profit opportunities on a daily basis and get the edge they need to stay ahead of the pack.