ALL ABOUT BITCOIN
Due to its volatile nature, Bitcoin prices usually fluctuate a lot. Since there are plenty of foreign exchange markets such as the dollar, the euro and others against the Bitcoin, at the same time, many Forex investors are also trading in Bitcoins.
The question here is simple: “Can I trade and make money from Bitcoin?” – Yes, profits can be generated from Bitcoin trading. It is worth noting here that there are two main ways to profit from trading in Bitcoin:
- Investing in Bitcoin this refers to buying Bitcoin usually in large quantities, and generating profits over time from its steady, long-term value increases.
- Bitcoin speculation: In the sense of trading Bitcoin more frequently, by buying at a low price and selling at a higher one – and afterwards repeating the same process. This can be a faster way to see growth in some cases.
Forex traders generally prefer to trade Bitcoin against the US Dollar – therefore, Forex brokers usually offer Bitcoin in currency pairs such as: USD / BTC, BTC / USD. Some brokers are also taking Bitcoin as an accepted deposit/withdrawal method for their traders.
How to trade cryptocurrency in CFD
Bitcoin is one of the newer commodities that can be traded with CFDs. Bitcoin is a crypto-currency that has value since it practically eliminates transaction fees when sending money globally and has a fixed supply of 21 million Bitcoin. It is a currency that is decentralized, allowing transactions between two parties without governments or a third party. The forces of demand and supply determine the price of Bitcoin on exchanges and this financial instrument has been gaining popularity among traders due to its volatile nature. New bitcoins are created with highly time-intensive algorithms which limits the rate they enter the market, while demand is affected by various factors, such as confidence in the central banking system, merchant adoption and the perception of Bitcoin as a store of value. Since there is a fixed supply, it is a finite commodity similar to gold or oil.
Bitcoin CFDs allow you to trade movements in the price of Bitcoin without owning or purchasing Bitcoin. This is useful because you do not have to worry about security issues regarding Bitcoin, such as encrypting your wallet, downloading a back-up, etc. When trading CFDs, there is no need to purchase the underlying asset. This makes investing in Bitcoin safer for those worried about the security of Bitcoin or those who do not want to set-up a wallet and purchase Bitcoin. Traders can speculate and make money on large price movements without needing to know how to acquire or store Bitcoin securely. Also, another benefit is that you can buy or sell Bitcoin at exchange prices. Trading in Bitcoin directly means you would have to sign-up to exchanges or purchase Bitcoin at a mark-up from the market price. Trading CFDs means you can buy or sell at the market price and gain more from large swings in either direction.