If you’re new to the world of cryptocurrency, you may be wondering what crypto trading pairs are. In this blog post, we’ll explain everything you need to know about them.
Checkout this video:
Introduction: what are crypto trading pairs, and how do they work?
Cryptocurrency trading pairs are a fundamental part of how exchanges function. A trading pair is simply an order book where bids (buy orders) and asks (sell orders) are matched in order to execute a trade. For example, the most popular cryptocurrency exchange, Binance, lists over 150 different trading pairs.
In order to understand crypto trading pairs, it’s important to first understand the concept of an order book. An order book is simply a record of all buy orders and sell orders that have been placed for a particular asset on an exchange. Order books are used by exchanges to match buyers and sellers in order to execute trades.
The bid price is the highest price that a buyer is willing to pay for an asset, while the ask price is the lowest price that a seller is willing to accept for an asset. The bid-ask spread is the difference between the bid price and ask price.
When a trade is executed, the buyer pays the ask price and the seller receives the bid price. For example, let’s say that you want to buy some Bitcoin on Binance and you see that the bid-ask spread is $9,700-$9,800. This means that you would pay $9,800 for 1 BTC and receive $9,700 worth of BTC.
The bid-ask spread can be thought of as the “cost” of buying or selling an asset on an exchange. The narrower the spread, the “cheaper” it is to buy or sell an asset on an exchange. When there is high demand for an asset, the bid-ask spread will be narrow because there are more buyers than sellers and vice versa.
It’s important to note that not all assets are traded against all other assets on every exchange. Each exchange has a different selection of trading pairs depending on what assets they offer and what other assets their customers demand.
For example, Binance offers BTC/USDT (Bitcoin/Tether), ETH/BTC (Ethereum/Bitcoin), and XRP/ETH (Ripple/Ether) trading pairs because these are some of the most popular cryptocurrencies that their customers want to trade against each other.
The different types of crypto trading pairs
Crypto trading pairs come in different shapes and sizes. From the most popular, such as BTC/ETH, to the more exotic, such as ADA/BNB, there’s a lot to choose from. But what do all these different trading pairs mean?
In crypto trading, a pair is simply the two currencies that are being traded against each other. So, in the BTC/ETH example, BTC is the ‘base’ currency, and ETH is the ‘quote’ currency. The ‘base’ currency is always the one being traded for the ‘quote’ currency.
The value of a crypto token is usually expressed in terms of another token. For example, 1 BTC may be worth 10 ETH. In this case, BTC is said to be the base currency and ETH is said to be the quote currency.
There are three main types of crypto trading pairs: major pairs, minor pairs, and exotic pairs.
Major pairs are top tier cryptocurrencies that are paired with either USD or USDT (tether). These currencies include BTC, ETH, LTC, BCH, and XRP. These pairs make up over 80% of all cryptocurrency trading volume and are therefore deemed to be more stable than other types of pairs.
Minor pairs are digital assets that are paired with major cryptocurrencies like BTC or ETH. These include altcoins such as EOS, ADA, XLM, and TRX. They account for around 15% of total cryptocurrency trading volume and can be more volatile than major pairs.
Exotic pairs are digital assets that are paired with less popular cryptocurrencies or altcoins. These include tokens like XVG, QTUM, NEO, GAS, and WTC. They account for less than 5% of total cryptocurrency trading volume and can be very volatile.
The benefits of trading crypto pairs
Crypto trading pairs are a way for traders to trade two different types of cryptocurrency against each other. This type of trading can be beneficial for a number of reasons, including allowing traders to take advantage of market volatility, getting exposure to different types of cryptocurrencies, and diversifying their portfolios.
The risks of trading crypto pairs
Cryptocurrency trading pairs are a risk for investors because price movements can be swift and drastic. For example, the price of Bitcoin fell from around $19,000 in December 2017 to below $6,000 by February 2018—a drop of nearly 70%. When placing trades on cryptocurrency pairs, it’s important to be aware of the risks involved.
How to choose the right crypto trading pairs
The crypto markets are open 24/7 and offer a wide variety of assets to trade. When you’re ready to start trading crypto, the first step is choosing which assets to trade in the form of “trading pairs.” But with so many options available, how do you know which pairs are right for you?
In general, there are three things to consider when choosing pairs: risk tolerance, market conditions and your trading strategy. Let’s take a closer look at each:
Risk tolerance: Crypto is a volatile market, and some coins are more volatile than others. If you’re risk-averse, you may want to stick to less volatile pairs or even combine them into one portfolio.
Market conditions: The cryptocurrency market is constantly changing, so it’s important to stay up-to-date on the latest news and trends. This will help you choose pairs that are more likely to succeed in the current market conditions.
Your trading strategy: Different traders use different strategies, so it’s important to choose pairs that fit your strategy. For example, day traders may prefer pairs with high liquidity so they can exit and enter positions quickly, while swing traders may prefer pairs with lower volatility for tighter stop losses.
The most popular crypto trading pairs
Cryptocurrency trading pairs are a crucial part of every exchange. Each market is based on a trading pair, which is a combination of two cryptocurrencies. For example, the BTC/ETH trading pair is based on Bitcoin and Ethereum.
The value of each cryptocurrency is measured against the other in the pair. So, if Bitcoin is worth $8,000 and Ethereum is worth $200, the BTC/ETH trading pair would be worth $40. This is because one Bitcoin is worth 40 Ethereum.
