Everything you need to know about investing in cryptocurrencies market in Australia
If you are from Australia, surely you did not come here by accident, but you want to learn cryptocurrency investment in Australia. Well, in this article, you will learn how to invest in cryptocurrencies in AU.
The first cryptocurrency to be released was Bitcoin in 2009 by Satoshi Nakamoto for which it is not known if it is an individual or group of people who came up with the idea. Since then, cryptocurrencies have grown drastically. Now, as per Coinmarketcap, there are more than 7000 cryptocurrencies.
If you are familiar with cryptocurrencies now and you somewhat know about their history, you surely have already regretted not making an investment back when Bitcoin started its journey. If you had bought one Bitcoin back then, which would have cost you a few dollars, now your coin would be worth $16,299 (at the time of writing). Well, imagine if you had bought 100 bitcoins or 1000. You would be a millionaire now!
But it is never too late to invest in cryptocurrencies. And if you are here you are surely interested. Different countries have different regulations when it comes to cryptocurrencies. In this article, we have put together the basics of investing and trading cryptocurrencies in Australia as well as Cryptocurrency regulation in Australia and the two most popular cryptos in Australia.
What is cryptocurrency trading?
Cryptocurrency trading means buying and selling cryptocurrencies for profit. Buying and selling cryptocurrencies entail speculating on the price movements within the market. At first, it might sound complicated, but trading cryptocurrencies has never been more accessible.
Anyone can buy and sell cryptocurrencies now through a cryptocurrency exchange. All you need to do is pick a reliable cryptocurrency exchange, create an account there and then you will be able to buy and sell cryptocurrencies.
Is Cryptocurrency Legal In Australia?
Cryptocurrency regulation is one of the most discussed topics in the crypto sphere. Whether cryptocurrencies should be regulated or not, there are different opinions. They say that Australians are laid back, but in terms of cryptocurrency regulation they have not been holding off. Australia is among countries that have been keeping an eye and have stayed up to date on the matter.
Are cryptocurrencies taxed in Australia?
Australia's government announced in 2017 that cryptocurrencies were legal. In their announcement, they said that "cryptocurrency is rapidly evolving" and that anyone involved in acquiring or disposing of cryptocurrencies needs to be aware of the tax consequences.
How are cryptocurrency exchanges regulated in Australia?
In 2018, the Australian Transaction Reports and Analysis Centre (AUSTRAC) implemented a new law for digital currency exchanges. This law is more rigorous as it obliges cryptocurrency exchanges to register with AUSTRAC, verify and identify users, maintain records, and comply with government reporting obligations.
How to trade cryptocurrencies in Australia?
As said above, trading cryptocurrencies sounds complicated. The term “Cryptocurrency” itself, seems unfamiliar and confusing to many people because everything happens virtually. However, trading cryptocurrencies now is simplified, and with a little bit of effort, anyone can learn how to do it.
Pick a cryptocurrency exchange
To start your investment in cryptocurrencies in Australia, pick one of the authorised cryptocurrency exchanges. Then you can trade basically any cryptocurrency you want to. You just have to purchase the cryptocurrency you want and store it in your preferred wallet. Some of the authorised cryptocurrency exchanges in Australia are CoinSpot, CoinJar and eToro.
Choose Your Trading Strategy
Cryptocurrencies are volatile by nature, so that’s why there is a high chance for profit when trading. The preferred cryptocurrency for Australians is Bitcoin as it is highly volatile. Yet, cryptocurrencies are “connected” to each other or better said are correlated. When Bitcoin’s price grows, most of the time so does the price of Ethereum, for example, or Litecoin.
Obviously, there is a risk when investing in digital assets. Predicting the price movements is crucial to investing rightly in cryptocurrencies in AU. Whether you are trading manually or using automated trading software, there is always a trading strategy needed. You can pick only one coin to invest in, and you can invest in several coins depending on your choice.
There are mainly three cryptocurrency trading strategies in Australia: hodling, day trading and CFD trading.
The term “Hodling” cryptocurrencies basically mean holding them for a more extended period. Long term hodlers are mostly novice traders that have just started their journey on the crypto world. They usually buy a coin at a lower price, hold it and wait for the price to increase and then sell it.
