$BTC Why use pairs trading?

Pairs trading is a strategy that speculates on the relative value of two cryptocurrencies rather than their actual price movements. In other words, in a way, the strategy assumes that one cryptocurrency will outperform another in the future. To do this, you need to identify two assets that strongly correlate with each other. This means that when one asset increases in value, the other usually follows suit.

However, there are times when this relationship breaks down, and the two assets move in opposite directions. When this happens, it presents an opportunity to profit from the price difference between the two assets. To do this, you need to buy the undervalued asset and sell the overvalued one.

You can then wait for the market to correct itself and close your position when the prices of the two assets have converged. This usually results in a profit, although there is always a risk that the price difference will continue to widen and you will make a loss.