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How Does The Volatility Of Bitcoin Make You Gain More?

The Cryptocurrency Trading space has been witnessing sudden surges and spikes in the past few years. Investments in Bitcoin cryptocurrency are growing by several million in a short timeframe.

Cryptocurrency, best known by the name Bitcoin, is a software-based virtual currency. When you try to procure such cryptocurrency, what you acquire is an algorithm-based digital asset. Bitcoin is a virtual currency characterized in the form of tokens. This bitcoin is peer-to-peer digital money that you can transfer without the involvement of a regulatory agency like a bank.

Digital Currency: The future of trading

img source: unsplash.com

Principally, cryptocurrencies are computer files that you store in digital wallets. A wallet is a digital structure that securely contains your cryptocurrency.

You can send Bitcoins to other people’s digital wallets and vice versa. A public list called the Blockchain keeps track of every cryptocurrency transaction.

The hype over Cryptocurrency and Bitcoin Trading is now making digital currency an investment greater than gold. Top investors are shifting to using cryptocurrency as a means of trade.

What accounts for the volatility of Bitcoin?

The value of Bitcoin is impossible to predict as the bitcoin price graph sees high crests and deep troughs in a short period. The value of cryptocurrency can encounter a double or even a triple-digit increase or decrease within a single day. These price fluctuations in Bitcoin give some Bitcoin traders huge profits, while some experience dramatic and sudden losses.

So, why are there so many ups and downs in the price of Bitcoin? Why is this Bitcoin so volatile?

The events that happen in and around the world have a significant impact on every market. Like any other market, the Bitcoin market is also very likely to be affected by worldly happenings.

Buying bitcoins

Source: Hacker Noon

How can you buy these Bitcoins? If you have powerful computers, you can even choose to mine bitcoin with its potential. You can transfer bitcoins within your digital wallets. Besides, Bitcoin Exchanges can assist you in buying or selling Bitcoins using various currencies.

Though Blockchain technology keeps track of all bitcoin transactions, the people behind remain anonymous.

Bitcoin – a technology of emotions

People and Investors have started seeking other alternatives to store currency like Bitcoins and cryptocurrency. An investor’s feelings of euphoria, panic, or emotional attachments or estrangements could impact the price of Bitcoin. When it comes to the value of Bitcoin, an investor’s emotions can take a toll on the market values. The moods of different investors are known to influence the price fluctuations of cryptocurrency. Some investors tend to sell their bitcoin possessions as a result of panic. The selling of Bitcoins leads to a drop in the value of the Bitcoin cryptocurrency.

Regulatory measures made by several governments are also impacting bitcoin prices.

Bitcoin Trading: Risks Vs. Rewards

Since Bitcoin transactions are entirely digital, there are possibilities of hacking threats. Since the transactions are irreversible, a security risk arises. Some fraudsters may even try to scam you by selling fake bitcoins. The volatility of cryptocurrency is yet another risk factor. Nevertheless, Bitcoins have made several common men into millionaires. If you know how to profit from the price fluctuations, you become the King of the Hill.

Got Cryptocurrency? How do you gain from its volatility?

You can make use of bitcoin’s unpredictability for your potential benefits. Here are some methods for you to gain from the volatility of the Bitcoin cryptocurrency.

Strategy is everything

Source: Medium

Whether you lose your valuable investments or gain significant profits depends on your investing strategy. Here are some schemes that you might want to research and explore.

Margin Trading – where you risk it to go for it

Being one of the riskiest options you have, Margin Trading with Bitcoin could make you a millionaire very soon. In margin trading, you can undoubtedly get your resources liquidated rapidly by exploiting the high leverage that forex agents offer. With the right moves, you can make a profit hundred times greater than your investment. Since it involves millions of dollars to influence Margin Trading, this option is reasonably sought-after.

You don’t need to depend on the cost increment to bring in cash. You can even earn profits by going short on your investment when you speculate prices. Be that as it may, there are numerous elements to consider if you are up to checking out Margin Trading.

A good approach is to start with small leverages since it will lessen the danger of liquidation. Also, it is good to ensure that your installment is something you can tolerate losing.

