Cryptocurrencies are digital assets that derives their value from supply and demand factors unique to each asset class. Cryptocurrencies are available in a finite supply and therefore increases in price as demand increases. Demand stems from speculative sources and more practical sources, for example Internet purchases paid for in various cryptocurrencies. Cryptocurrencies also has a tendency to react to market sentiment in more traditional markets such as equities and foreign exchange, increasing during periods of negative sentiment and is highy volatile.

1. High potential returns: Cryptocurrencies are considered a high volatile asset class. This leads to higher risk, which could lead to higher rewards if your speculations are correct.
2. ‍Diversification: Cryptocurrencies represent a different type of asset class that is not directly correlated with traditional financial markets, such as stocks or forex. This could potentially reduce your overall portfolio risk.
3. ‍Accessibility: Cryptocurrency markets are accessible 24/7, allowing traders to buy or sell digital assets at any time, including weekends and holidays.
4. ‍Liquidity: Major cryptocurrencies like Bitcoin and Ethereum tend to have high liquidity, meaning there are plenty of buyers and sellers in the market. This high liquidity can make it easier to enter or exit positions without significant price slippage.
5. ‍Decentralisation: Cryptocurrencies are typically decentralised and not controlled by any single entity or government. This decentralisation can be appealing to those who value financial sovereignty and want to reduce their reliance on traditional financial systems.

Cryptocurrency prices can be influenced by various factors, including:

• Market demand.
• Supply dynamics.
• Regulatory developments and government policies.
• Technological advancements and upgrades.
• Adoption and acceptance by businesses and individuals.
• Security and hacking incidents.
• Investor sentiment and market speculation.
• Macroeconomic factors and global events.
• Media coverage and public perception of cryptocurrencies.

Before making trading decisions on cryptocurrencies, you can perform research and analysis using the following methods:

1. ‍Cryptocurrency fundamental analysis: Evaluate the project’s whitepaper, team members, partnerships, technology, use case, and community support. Analyse the project’s potential for adoption and its competitive advantages.
2. ‍Cryptocurrency technical analysis: Study price charts, indicators, and patterns to identify trends, support and resistance levels, and potential entry and exit points. Use tools such as moving averages, RSI (Relative Strength Index), and MACD (Moving Average Convergence Divergence).
3. ‍Crypto market sentiment analysis: Monitor social media platforms, online forums, and news sentiment to gauge the overall market sentiment towards a particular cryptocurrency.
4. ‍Risk management in cryptocurrency trading: Consider factors like market volatility, liquidity, and risk-reward ratios when assessing potential trades. Set appropriate stop loss and take profit levels to manage risk effectively.