How to trade in Bitcoin
A bitcoin cost less than one penny in 2010. At the end of 2021, this figure has topped with handsome amount of $40,000.
Volatility in the market has been the only constant throughout bitcoin's history, which has been marked by spectacular rallies and the bursting of speculative bubbles.
While this volatility attracts traders, it's also why newcomers and seasoned experts should proceed with care when investing in bitcoin.
Steps to trade in Bitcoin
1. Determine your preferred method of Bitcoin trading.
Traditionally, trading Bitcoin has included making purchases and sales via a Bitcoin exchange. Contracts for difference (CFDs) provide an additional trading option for bitcoin by allowing investors to speculate on the cryptocurrency's price movements.
Here you don't have to use an exchange to buy and sell CFDs on Bitcoin since they are traded OTC. In addition, because of the leverage inherent in CFDs, you will need to put up a margin to initiate a transaction.
This gives you complete exposure to the bigger stake, although at the expense of a lower starting investment. However, since leverage magnifies both your earnings and losses, you need to ensure that you take precautions to reduce the likelihood of adverse outcomes.
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2. Why does the price of bitcoin fluctuate
1. Bitcoin Supply- It is projected that the current supply of 21 million bitcoins will be depleted by the year 2140. Bitcoin's price may rise in the coming years as its finite supply could lead to a rise in price in response to rising demand.
2. Integration- Bitcoin's growth to popularity in the public eye depends on its adoption by new banking and payment infrastructures. With any luck, more demand for bitcoin will lead to a higher price for the cryptocurrency as a whole.
3. Key Events- The price of bitcoins might be affected by several external variables, such as government policies, security incidents, and macroeconomic news. Trust in bitcoin might be boosted by any agreement among users on how to raise the network's capacity, leading to a rise in the cryptocurrency's price.
3. Strategies for Bitcoin Trading
Daily CFD trading entails opening and closing a position within a single trading day, preventing overnight exposure to the bitcoin market. For this reason, you won't have to pay any extra money for financing your project overnight.
If your goal is to capitalize on the daily volatility in the price of bitcoin, then this strategy may be right for you. This method may be suitable for you if your goal is to capitalize on Bitcoin's short-term price fluctuations.
4. Proceed with your first Bitcoin trade.
Contracts for difference (CFDs) allow investors to bet on the price swings of bitcoin without ever taking physical possession of the cryptocurrency.
This signifies that you have the choice of going long or short on the coin. Your gain or loss will depend on the extent of the market shift and how effectively you were able to foresee it.