But, here is a thing with hodling; patience is necessary. Many hodlers don’t have patience, so they sell their coins at a specifically increased price, thinking that it won’t grow anymore. Then they regret it later when the price surpasses their expectations. There is no specified time of how long should one hold their coins. Some hold them for days, weeks, months, even years.
In day trading, traders aim to hold their investments for less than a day. It is not easy to master day trading as it requires commitment and a lot of screen time practising. Though, those who master day trading have the advantage to earn money, as cryptocurrencies are volatile and there are opportunities to catch profitable trades every day.
Here at Trading Education, we teach the best trading strategies, including Hodling and Day trading. If you want to become a master at trading cryptocurrencies, check our courses here.
CFD is an acronym for Contract For Difference. This crypto trading method is a bit more complicated, especially for beginners. A CFD is an agreement based on an underlying asset. In CFD trading you actually never own the cryptocurrency. Instead, if you open a trade, you speculate on whether the value of the underlying asset will increase or decrease.
CFD trading is heavily regulated in many countries do now allow it at all. Fortunately in Australia, ASIC (Australian Securities and Investment Commission) has allowed CFD trading.
eToro offers CFD trading in Australia. eToro AUS Capital Pty Ltd. is the holder of an Australian Financial Services Licence (AFSL) 491139 issued by the Australian Securities and Investments Commission (ASIC) and regulated under the Corporations Act (Commonwealth).
It is worth noting that Australians have been familiar with CFD trading long before cryptocurrencies were released. They have used CFDs to trade commodities, futures, forex, stock market indices and individual stocks.
What Are The Two Most Popular Cryptocurrencies in Australia?
The two most popular cryptocurrencies in Australia are Bitcoin and Ethereum.
In terms of market cap, Bitcoin (BTC) has always been the most popular cryptocurrency in Australia and on the global market. Its market cap this month is currently $302,165,391,228. Using the sum we mentioned above, this can be calculated by multiplying the number of Bitcoin tokens in circulation (18,538,368 BTC) by the price ($16,299).
In second place is Ethereum, a blockchain platform which uses ‘smart contracts’ to carry out digital transactions. Its native currency is known as the Ether (ETH) and its current market cap is $51,507,291,691.
This can be calculated by multiplying the number of Ether tokens (113,448,141 ETH) by the price ($454).
Why Are Bitcoin And Ethereum So Popular In Australia?
In short, Bitcoin and Ethereum are popular in Australia for different reasons. Bitcoin itself has digital scarcity (as a limited number of Bitcoins exist), so retains a large market cap due to this scarcity value.
Ethereum has utility value as well, as while a limited number of coins can only ever be produced, but its network can be utilised for hosting ERC 20 tokens (among others)
Being the oldest and largest cryptocurrencies, Bitcoin and Ethereum have had the most time to mature in the market. Simply put, Bitcoin is the market leader because it was the first cryptocurrency to perform its desired function.
When it comes to coin market cap though, Ethereum has a unique advantage in increasing the volume of its market cap due to the value of its smart contract platform. While the market cap of Ethereum currently sits at around $26 Billion USD (as at July), the total market cap of ERC-20 tokens is now $29 Billion USD. The point at which the market cap value of Ethereum was eclipsed by the ERC-20 tokens on its platform was formerly known as a “Flippening” i.e. whereby the total market cap of a given tradeable cryptocurrency overtakes the market cap of another (at the time more popular) cryptocurrency or stock.
The real question is, when it comes to cryptocurrency why does popularity matter so much?
When the Bitcoin vs Ethereum flippening occurs, all cryptocurrencies will be indexed against it
Currently, many traders often use Bitcoin as a trend setter for the general performance of the market.
If the Bitcoin vs Ethereum flippening occurs, it could make the market more volatile as Ethereum itself is valued both by itself and its ERC-20 tokens.
While cryptocurrencies are generally volatile, Bitcoin has the ability to smooth things out by ensuring that its value isn’t tied to the utility of its network for any other purpose than to host the Bitcoin ledger. Ethereum’s network is generally more volatile than Bitcoin as its ledger is used for things other than hosting Ethereum’s network.
