Every year the number of crypto followers is increasing. Experts predict the great future for the digital currency and even believe it will become the greater alternative for the traditional finance system. However, we should be sure about what we are having right now. That is the great currency with its huge value. The possible today’s way to become the owner for this digital gold is mining or buying. The two require capital and strong belief in Bitcoin. At the same time, Bitcoin trading is a bit different approach for getting familiar with crypto and earn some money on it.
What influences Bitcoin’s price?
It is necessary to know the factors that influence Bitcoin’s price before you get involved into Bitcoin trading. These are Bitcoin supply, media influence, integration and key events.
What concerns Bitcoin supply, it is capped at 21 million. That means that only this number can be mined in total. It is planned to be exhausted by 2140, but it might be allowed for a larger supply and longer term.
Media is another key factor to influence Bitcoin’s price. Any breaking news has a great effect on the coin’s market price. It might be about Bitcoin’s security, value, new Bitcoin supporters. They say it is all under control of huge whales that do control the whole market.
When Bitcoin integrates into new payment systems, it has a tremendous effect on its price rise when it has positive consequences. Integration is efficient for its growth and popularity.
Significant events make their own changes. Changes in regulations, improvement of security and various kinds of Bitcoin announcement push the price up.
Strategies for Bitcoin trading
Bitcoin trading can be done differently. You should clear up the strategies to choose the best option for you.
- Day trading. If you are eager to get profit from Bitcoin’s short-term price movements, you should pay attention to this option. Day trading is when you open and close a position within one trading day. However, the statistics show 80% of all day traders quit in the first two years. Day trading is extremely difficult and emotionally exhausting.
- Trend Bitcoin trading. Let’s clarify what is ‘bullish’ and ‘bearish’ markets first. Bull markets feature upward trends over short periods. These markets are often characterized by optimism among investors; they bring expectations of prices to rise. Bear market is opposite; when you see the prices start to drop rapidly. Trend trading means taking a position that matches the current trend. When the market is in a bullish trend, you’ll go long and if the trend is bearish, you’ll go short.
- Hedging strategy. Hedging means that you sell Bitcoins in order to reduce the risk of holding it and this way increasing or maximizing the reward of your profits. For instance, if you own some Bitcoins but you worry about a short-term drop in their value, you could open a short position on Bitcoin. If the market price of the crypto coin falls, the rewards on your short position will balance some or all of the losses on the coins you possess.
- HODL strategy. This means that you will hold your Bitcoins as long as you can. The name of the strategy appeared as a derivative of the misspelling from a word ‘hold’ on one of the crypto forums. If you are a true believer into the crypto future, this strategy will fit you best of all. Crypto enthusiasts often say ‘hold on for dear life’. However, you should be sure in the long-term positive outlook.
Bitcoin trading is not easy money
You might have a picture of a person doing nothing, sitting on the couch and checking balance on his Bitcoin wallet. Crypto trading is not about that. To become a successful trader you need to have a clear understanding of what is going on in the crypto world, make deep analysis and be aware of all the specifics. There is no doubt that Bitcoin trading might be a great alternative to your job, but evaluate all the necessary skills and your ability to flexible and unstable crypto world.