Bitcoin is the first cryptocurrency that was created and launched with the help of blockchain technology in 2009. After its creation, several altcoins came into the market. As the market evolved, cryptocurrency trading came into effect with time, and so crypto exchanges were introduced for the same purpose.
The third Bitcoin halving event has significantly influenced its price, market capitalization and helped it enter the mainstream market in recent times.
What Is Bitcoin Trading?
Bitcoin’s price is governed by the market law of supply and demand like every other investment asset and product in this world. It is also largely impacted by market acceptance. Another important factor is how much the token is promoted in the media, how much it can manage to trend in social media, and how much it is endorsed by big market influencers.
Bitcoin trading, to put in simple terms, refers to buying and selling bitcoin tokens, but it is unique and different from the usual bull market stock trading. This is because bitcoin trading is largely impacted by the volatility of BTC. Thus, on the one hand, it creates the opportunity of making humongous amounts of profits while, on the other hand, the window of unimaginable losses remains open. Bitcoin trading typically comprises speculating the token’s price movements in the near and distant future, investing in the asset accordingly, and holding it for the right duration of time.
How Does Bitcoin Trading Work?
Bitcoin trading has two main ways of functioning; viz, direct sales, and via online exchanges. Direct sales are made through digital currency exchange markets. In direct sales, sellers are expected to offer a particular amount of bitcoins to the buyers directly, who will then decide to purchase it as per their discretion. Whereas in online exchanges, sellers indicate the amount of bitcoin they want to sell at a certain price, and the online exchange acts as a middleman of finding the right buyer for a small amount of exchange fee.
There are multiple ways of making profits. Traders can either make profits by selling bitcoins or by investing in other crypto-assets with the purchased bitcoin.
Bitcoin Trading Steps:
- First and foremost, traders have to know how bitcoin’s price movements happen. They have to remain updated about the market at all times and be aware of bitcoins’ available supply.
- Secondly, traders have to decide on a trading style, profit goals and adopt a correct strategy of bitcoin trading. Several available strategies include day trading, swing trading, margin trading, or simply buying and holding.
- Traders have to be decided whether they want to invest in bitcoin for the short term or long term. It is also essential to determine the limit of risk-taking.
- Another important factor in choosing an appropriate way is to get exposed to bitcoin either via exchanges or bitcoin derivatives.
- Finally, they should keep track of their investments at all times proactively.
Can Bitcoin Trading Be Considered Safe?
Bitcoin trading is risky due to the volatile nature of the bitcoin token. Risks are also related to the safety features of the exchanges and derivative exchanges as often security breach incidents can lead to loss of funds. However. If you want to make an investment in Bitcoin to make a good profit from it with a secured platform then Bitcoin Rush is the platform for you. Read out Bitcoin Rush Reviews by experts to know more about this safest Bitcoin robot.
When Is the Best Time to Trade Bitcoin?
Though cryptocurrency exchanges function round the clock and throughout the week, according to crypto trading experts, the best time to trade bitcoin is influenced majorly by its volatility and this in turn largely varies with the exchange through which someone is trading. Therefore, traders need to find out when bitcoin is performing at its best and when it is more volatile after making careful observations about their exchange and trade accordingly.
The Bottom Line
In a nutshell, bitcoin trading requires traders to speculate about bitcoin’s price movements. Traders need to make the right judgments on how long they should hold the bitcoin assets before the next drastic price fall and estimate their profits and losses more precisely.
Harvey is the FinanceWhile’s passionate news writer. Before joining our team, he was a freelance writer and had written a number of articles related to finance and economics for foremost publications and news sites. He is an avid traveler. In leisure, he loves to travel and explore new places.