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See The 6 Biggest Problems With Crypto Trading And Solutions



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Crypto trading is an avenue for making a profit. However, there are some challenges crypto traders encounter, such as security risks, liquidity problems, regulations, and lack of transparency.

Cryptocurrencies are gaining more popularity as financial instruments due to their speed and low cost of transactions. Also, some investors have realized a fortune from trading over time. However, there are several unique challenges that crypto trading brings for traders and investors.

The biggest problems with crypto trading include security risks, liquidity problems, regulations, lack of transparency, and high trading fees. Keep reading to find out these deep-lying issues and practical solutions.

Biggest Problems With Cryptocurrency Trading

  • Security Risk

Cryptocurrencies are anonymous and decentralized systems optimizing speed over the traditional financial framework. However, its anonymous feature also allows dangerous individuals and organizations to seize control of vital data and users’ tokens.

Crypto developers face devastating hacks perpetrated by faceless elements hiding behind the anonymous feature. According to statistics, $3 billion was stolen in 2022 in 125 system hacks.

Hackers identify defects in a blockchain code and sometimes compromise the entire chain. Also, they devise mischievous means to collect users’ private keys and access their wallets.

Also, crypto exchanges are targets, as the infamous Mt.Gox incident proves, where $350 million worth of BTC was stolen. Such events create critics who view cryptocurrency as a Ponzi scheme.

So if hackers compromise the exchanges, traders will lose their tokens which they may or may not regain.

Regaining the tokens depends on if the exchange decides to cover the losses or if the hackers return the stolen funds.

  • Liquidity Problems

Liquidity is a vital factor in any financial market. When there is insufficient liquidity, it affects traders adversely. Orders are not executed on time, allowing big traders to influence the prices.

Also, a lack of liquidity will increase volatility and increased price slippage. Such a situation gives an unfair advantage to crypto exchanges with large liquidity as they can charge high prices to list tokens.

This is one of the reasons several crypto projects focus more on Decentralized Finance (DeFi) to ensure maximum liquidity at all times.

  • Crypto Regulations

Cryptocurrency regulations often seek to protect traders from rug pulls or scam projects. However, some regulations are harsh, with an outright crypto ban enforced in some regions.

Other countries or provinces place heavy taxes on crypto trading and mining activities. Such restrictions could discourage crypto traders who might stop trading entirely or relocate to a better zone.

With the crypto boom, there is a growing need for a clearly defined regulatory framework that will protect traders but not destroy crypto projects.

READ ALSO: Montana has Made Mine Cryptocurrency Bill Legal

  • Lack Of Transparency

Since the inception of altcoins and memecoins, many crypto projects have launched, claiming to be fully decentralized.

However, a closer look reveals that some of these projects make bogus claims, with most of their Initial Coin Offerings (ICOs) unsuccessful.

Also, the whales control most of the top crypto projects holding many coins. With such a significant share, whales can influence the price of a project to sway the market in their favor.

These unidentified whales could be large institutions making it almost impossible for individuals to compete against them.

  • High Trading Fees

Some cryptocurrency exchanges charge traders high rates even when the trade is in losing positions.

A specified percentage unique to each exchange serves as a commission on each transaction made on an exchange.

Sometimes, some popular exchanges roll out incentives such as paid referrals to encourage traders to stay on the platform.

However, it could be a challenge for small-scale traders to keep up with high rates on some exchanges. Also, some exchanges charge high withdrawal rates, thus reducing the final payouts for successful trades.

  1. Lack Of Relevant Knowledge

Crypto trading takes deliberate effort and training to understand. Some traders suffer heavy losses placing trades based on emotions.

A trader must understand technical and fundamental analysis, price patterns, and vital information for trading.

Despite all the precautions, traders still suffer huge losses, sometimes due to market volatility. The psychological aspect of trading is also critical for every crypto trader to prevent losses.

READ ALSO: See The Analyst That Predicts BTC Price At $40,000

Solutions To Problems Associated With Crypto Trading

The problems associated with crypto trading have practical solutions that could minimize or eliminate them.

Security Challenge Solutions

Due to the reoccurrence of security breaches, crypto platforms now utilize several methods to safeguard users.

These methods include two-factor authentication, and Know-Your-Customer (KYC) verification, among others.

Also, cold storage for crypto tokens in an offline wallet is another method to safeguard against hacks and breaches.

Liquidity Problem Solutions

Liquidity is vital to every crypto exchange. To solve liquidity problems, exchanges can work with a collective pool server made up of an order book shared among several exchanges.

If one exchange lacks sufficient liquidity, it can tap from the collective pool to execute transactions. Also, staking is another method that provides liquidity while the staked tokens earn rewards.

Regulatory Solutions

Crypto regulators must safeguard users from scam projects that could fleece them of their tokens.

However, these regulators must collaborate with the cryptocurrency developers to grasp the scope of their projects and meet them at a common ground.

Kicking against cryptocurrencies might not be the best option as they gain more relevance and utility. A balanced and well-rounded approach is the key to successful regulation.

Transparency Issues

Crypto developers should thoroughly explain the true scope of their project. As a rule of thumb, a project without a clear whitepaper or proper registration with the authorities might be a scam project.

Users must investigate how genuine a project is before committing to it.

High Trading Fees And Withdrawal Charges

Competition and regulation could help combat this issue. If more reliable exchanges offer lower fees, users will migrate to these exchanges since they are affordable.

Also, based on regional laws, exchanges might be restricted to remain in a uniform price range for trading and withdrawal activities to encourage more traders.

Lack Of Proper Knowledge

Several courses are available for users who wish to go into crypto trading virtually and in person. A user can also subscribe to a professional trading coach with a proven track record of success.

Also, they can engage in social or copy trading, which might be easier, although they have challenges.

READ ALSO:Ripple Launches Liquidity Hub To Upgrade Business Payment


Cryptocurrency trading is rewarding and comes with its unique risks and problems. The biggest problems with crypto trading include security problems, liquidity problems, harsh regulations, and a lack of transparency.

These problems have practical solutions that involve a conscious effort by the users, developers, and relevant authorities to surmount these challenges.

Although the challenges might not disappear, they could be controlled to make trading more profitable.

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