Margin Trading requires constant monitoring of the Bitcoin market since a mishap or a price fluctuation could bring you gigantic misfortunes. You should consistently be prepared to react if the margin trade does not go as per your expectations.

If you trade with proper planning, even if you encounter a loss, the loss cannot go beyond the initial investment you make. Since things may not go all the time as arranged in margin trading, you should rethink the risks involved before engaging yourself in trade. If you are a risk-taker, Margin Trading is the policy for you.

Dollar-cost averaging (DCA), the way to play safe

Considered as the most secure alternative by a wide margin, dollar-cost averaging involves putting a fixed measure of cash into bitcoin. In Dollar Cost Averaging, you invest a fixed amount at regular intervals of time. For instance, you can choose a predetermined amount (say some 10 dollars) to contribute consistently to your investment.

First-time investors in Bitcoin and amateur traders should check out this popular option of Bitcoin Trading. It involves routine purchasing with modest amounts of cash, and you need not put in a sizable sum of money as an investment in this. Since you schedule and invest your money over a set period, you can safely trade in volatile trading options such as cryptocurrency.

By adopting the dollar-cost averaging option, you need not worry about the volatility of the bitcoin market or the price fluctuations of cryptocurrency. The sum you contribute regularly will keep developing as you get acclimated to the instability of the Bitcoin trade.

The vast majority of traders who tend to hold Bitcoin for over three years do get benefitted. People who are short-term traders of Bitcoin do not comprehend the elements of the trade and liquidate Bitcoin at a quicker rate. Dollar-Cost Averaging could help you understand the essence of the cryptocurrency trade.

Bottom Buying – The right time, the perfect profit

One great practice in any trade is buying when the prices are low and selling when the price chart encounters an increase. This practice goes well with Bitcoin and cryptocurrency trading too. You can start trading on reliable platforms like BritishBitcoinProfit.org.

You are sure to hit a high in profits if you are patient. As Warren Buffet says, “The stock market is a device for transferring money from the impatient to the patient”. Impatient people generally don’t do well with this type of trade. If you have got the luck and tolerance, you could gain from this strategy.

Just HOLD it!

Source: pixabay

One can gain good profits with this approach if one follows a HODL (Hold On for Dear Life)
For a Bitcoin trader, the HODL approach proves out to be one of the most profitable trading strategies.

Day Trade: The Everyday Market Gimmick

People who adopt the Day Trading strategy of crypto trading gain from price movements in a brief period. These traders make several trades on a single day.

Most Day Traders do not hold assets for more than some hours. When the day ends, day traders make small profits by selling their assets.

Swing Trade: Profits Take Time

Source: Medium

 

In contrast to Day Traders, Swing Traders hold their assets (say Bitcoin or cryptocurrency) for more than a day.

If you prefer Swing Trading, patience is necessary as you should concentrate on the bigger picture than small profits. A steady survey and monitoring of the market are a must to look out for the price fluctuations. When you feel like it is the best time to sell, you can liquidate your assets and gain profits. Just Chill. Good Things Take Time.

Scalping: Where Every Second Counts

An extreme way of trading is where rapid liquidation of Bitcoins takes place. The Scalping strategy takes the crypto trade to the extreme where Buying and selling Bitcoin happens real quick. Scalpers hold their assets for less than minutes.

Scalping can be helpful if your goal is to make quick profits in a brief period. Within a single day, you would have to make several trading moves to make profits.

The peaks and valleys of crypto trading

Source: Nikkei Asia

The fluctuations in Bitcoin price are innate, and it does not affect the increased hype of the Bitcoin market that has been prevailing for the past few years. Regardless of the fluctuations, one can earn good profits with proper research and the right investment strategy.

Conclusion

Though the sudden price fluctuations in cryptocurrency inflict huge losses on several people who trade, several Bitcoin investors gain sizable profits from its volatility. You just have got to make the right move. Before investing in Bitcoin, make sure you thoroughly research the Bitcoin market and acquire proper knowledge of crypto trading.

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