The most popular crypto trading pairs are:
BTC/USD – Bitcoin and US Dollar
ETH/USD – Ethereum and US Dollar
XRP/USD – Ripple and US Dollar
BCH/USD – Bitcoin Cash and US Dollar
LTC/USD – Litecoin and US Dollar
EOS/USD – Eos and US Dollar
BNB/USD – Binance Coin and US Dollar
BSV/USD – Bitcoin SV and US Dollar
ETC/USD – Ethereum Classic and US Dollar
TRX/USD – Tron and US Dollar
The least popular crypto trading pairs
Crypto trading pairs are simply the different combinations of digital assets in which you can trade on a given cryptocurrency exchange. For example, on Binance, the most popular crypto trading pairs are BTC/USDT (Bitcoin to Tether), ETH/USDT (Ether to Tether), and BNB/USDT (Binance Coin to Tether).
The least popular crypto trading pairs tend to be those with more niche or altcoins, such as BAT/ETH (Basic Attention Token to Ether), or XVG/BTC (Verge to Bitcoin). These pairs tend to have less volume than the major pairs, and as such, can be more difficult to find buyers or sellers for.
How to trade crypto pairs
A trading pair is a currency pair that you trade on an exchange. For cryptocurrencies, this is generally referring to pairing one cryptocurrency with another cryptocurrency or with FIAT currency. For example, on Binance, they offer many different crypto to crypto trading pairs such as ADA/BTC and many crypto to FIAT currency trading pairs such as ADA/USDT.
What is a pair?
In order to better understand what a trading pair is, we must first understand what a currency pair is. Generally, in forex trading, you trade one type of currency for another. For example, you may trade US dollars for Euros. In this case, the US dollar would be the base currency, and the Euro would be the quote currency. The price of the currency pair would be displayed as EUR/USD and would show how many US dollars it would take to buy one Euro.
In cryptocurrency trading, things are a bit different since there are no physical currencies involved. Instead of traded for another physical currency, cryptocurrencies are generally traded for other cryptocurrencies or for FIAT currencies. For example, if you wanted to trade Bitcoin for Ethereum on Binance, the pair would be displayed as BTC/ETH and would show how many ETH it costs to buy 1 BTC. The base currency in this case would be BTC and the quote currency would be ETH since that is what you are paying with.
What is a FIAT Currency?
A FIAT currency is a legal tender whose value is backed by the government that issued it. The USD, EUR, and GBP are all examples of FIAT currencies. Cryptocurrencies are not FIAT currencies and are not backed by governments.
What does it mean to trade a pair?
When you trade a pair, you are speculating on the price movement of those two currencies in relation to each other. For example, let’s say that BTC is currently worth $5,000 and ETH is currently worth $500. The BTC/ETH pairing would have a value of 10 since it takes 10 ETH to buy 1 BTC ($5,000/$500=10). If you believed that ETH was going to increase in value relative to BTC, then you might buy some ETH using your BTC. Let’s say ETH increases in value so that 1 ETH is now worth $600 while 1 BTC is still worth $5,000. In this case, the BTC/ETH pairing would now have a value of 8.33 since it takes 8.33 ETH to buy 1 BTC ($5
The future of crypto trading pairs
With the advent of cryptocurrency, there has been a lot of innovation in the field of trading pairs. In the traditional sense, a trading pair is a currency pair that is traded on an exchange. For example, the EUR/USD pair is a currency pair that is traded on the foreign exchange market.
However, with the rise of cryptocurrency, there has been a new type of trading pair that has emerged – the crypto trading pair. A crypto trading pair is simply a pairing of two different cryptocurrencies. For example, the BTC/ETH pair is a crypto tradingpair that matches up Bitcoin with Ethereum.
There are many different benefits to using crypto trading pairs. One of them is that it allows you to trade multiple cryptocurrencies without having to worry about managing multiple wallets. Another benefit is that it can help you to diversify your portfolio and reduce your risk.
In the future, it is likely that we will see even more innovation in the field of crypto trading pairs. This is because as more and more people become involved in cryptocurrency, there will be more demand for new and innovative ways to trade them.
FAQs about crypto trading pairs
Crypto trading pairs are simply two different cryptocurrencies that can be traded for each other on a cryptocurrency exchange. Each currency in the pair is known as a “token.” For example, Bitcoin (BTC) and Ethereum (ETH) are two of the most popular cryptocurrency tokens.
When you place an order to buy or sell a crypto trading pair, you are effectively exchanging one token for another. The exchange rate between the two tokens is determined by the current market price.
Crypto trading pairs can be traded against each other on a crypto-to-crypto exchange or against fiat currencies on a crypto-to-fiat exchange. Fiat currencies are government-backed legal tender such as dollars, euros, or yen.
The most popular crypto trading pairs tend to be those that are traded against fiat currencies such as USD or EUR. These pairs are often known as “fiat pairs.” Some of the most popular fiat pairs include BTC/USD, ETH/USD, and XRP/USD.
There are also a number of “altcoin pairs” which are traded against other cryptocurrencies rather than fiat currencies. These pairs can be found on crypto-to-crypto exchanges and tend to be less liquid than fiat pairs. Some examples of altcoin pairs include ETH/BTC, LTC/BTC, and BCH/BTC.