Ethereum’s network hosts lots of other use cases, and often not just ERC-20 token transactions. Sometimes, the Ethereum network can be clogged, leading to significant spikes or drops in the value of the token. This happened previously with the website Cryptokitties, when in 2017 a significant network clogging lead to a sudden spike and drop in Ethereum’s price.
Why Should You Start Investing In Cryptocurrency In Australia?
There are two main reasons as to why you should learn to trade and start investing in cryptocurrency in Australia.
First, on 11th of May 2020, Bitcoin halving took place for the third time in Bitcoin’s history. And, last time when halving happened in 2016, the next year 2017 was the one when Bitcoin reached its all-time high of $20,000. So, a similar thing might happen in 2021.
2020 has so far been an exciting year for cryptocurrency traders. Cryptocurrencies are volatile, and 2020 has proved it. Due to the coronavirus pandemic, Bitcoin value went down to almost as low as $3000, but then it quickly climbed back up, and as per Coinmarketcap at the time of writing, the Bitcoin price stands at $16,299.
Second, Cryptocurrency experts believe that now is a perfect time to invest in cryptocurrencies as, according to them, we are going through a unique time since there is a chance that 2017 will be repeated.
According to cryptocurrency expert Ivan On Tech, in the way the market is developing, there are signs that 2021 will be a year similar to 2017 for cryptocurrencies. He made his prediction on Twitter, saying that Bitcoin will reach $40,000 by December 2021 and Ethereum will hit $6000 by then. Indeed it seems like a special time we are going through. It's just like at the beginning, those who did not invest missed the boat.
If we go back when Bitcoin was released in 2009, there was a lot of scepticism about cryptocurrencies, but now they have grown to the point where they are having an impact on the traditional financial world.
- It is never late to invest in cryptocurrencies.
- Cryptocurrency trading means buying and selling cryptocurrencies for profit.
- You can invest and trade any cryptocurrency in Australia, but Bitcoin and Ethereum are the most popular coins.
- Australia is one of the countries that have stayed up to date and has not neglected cryptocurrency regulation.
- Cryptocurrency exchanges in Australia have to meet the rules set by AUSTRAC.
- There are mainly three cryptocurrency trading strategies in Australia: hodling, day trading and CFD trading.
- Now is a perfect time to start investing in cryptocurrency market in Australia as experts say they are expected to grow in value significantly in the upcoming years.
Start Your Cryptocurrency Investment In Australia
Investing in cryptocurrencies can seem risky and you may hesitate before making your first move. We hope this article has given you some information on how to get started investing in the cryptocurrency market in Australia.
Furthermore, trading cryptocurrencies is something you should learn, especially given that cryptocurrencies have great potential, and may take a leading role in the financial world in the future. It is obvious that understanding the cryptocurrency market takes a lot of time and commitment, but as always the first step is the biggest and most important one. So make it today, pick the top cryptocurrency exchange and start investing in the cryptocurrency market in Australia.
Top Cryptocurrency Broker In Australia
Now you know more about how to actually start investing in the cryptocurrencies market in Australia, you could be ready to take your interest to the next level.
Understanding the cryptocurrency market can take years of study. However, by reading this article today, you’ve taken your first steps towards becoming a better crypto investor. the next step is to choose the best Crypto broker in Australia.
A trader with an eToro account can trade CFDs on underlying financial assets such as Stocks, Commodities, and Cryptocurrencies. With tight spreads, they are a leading global brand. Voted top broker in AU.
Trade cryptos with top-rated broker eToro, which has been selected based on its high rating and your location.
eToro is an excellent brokerage company that has its cryptocurrency exchange also. It has a user-friendly platform and has a great app that is easily accessible. eToro’s exceptional crypto exchange, eToroX, offers a revisionist crypto asset trading experience for algo traders, institutional-grade investors, and experienced crypto traders.
An outstanding thing about eToro is that you can copy a trader so that any trades they open will automatically open in your account with a proportionate percentage of your designated funds.
On eToro traders can build a diversified portfolio with 14 of the most popular coins in Australia, including Bitcoin (BTC), Ethereum (ETH), Ethereum Classic (ETC), Dash, XRP, Litecoin (LTC), Bitcoin Cash (BCH), Stellar Lumens (XLM), NEO (NEO), EOS (EOS), Cardano (ADA), IOTA, TRON, ZCash, Tezos.
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eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.