Years ago I got some mentorship on Forex trading from someone who had been doing it for a long time very successfully. No automated trading. Infrequent trades based on manual technical analysis and avoiding news events. He was very very adamant about always trading in the direction of the larger trend.
The crypto market is fairly new. The recent astronomical gains over the past 6 months have drawn in many investors (many without any Forex trading experience). A lot of people out there hoping to make quick easy money to buy that car or house. On a scale of market maturity, 100 being equivalent to the major fiat currency pairs, I’d say the crypto market is at best a 50 overall with Bitcoin and Ethereum being more mature than average and Alt Coins being less so with more volatility.
In any case, there’s still going to be a lot more entry of new investors into the crypto marketplace going forward as long as these big gains continue to be made. For US Clients, currently you can only sell short on BTC and ETH in the CME Futures Market (unless you go with an Offshore Broker). The majority of new investors, both retail and institutional, are not going to go with Offshore brokers.
I would think due to the potential for a further significant increase in investors coming into cryptos, this will create a very strong upward mid-term trend. In Forex, there’s the saying “The Trend Is Your Friend”. Seems to me, Cryptos, with 2-5X leverage have more potential in the mid-term to reliably make more profit than fiat Forex. I’m sure there are some staunch seasoned Forex traders that consider Cryptos a kin to a “Pyramid Scheme” but it sure seems to me that until the market is matured and the number of new investors coming in has slowed down, it’s going to maintain a strong upward trend for what, maybe another year? Then I would think the volatility (except for newer Alt Coins) is going to flatten out and be more like fiat Forex. In which case I would imagine the brokers will be steadily increasing the available leverage above 5X because currently the volatility of crypto has a leverage multiplier of about 10-20X, so trading with no leverage in BTC/ETH is roughly the same as trading EUR/USD at 10X. I’m surprised the offshore brokers still are not going higher than 5X at this point. However most new crypto investors have no concept of prudent trading practices like not risking more than 1-2% of your equity on a single trade.