Guide for traders

We have seen earlier that hedging would be a wise choice for anyone who want to trade, as if Bitcoin at some point loses much of its trading value and utility, another currency can take the lead and be the one with the biggest market cap.

It is not right, however, to think only in absolute numbers. Often, many traders - and not only – hope and claim that this hypothetical event will happen in favor of the “A” Coin, for B, etc. This is done for two reasons: a) or because they really believe it, b) or because they have invested heavily in the "competitive" currency and in this way they want to lead others in the direction they want, believing that they will make big profits.

They cannot, however, consider the damage that will result from such an event, as most investors have invested in Bitcoin. And when we say "investors," we mean all these small investors who bought even a small amount and it is reasonable that if they lose their money in this way, they will not turn to look at any other currency. Additionally, it's also a branding and a marketing issue, as most people still are familiar with Bitcoin more than any other currency, so it becomes even more difficult to regain the confidence and trust of the investing public. But even for professionals in the field, hedging will be increasingly costly, since if Bitcoin loses its lead, it would be reasonable to assume that any other currency will lose it faster and easier.

Thus, higher costs, greater instability and less confidence will lead to a smaller number of investors, resulting in a noticeable reduction in the volume of transactions, which in turn will lead to price reductions and thus profits.

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