Cryptocurrency trading pairs are two currencies for each other, meaning you sell one to get the other. Bitcoin is considered a major currency among trading pairs. It is by far the most common trading pair, where most of the volume of currencies is concentrated against Bitcoin. However, stable currencies have a share. Especially large is #usdt so they are the two most common options. For example, if you aim to exchange (USDT) for Bitcoin #BTC , you will participate in the USDT/BTC trading pair.
In most cases, cryptocurrencies are not traded against fiat currencies, although some options are emerging at the moment. Instead, you will be trading for the value of another cryptocurrency. These groups help determine the value of your cryptocurrencies. Typically, exchanges will offer different pairs, and you can choose which one to use based on the currencies you already own.
In short, a cryptocurrency pair means that you are buying one digital asset and selling the other digital asset at the same time. Trading pairs are crucial when it comes to analyzing the cryptocurrency market and current market conditions.
Two main categories of trading pairs
Cryptocurrency trading can be between cryptocurrencies only such as USDT/BTC and BTC/eth and it can be between cryptocurrencies and fiat currency such as BTC/USD. It is important to understand the main differences between the two basic categories of cryptocurrency trading pairs; You can either trade cryptocurrencies for fiat currency or trade one cryptocurrency for another.
We point out here that liquidity plays an essential role in price spreads, as you may experience lower trading volumes and wider spreads due to lower popularity and lower market value.
Trading pairs of fiat currencies to cryptocurrencies
In a fiat pair like USD vs. BTC, you have a digital asset on one side, and a fiat currency like the US dollar or euro on the other. Trading pairs from fiat to cryptocurrencies are usually preferred by traders who have just entered the cryptocurrency space.
Many fiat to cryptocurrency trading pairs include the USD as their base currency since it is known as the reference fiat currency for the entire cryptocurrency market.
The question is whether it is better to trade cryptocurrencies against fiat currencies or against other cryptocurrencies
This question is often asked in forums related to trading cryptocurrencies. For example, if you trade the currencies Ethereum #etherreum against Bitcoin BTC, then you may lose even if Ethereum rises more than Bitcoin rises, if both of them together decline against the dollar USD or USDT. This is why it is better to trade against stable cryptocurrencies or against the US dollar
Except in the bull market and the clear bull market here, it is good to trade against BTC and Bitcoin, because here when you win, you have won twice. First, you won against Bitcoin and you won a second time because Bitcoin also rose compared to the US dollar or USDT.
The best cryptocurrency trading pairs
The most popular cryptocurrency trading pairs are those that include major currencies such as Bitcoin, Ethereum, Ripple, Litecoin, Usdt or any of the other leading cryptocurrencies in terms of market cap.
In addition, trading volume in cryptocurrencies also appears to be trending towards fiat base pairs and associated fixed currencies. However, there are many other digital currencies available in the market, so there is a wide range of pairs to choose from. The image below shows us the ranking of the most popular pairs according to trading volume. You can also view the rest of the pairs through this link affiliated with the Binance platform.
https://www.binance.com/en/markets
The 3 strongest pairs are:
BTC/USDT - Bitcoin (BTC) vs. Tether (USDT): This pair is popular due to its high liquidity, wide use in trading, and is supported by all platforms.
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ETH/USDT - Ethereum (ETH) vs. Tether (USDT): This pair is also widely used due to the popularity and large liquidity of Ethereum, which is also supported by all platforms.
BNB/USDT Binance Coin vs. Tether USDT This pair is widely used because BNB is affiliated with the Binance platform known for its reliability in addition to the most popular stablecoin USDT.
We have limited ourselves to referring to these three pairs as they rank first as they are the most traded and famous pairs in 2024, due to the high liquidity they enjoy and because they usually cover the largest digital currencies in the market. It is necessary for the trader to choose pairs that match his strategy.
How do cryptocurrency trading pairs work?
Cryptocurrency trading involves calculating the value of one cryptocurrency against another to determine its relative value. It is similar to checking the price of a product in a traditional store, which is expressed in paper money.
However, it is different from regular daily transactions because the cryptocurrency space involves dealing with multiple digital assets. That is why trading pairs play an important role in determining the value of a particular cryptocurrency when it is exchanged for another.
To buy the base currency, a trader needs to own the quote currency. Traders determine the price they aim to buy at and the amount of the quote currency they want to place in the trade. Sellers indicate the price of the base currency and the number of assets they wish to sell.
On centralized exchanges (CEXs), order books are set up to support both assets. Sell orders are usually arranged in ascending order while buy orders are arranged in descending order.
How to choose a crypto trading pair?
Trading cryptocurrency pairs requires a great level of knowledge and careful monitoring of market conditions, along with an understanding of the dynamics between the chosen pairs. Therefore, it can be said that there are three main things to how to choose trading pairs:
Choose a leading platform
Choosing a good platform is considered the first step in this path, as you must choose a safe platform with high liquidity and customer support in all languages, and here there is no need to tell you that the Binance platform is the best of all and without dispute.
Trading volume is good
Trading volume displays the number of trades made in a specific trading pair during a given period. High trading volume usually involves a higher level of liquidity and an active market.
If, for example, you choose a pair with a low trading volume, it will take a lot of time before you can place a trade. This scenario usually happens with some altcoins that may not be as profitable when compared to popular cryptocurrencies.
High volume pairs are more attractive to users because they provide fast execution of trades. Low volume pairs can suffer from slower trade execution and wider spreads which can affect the entire trading experience.
Liquidity monitoring
Liquidity is used to measure how easy it is to buy or sell a digital asset without significantly affecting its price. If the cryptocurrency pair has high liquidity, this means that there is a small difference between the buy price and the sell price, and this enables trades to be executed quickly with reduced price differences.