Trading pairs in crypto aren’t limited to stablecoins and fiat currency. The first widespread crypto trading pairs utilized assets like bitcoin and ether.
How Do Crypto Trading Pairs Work?
While investing in cryptocurrency nowadays is a relatively simple affair, exchanges in the early years of crypto offered far less in terms of user experience (UX) and trading options. Exchanging between fiat currencies and stablecoins and choosing from vast arrays of asset pairs are both considered customary of exchanges now, but these options were not available on most exchanges for most of crypto’s early timeline. A typical early-phase crypto exchange would offer one to two base trading pairs — usually bitcoin (BTC) and ether (ETH). These two crypto trading pair families (BTC and ETH) still tend to dominate the crypto-for-crypto trading markets, but were all the more ubiquitous when they were the only options. That lack of variation in trading pairs often proved problematic for many traders and much of the wider market, because it was difficult to hedge against market volatility.
During that era, many crypto assets would correlate with each other. When the crypto markets went up, most crypto assets went up — a desirable outcome for crypto investors. However, when markets went down, switching between crypto assets would offer little relief or stability. The only option was to find some way to cash out your crypto for fiat — and perhaps try to buy back in when you felt the market was ready to trend upwards again. As many exchanges had no access or connection to the banking system, many investors would have to find a buyer and exchange crypto for cash face-to-face. A hassle on a good day, this process became highly problematic during market downturns that saw less demand for crypto assets. That’s why the expansion of trading pairs to include stablecoins, fiat currencies, and myriad cryptocurrencies played a major role in maturing crypto markets long-term.
BTC/Crypto Trading Pairs Explained
Bitcoin was the first cryptocurrency, and was thus the first base trading pair to gain widespread popularity in the crypto trading world. While the list of most popular crypto-to-crypto trading pairs fluctuates with the market, some of the most common BTC trading pairs have included:
BTC/ETH — bitcoin for ether
BTC/DOGE — bitcoin for dogecoin
BTC/LTC — bitcoin for litecoin
BTC/ADA — bitcoin for cardano
BTC/XLM — bitcoin for stellar lumens
Trading Crypto Pairs with Ethereum’s ETH
Over time, most exchanges evolved to offer Ethereum’s native ETH currency as the second major crypto trading pair option. The following ETH trading pairs have historically had consistently high trading volumes and popularity amongst traders:
ETH/BTC — ether for bitcoin
ETH/BCH — ether for bitcoin cash
ETH/LINK — ether for chainlink
ETH/ADA — ether for cardano
ETH/DOGE — ether for dogecoin
Trading Crypto Pairs With Stablecoins
With exchanges seeking — and traders demanding — stable assets with less hassle than cashing out to fiat, the first stablecoin was released in 2014. Called tether (USDT), this stablecoin is soft-pegged to the U.S. dollar and closely follows its value. With its early mover advantage, USDT has remained the most popular stablecoin base pair. In fact, in December 2021, six of the top ten trading pairs — regardless of category — feature USDT. Some of the most common USDT trading pairs include:
USDT/BTC — tether for bitcoin
USDT/ETH — tether for ether
USDT/DOGE — tether for dogecoin
USDT/BCH — tether for bitcoin cash
USDT/LTC — tether for litecoin
Common and Exchange-Specific Stablecoin Base Pairs
While USDT remains the most common stablecoin pair, there are many stablecoin options gaining market share. Many exchanges offer multiple stablecoin base pairs, with some exchanges offering their own bespoke stablecoin. For example, the Gemini exchange has its own stablecoin called gemini dollar (GUSD), and features GUSD/BTC and GUSD/ETH trading pairs. Binance USD (BUSD) is another stablecoin option that was developed by the Binance exchange.
DAI: A Common Stablecoin Base Pair for DEXs
While some of the aforementioned stablecoins are also tradable on decentralized exchanges (DEXs), most stablecoins experience significantly lower trade volumes and liquidity in the decentralized finance (DeFi) sector. Instead, more decentralized and collateralized stablecoin options are preferred to reserve asset stablecoins like tether. DAI was the first crypto-collateralized stablecoin to see significant adoption. Common crypto trading pairs with DAI as the base pair include:
DAI/ETH — dai for ether
DAI/wETH — dai for wrapped ether
DAI/USDC — dai for USD coin
Fiat Currencies in Crypto Trading Pairs
As cryptocurrency has become widely accepted throughout global markets, it’s now much easier to transfer between fiat and crypto assets. That’s why fiat currencies themselves have been the most recent major trading pair category to break through. From a trader’s perspective, fiat currencies function much like the stablecoins that are pegged to them. Stablecoins such as USDT, USDC, DAI, GUSD, BUSD, and others — all peg to USD. Perhaps due to the dollar’s strength worldwide, as well as the number of U.S. crypto investors, the most common fiat base pair is USD, with these pairings being some of the most common:
USD/BTC — dollars for bitcoin
USD/ETH — dollars for ether
USD/USDT — dollars for tether
USD/MATIC — dollars for polygon
USD/ADA — dollars for cardano
These common crypto trading pairs measure global metrics. The use of particular fiat currencies on regional exchanges varies greatly, with the national currency of a local exchange often being among its most popular base pairs. When it comes to fiat base pairs: the Canadian dollar (CAD) is popular in Canada, the Hong Kong dollar (HKD) is popular in Hong Kong, and the British pound sterling (GBP) is common in the United Kingdom. One advantage of using fiat in lieu of a fiat-pegged stablecoin of the same value relates to the ease of “cashing out” your crypto, and its universal acceptance by merchants. The phenomenon of cashing in and out from fiat — or crypto — is why many common trading pairs are between stablecoins and fiat.
Trends in Cryptocurrency Trading Pairs Explained
Offering relative stability, USD — and USD-pegged stablecoins — can generally be found in just about every crypto trading pair in a top 150 cryptocurrency trading pairs list. Though subject to change, some of the most common by availability, as well as by trading volume, are:
BTC/USDT — bitcoin for tether
ETH/USDT — ether for tether
BTC/USD — bitcoin for U.S. dollars
ETH/USD — ethereum for U.S. dollars
While there are thousands of trading pairs, these four tend to take up a huge percentage of trading activity. In December 2021, these four pairs accounted for a sizable chunk of total crypto trade volume. While crypto trading volume appears to be trending towards fiat base pairs and the stablecoins pegged to them, BTC and ETH crypto trading pairs also remain dominant as readily liquid and available options for trading in and out of assets throughout the crypto ecosystem.
Cryptopedia does not guarantee the reliability of the Site content and shall not be held liable for any errors, omissions, or inaccuracies. The opinions and views expressed in any Cryptopedia article are solely those of the author(s) and do not reflect the opinions of Gemini or its management. The information provided on the Site is for informational purposes only, and it does not constitute an endorsem*nt of any of the products and services discussed or investment, financial, or trading advice. A qualified professional should be consulted prior to making financial decisions. Please visit our Cryptopedia Site Policy to learn more.
