Bitcoin trading is a digital currency that was created in 2009 and has seen a gargantuan increase in value ever since. Big price changes can happen any time as the bitcoin market operates 24/7. The volatility of the bitcoin makes it a very risky investment yet it attracts many investors for the same reason. Are you looking to get into bitcoin trading? This article will give you the basic knowledge you will need to engage in Bitcoin trading.
Factors That Affect the Price of Bitcoin
Being a decentralized currency, bitcoin isn’t affected by most economic and political factors unlike regular currencies. The factors that do affect bitcoin value include the following:
Supply - There is only a limited number of bitcoins that can be “mined”. The final bitcoin is expected to be mined by 2040.
Bitcoin Market Cap - The current value of the entire bitcoin market as well as its perceived value play significant role in determining the price of bitcoin. This is due to the fact that traders go long on bitcoin in times of upsurge and withdraw all their investments in times of decline.
Bitcoin News which influences the public’s attitude towards the digital currency.
Strategies
It is no surprise that there is no magic method in being successful at bitcoin trading 100 percent of the time but here are some trading strategies that may help you.
Day Trading - Day trading allows you to go for a more short-term approach by taking advantage of the price movements during the same day.
Buy and Hold - This enables traders to opt for a passive and long-term strategy by buying bitcoins and holding onto them for an extended period of time regardless of the market’s movement.
Swing Trading - This strategy requires constant monitoring of the bitcoin market to catch upward trends whenever they appear and keep holding onto that position until the first sign of a decline appears.
The Risks Involved
Bitcoin trading requires caution. One day you’ll see the currency’s value reach an all-time high of near $20,000 and then the next few days you’ll see it go down to $6,000. Apart from high volatility, many bitcoin exchanges are a target of hacking and theft.
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