A spot market is where commodities like cryptocurrencies are exchanged with fiat currency or other cryptocurrencies for immediate delivery. Here, delivery means cash exchange for cryptocurrency. In comparison, a futures contract is based on the delivery of the underlying cryptocurrency at a future date. Over-the-counter (OTC) markets and exchanges may provide spot trading and/or futures trading of the cryptocurrencies.
What is spot trading in cryptocurrency?
When trades are done in an instant and settled manner, it is known as spot trading which can be carried out in stocks or cryptocurrencies. In spot trading, the traders are required to be booked on the spot and not on a date in the future.
Benefits of Spot Trading in Cryptocurrency
A lot of benefits can be availed by both the buyers and the sellers when going to trade in the spot market.
- The negotiation between both parties is largely competitive. There goes a price bargaining and the best price can be availed by both the buyers and the sellers. This ensures a fair amount of competitiveness in the market. This availability of the best price makes spot trading of cryptocurrencies highly lucrative in the spot market.
- It is a regulated system that is largely transparent; there is an avoidance of the fear of illegal transactions of cryptocurrencies. As there is on the spot trading of cryptocurrencies, it ensures that the transparency is maintained and the illegal trading can be curbed because there is no deferred delivery of cryptocurrencies or the settlement of payments.
- There is a trading prospect of simultaneous buying and selling of cryptocurrencies in different markets in order to take advantage of differing prices for the same asset such as cryptocurrencies.
- Due to the advancement in the technological sphere, there is an expectation of quicker transaction by the buyers and the sellers in cryptocurrencies.
- B2C spot markets can provide up-to-date information about the availability of cryptocurrencies, its price, and consumer demand. All this happens on a real-time basis. This allows the supply chain participants to do the updating of their plans to take into account real-time information.
- In one kind of trading where there is purchasing of one cryptocurrency when it is low and selling of another that is high, making a profit with the balance, there are various advantages in such on-the-spot trading.
- There is a low capital requirement. Now anyone with any amount of capital can enter the cryptocurrency market. The market is easy to operate due to the short history that has made it a standardized platform to do the trading in.
- There is low transaction cost when compared to stock trading; even the charges of the brokers are lower. As it is an ever-changing market, there is always an opportunity for new money-making opportunities that never cease to turn up.
- There is immediate liquidity in such spot trading of cryptocurrencies as there is an instant and immediate transaction that goes on between the buyer and the seller. There is no deferral of delivery of either crypto to crypto or crypto to fiat.
- In the spot trading when you buy a cryptocurrency, you are purchasing the asset upfront in the hope that it increases in value. But when you trade on the price of a cryptocurrency, you can avail of the opportunity of a rising and falling of market price.
These are some of the benefits that you can avail when going to buy and sell digital currencies in the spot market. If you too are considering investing in the spot market, it would be good to look for a coin trade platform that offers maximum liquidity and utmost security. If you are looking for one, you should look no further than PCEX Member.