Bitcoin Trading Explained

Cryptocurrencies are here to stay and Bitcoin – the world’s first cryptocurency is expanding in popularity rapidly. As the first digital currency, Bitcoin or BTC is now internationally accepted by merchants, traders and customers alike. As a cryptocurrency, it is not regulated or affected by the actions of central banks or governments bur rather it is governed by a complex algorithm that caps its production at 21 million coins.
Most brokers now offer trading Bitcoins (BTC) alongside fiat currencies (traditional currencies) online as the cryptocurrency is rapidly gaining in popularity in the virtual trading arena. Traders are showing increasing interest in Bitcoin trading for many different reasons. It is popular with CFD trading (contracts for difference), and a wide range of reputable trading platforms and brokers now offer BTC as one of their assets. It falls in the currency category, alongside other standard Forex pairs such as the USD/CAD, GBP/EUR, USD/JPY, USD/RUB, etc.


Why is Bitcoin Trading So Popular?

There is a reason why Bitcoin trading is becoming more and more popular – when and if done correctly, it is extremely profitable. However, you need to have a basic understanding of what Bitcoin is and how to select a reputable exchange, where you can buy and sell the crptocurrency.
A lot of exchanges are beginning to offer competitive leverage with BTC trading in a CFD format. It is common for brokers to give traders 20:1 leverage ratios, with trades starting from as little as €100/$100/£100. However, it is worth noting that Bitcoin is a currency that is associated with high liquidity and its price fluctuates greatly on a daily basis. This is why it’s important to select a broker that is fully regulated, licensed, and reputable with Bitcoin trading, since these guarantee safety, security, and minimal margin levels. As one of the more recent additions to the range of tradable assets, Bitcoin is truly unique and offers a host of advantages.
The digital currency was created in 2009 by Satoshi Nakamoto and was intended to be used as a peer-to-peer money transfer system. What is unique about Bitcoin is that it is 100% safe and secure to transfer from one person to another, for investment purposes, merchandise, trading etc. Transactions of BTC are non-refundable. All parties have the benefit of complete anonymity when purchasing BTC. Because it is not governed by the actions of central banks, no monetary authorities can increase or decrease its supply. There are also no transactions fees levied on BTC transfers, making it easy to pay or get paid with this option.


Bitcoin Valuations Rise Relative to Fiat Currencies

In terms of online trading of BTC, clients at all regulated exchanges can use their Bitcoin wallets to transfer BTC into their trading accounts. The can use these wallets to purchase fiat currency, commodities, indices, equities and other currency pairs. These digital currency units are auto-mined with computers and complex software. This process takes time, which is the reason why Bitcoins are so rare, valuable and increasing in price. Production has been capped at 21 million coins, after which time there will be no additional production and the current coins in exchange are about 16 million. This finite model follows a similar pattern to that of other commodities like silver, copper, gold, platinum, and the like.
As Bitcoin’s rarity increases, so do demand and price. For example, in 2009, it was possible to purchase 1,309 Bitcoin for $1. In 2017 years 1 Bitcoin is worth $4,300. This dramatic increase showcases the importance of digital currency as it becomes a more accepted method of payment online. As the global economy moves towards a cashless society, BTC is at the forefront of this revolution. Traders are fast to cash in on its popularity by trading it against multiple currencies and commodities. XGB/BTC, MOON/BTC, BTC/INR, BTC/CBY, BTC/EUR, CBX/BTC and DOGETH/BTC are becoming popular cryptocurrency pairs.


How to Trade Bitcoin against Other Currencies?

Bitcoin can be traded on exchanges similarly to how you trade other currencies. Different traders or speculators have different strategies and base their trades on technical analysis or the economic calendar of events to ascertain future price movements. There are a number of strategies based on Elliot waves, Fibonacci fans, simple moving averages, exponential moving averages and Hindenberg omens that work to one extent or another. However, to be able to apply any of these models in your trading, you need to have a sufficient understanding of financial markets, Bitoin, the platform you’re trading on.
Most exchanges are open to the use of all of these strategies, including allowing traders to integrate their own software and black boxes into their markets and execute buys and sells according to specific conditions. This is traditionally reserved for large hedge funds and is the most technical form of trading but if you have the technical expertise – it may be worth trying.
As a whole, Bitcoin traders base their trading decisions around crypto sentiment in the news. Monitoring various exchanges and global orderbooks across all exchanges is useful to spot market movements and live prices to stay up to date with crypto currencies and Bitcoins across the world. There is increasing interest in trading Bitcoin and a multitude of reputable trading platforms now make this possible for everyone.