ELI5 - What Is Pair Trading

Imagine $BTC and $ETH are two superheroes in a city of digital money.

Pair trading in cryptocurrencies is like watching these superheroes battle it out in the city streets.

Sometimes, BTC flies high above the city, making everyone go wild with excitement.

But when BTC is flying high, ETH might be chilling in the shadows, not getting as much attention.

That's when the pair trader swoops in like a superhero sidekick.

They sell some of their BTC, thinking it's reached its peak, and use that money to buy ETH, which they believe is poised for a comeback.

It's like saying, "Hey, BTC, you've had your time to shine. Now it's ETH's turn!"

Then, if ETH starts zooming through the city, gaining popularity, and BTC takes a breather, the pair trader might reverse their move.

They'll sell some of their ETH, thinking it's reached its peak, and buy back BTC, betting on its resurgence.

It's an exciting game of predicting which superhero will dominate the city skyline at any given moment.

And for pair traders, it's not just about the thrill; it's about making smart moves to ride the waves of these digital superheroes' adventures!