Cryptocurrency trading pairs work by comparing the cost of one cryptocurrency for another. This is used to establish value. It’s honestly not really any different from going to a store and seeing that a product is worth a certain amount of fiat currency.

The only difference here is that most people don’t use multiple fiat currencies to transact in their everyday lives like we do with cryptocurrency. Trading pairs help to establish the value of an asset when it’s traded for another asset, that’s it.

Cryptocurrency trading pair example

Jimmy currently owns one Bitcoin, but he’d like to purchase Ethereum instead. He goes to the exchange and selects an ETH/BTC trading pair. The exchange then displays what the current value of Ethereum is when compared to Bitcoin. Jimmy agrees to this value and submits a trade to sell half of his Bitcoin for Ethereum.

Jimmy was able to do this because he already held BTC, which was a base trading pair. If he instead was holding XRP but it was not a trading pair on his exchange then his trade would look different.

First, he’d need to trade XRP/BTC to get some Bitcoin, and then he could perform the ETH/BTC trade to trade his Bitcoin for Ethereum. Remember that while an asset may be listed on an exchange it does not mean that you can directly trade it for every other cryptocurrency on that exchange.

Sometimes you need a “pass-through” currency in order to make trades work. If you’re not sure, then trading for Bitcoin is the most foolproof way, as it’s a trading pair almost everywhere, with the exception of a few Ethereum based token exchanges.


What’s the difference between crypto pairs?

You’ve likely noticed that there are many different trading pairs on Tokenize Xchange. They work much the same way as using any other pairing, but you should be aware that the value could actually be much different for each pairing.

That’s because every pairing is essentially its own order book. It has its own bids and asks, and depending on demand you could actually be paying a premium to trade with these pairs, or perhaps getting a good deal if you can fill a demand. Nine times out of ten you’d be better off trading using BTC though.

How to choose a crypto pair to trade?

When choosing a best trading pair you should make sure that you choose one that’s offering you an advantage. Make sure that you’re not losing money on a trade, and make sure to take the current trading volume into consideration.

If a trading pair has little trading volume then you could be sitting on a trade for a very long time before it goes through. This could impact your decision to use a certain pairing even if you would come out ahead on the deal.

Is there any correlation between cryptocurrency trading pairs?

The answer is, sometimes. Some cryptocurrencies and pairings do have a certain price correlation where they follow each other but not always. Since Bitcoin is so tied to the entire cryptocurrency market many of them tend to follow it, but there is sometimes some deviation.

This can be particularly true if you’re using a pairing or exchange which has a very small number of traders. In these cases, almost all of the demand can be totally held within the BTC base currency, leaving little liquidity for other pairings. Low liquidity can cause strange price movement, and you should be aware of this when trading.