Bitcoin is the most popular cryptocurrency nowadays. This decentralized medium of exchange allows for anonymous transactions through its peer-to-peer network without necessitating intermediaries. Network nodes authenticate the transfers through cryptography, as well as recorded in a public ledger called a blockchain.
One way to earn Bitcoin is through mining, where you program your computer to solve a computational problem that enables the network to connect transactions in the blockchain. Another method is through trading. Similar to stocks, you buy the cryptocurrency at a low price using real money and sell it when its value increases.
Here are a few tips to help you trade Bitcoin wisely:
1. Understand What Affects Bitcoin’s Value
Lots of people are scared to trade Bitcoins because of the market’s volatility. However, instead of looking at this characteristic as adverse, you can view it in a more favorable light since it allows you to gain high profits without leveraging.
To get more assurance in this venture, you should do your research and understand the factors that affect Bitcoin’s price before starting to trade. Online resources like bitcoin-profit.io provide information on tech products through reviewing software and platforms for crypto trading. Visiting the site can help you in this endeavor.
These are the factors that influence Bitcoin’s value:
- Supply– The 21-million limit to Bitcoin supply still has a long way to go before being entirely mined by 2040. Nonetheless, the availability of the cryptocurrency rises and falls based on how quickly or slowly they enter the market and the owners’ activities.
- Market Cap– The market’s perceived and actual value plays a significant role in the decisions of traders to ride the surge or opt out and burst the inflating bubble at a given time.
- Adoption and Integration– Another factor that influences Bitcoin’s price is the adoption of the cryptocurrency as a payment method, as well as its integration into payment systems and crowdfunding platforms.
- Significant Events– Key world events like modifications or updates to regulations, security breaches, and macroeconomic mishaps also influence the cryptocurrency’s value, as well as negative publicity.
2. Know the Trading Platforms
With the boom of Bitcoin trading in recent years, it’s no wonder that several platforms have emerged to cater to people who want to try their hand at this venture. Finding the best Bitcoin exchange depends on various factors like your home country, preferred payment method, registration and processing fees, and limits.
Some popular cryptocurrency exchanges include:
- Coinbase– This digital currency wallet and platform allows Bitcoin buyers and sellers to exchange goods. It’s one of the largest in the market today with over 20 million users.
- Binance– Binance is known for its low trading fees of 0.05 percent. The platform has the most volume of cryptocurrency exchanges, and its mobile app is user-friendly.
- Bitcoin Revolution– Bitcoin Revolution allows for automatic trading according to signals programmed to monitor the market trend. Users can configure the software, leave it to trade on their behalf, and collect the profits.
- Bitmex– Unlike other exchanges, Bitmex purely trades Bitcoins. It’s considered as the third-largest platform for BTC trading and ideal for short-selling, as well as margin trades.
- Robinhood– If you want more profit, Robinhood charges no fees for Bitcoin trading. The platform has its roots as a fee-free stock brokerage.
- Square Cash – It’s a mobile wallet that allows users to buy and sell Bitcoin. The app also doesn’t charge any trading fee and makes cashing in easier.
3. Prepare for the Risks
As mentioned above, you need to understand that the Bitcoin market is volatile due to its relative newness and open-source aspect. Trading this cryptocurrency continues to entail high risks. Research is crucial since you can’t always rely on other people to guide you.
You should have a fair understanding of how it works and learn strategies on how to earn more profit. Moreover, you should only invest the amount that you’re willing to lose. This way, you won’t endanger your finances and regret joining the hype.
4. Stay Up-to-Date with Related News
Knowledge is valuable in making decisions pertaining to Bitcoin trading. The value of the cryptocurrency continues to be affected by significant world events even when no single administrative center regulates it. Keep yourself updated with the news and BTC’s movement so that you can plan your next steps well.
In recent years, these events have had substantial effects on the price of Bitcoin:
Brexit – 2016 to 2019
The Brexit referendum, which was held on June 2016, led to an upheaval in all industries about Britain’s exit from the European Union. The process was supposed to culminate with the UK leaving the group, but the deadline has been postponed to October of this year.
Economists predict that this event, when it pushes through, will have devastating long-term effects on the UK economy and other EU member states. Some even expect Bitcoin to rise higher than the Pound.
India’s Bank Note Demonetization – 2016
In November 2016, the Indian government confirmed the demonetization of all 500 INR and 1,000 INR from the Mahatma Gandhi series. The national bank also released new 500 INR and 2,000 INR banknotes in an effort to lessen the use of counterfeit cash.
Bitcoin price rose when the announcement was made, and still rose to new heights after it was implemented, from 51,600 INR to 69,500 INR per Bitcoin. The demonetization also supports the vision of a cashless society from which Bitcoin has a lot to gain since it’s the most popular cryptocurrency.
US Elections – 2016
Donald Trump’s advocacy against illegal immigration may lead to a boom in Bitcoin use due to his plans to implement a remittance tax. If this successfully pushes through, illegal immigrants sending money to their home will have to pay higher fees. This can make Bitcoin and other cryptocurrencies more attractive.
Bitcoin trading can be a lucrative venture provided that you have a fair understanding of the factors that affect its value. You should also look for reliable platforms that suit your preferences and keep yourself updated on the latest news about the cryptocurrency. Remember, trading always has risks, but it also delivers high rewards.