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Crypto Trading Pairs Explained

By Tokenize Xchange
October 10, 2022

If you are a beginner in the crypto space, you may certainly find it confusing when crypto coins are traded in pairs, for example, BTC/SGD; or BTC/USDC. This is a solution to increase liquidity and help limit risks in trading. Let’s find out what a trading pair is and how it works with Tokenize XchangeCryptocurrency Platform Singapore.

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What is crypto trading pair?

A crypto trading pair (or cryptocurrency pair) is a pair of cryptocurrencies that can be traded for one another on an exchange. BTC/XSGD and ETH/BTC are two instances of trading pairs.

How to understand crypto trading pairs

Because there are only two components in a crypto trading pair—the base currency and the quote currency—reading them is simple.

The first cryptocurrency in a crypto trading pair is always the base currency. The base currency is the benchmark against which the other currency is measured. The quote currency is the second component. It is the exchange rate between the base currency and the quote currency. After the “/,” the quote currency appears. 

For example, in ETH/BTC trading pair: ETH serves as the base currency while BTC is the quote currency. 

Together, the pairs will inform you of the quantity of the quote currency required to equal one complete unit of the base currency.

On Oct 4, 2022, ETH/BTC was trading at about 0.067 from a practical standpoint. In other words, a trader would obtain 1 Ethereum for approximately 0.067 Bitcoin.

Types of Crypto trading pairs

Since you can exchange cryptocurrencies for fiat money and other cryptocurrencies for one another, it is crucial to understand the differences between the two types of trading pairs.

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Crypto-to-crypto pairs

Crypto-crypto pairs describe a pair of two digital assets, such as the ETH/BTC pair previously discussed. If your trading pair includes big cryptocurrencies like BTC, ETH, LTC, or another popular coin, you can be sure that it will have a large trading volume and draw a lot of liquidity to cryptocurrency exchanges

Fiat-to-crypto pairs 

Fiat-to-crypto pairs are more common among traders who are just getting started in the world of cryptocurrency trading and who still struggle to understand crypto-crypto pairs. One side of this pair will include a digital asset and a fiat currency (e.g. USD, EUR, SGD, etc).

Since the United States Dollar is utilized as the benchmark currency for the entire cryptocurrency industry, USD makes up the vast majority of fiat-to-crypto pairs.

Why crypto trading pair is important

Individual assets can be valued through pair trading without the need for fiat. Trading pairs are crucial in the world of cryptocurrency because they help improve the liquidity of transactions.

Here’s an example: A trader searches for the CHZ/LINK pair on a decentralized exchange (DEX) in order to convert Chilliz (CHZ) into Chainlink coins (LINK). The Digital Currency Trading Platform did not, however, offer this trading pair.

Hence, trading crypto pairs with a stablecoin has become a solution because stablecoins, with their stability in value, make it simpler for investors to calculate the value in fiat money. 

So, in this situation, the trader has the option of switching to the CHZ/USDC trading pair by selling CHZ for USDC. And then, he/she can buy LINK by exchanging USDC for LINK using the LINK/USDC trading pair.

Buy and sell crypto pairs on Tokenize Xchange

If you are a new investor who is looking for a Digital Exchange Platform that allows trading cryptocurrency pairs, you are in the right place. Tokenize Xchange – Singapore Crypto Trading Platform provides 50+ crypto trading pairs for users from all over the world including:

Sign up for your new account with a few steps to start trading right away!  

Disclaimer

Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk.