Cryptocurrencies are volatile, that is no secret. Early investors to Bitcoin and other Cryptocurrencies have seen massive returns on investments since Bitcoin boomed to an all-time high of $20,089 in December 2017 - up from around the $1,000 mark just 18 months before.
Since then, we have seen BTC price go to lows of around the $3,000 mark in early 2019 and we have recently a resurgence in the baseline digital asset.
From mid-February til now, we have seen BTC fall from a relatively stable $9,000 mark, come down to $6,858 at the time of writing.
BTC ROI currently stands at $4,969.22% based on $6,858
We can allow a bit of leeway for the fall in BTC price, as asset classes across the board have been hit hard due to the ongoing global pandemic of COVID-19. Perhaps the exception is Gold, which performs strongly in times of crisis.
There is an unusual amount of volatility across all markets due to the Coronavirus. This could spell good news for Crypto investors though, as Blockchain technology facilitates cashless payment solutions. The less contact the better in these strange times of isolation and lockdown.
The exception of Crypto volatility would be Tether. How Tether works is that it literally Tethers itself to Fiat, specifically USD and has a like for like valuation with the US Dollar. This is to facilitate digital payments on the Blockchain network which hold their value.
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With high market volatility comes profitable opportunity! So how can BTC investors capitalise on sharp market movements?
Traditionally when Crypto investors think of purchasing digital assets, the thought process can often be one dimensional.
There is a problem with the above process. What happens when the price of your digital asset starts to depreciate?
Read on to find out how you can capitalize when Bitcoin price starts to take a downward price movement.
Sell and buyback
The most obvious thing to do for HODLer, would be to sell their Bitcoin before it reaches a severe low.
Then buy back when it is deemed, in the investor's opinion, that the all-time low has it. Then the only visible future for the asset is to start climbing in value again - ensuring a profit.
Trade Digital Assets
This is the biggie, the money maker!
The beauty of trading digital assets is that you can make money on market downturn by predicting that an asset will fall in value. The industry term is known as "going short" or opening a "sell" position.
Bitcoin is the baseline for digital assets so when BTC performs poorly, this has a knock-on effect to other Crypto’s further down the chain.
When opening positions in the Bitcoin market, traders should consider the following to optimise their trading success.
By margin trading or trading with leverage, traders can further magnify profits. Leverage is, in essence, a loan within a trading account, allowing traders to trade higher volumes with less capital investment.
The higher leverage setting, the greater the profit opportunity.
Scalping is opening a position in a market, buy or sell, and then closing the trade when it shifts into a profit zone. The idea is to enter and exit markets quickly with the goal of making a profit.
Crypto trading provides a sound environment for traders wishing to deploy scalping as their chosen trading strategy. The volatility movements in Bitcoin markets can make day traders big profits by combining scalping with high leverage.
To give an idea of the volatility within the BTC market on October 25th 2019, BTC price had skyrocketed by 42% on the previous 24 hours. On the 24th BTC was trading around $7,000 against USD. Fast forward 24 hours and that figure reached $10,500.
If you are new to digital assets or indeed the world of CFD trading, then look for a broker that offers a free to use "demo account".
Given the volatility of Cryptocurrencies, a demo account would provide an environment where traders can finely tune a trading strategy and see first-hand Bitcoin volatility.
Bitcoin whales are individuals or companies who hold vast amounts of Bitcoin. Should they suddenly dump lots of BTC, this can dramatically affect BTC price.
There are Twitter pages and some brokers even have Whale Movement features which show large transactions between Bitcoin wallet addresses.
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ONE BIG EVENT
There is a massive event on the horizon which will impact the Bitcoin market and reshape the whole Bitcoin landscape for the foreseeable future...
The way BTC comes into circulation is through a process known as "mining". Bitcoin miners are rewarded for verifying transactions on the Blockchain network, allowing the flow of peer to peer, digital transactions.
The verifying of transactions adds a new chain into the block on the blockchain. Each time a new block is created, miners are rewarded in Bitcoin. At present, the BTC reward is 12.5BTC which is set to be halved.
Every 210,00 Blocks mined, the BTC reward is halved. This event is known as the "halving" or "halvening".
The next halving is expected to land on the 12th of May 2020 where the reward will be cut to 6.25BTC.
Why is this significant? Because history has shown us that in the previous 2 halvings, there is great volatility in the market just before and just after the event, meaning fantastic opportunities for traders!
BTC has been a safe haven for investors recently, outperforming Oil and The S&P 500. With doom and gloom in the stock markets, this may be the best time to put trust in decentralized assets.
More and more people each day are looking towards digital assets as THE realistic, global payment method of the future. With Blockchain technology going from strength to strength in development the only way seems to be up for BTC.
Award-winning broker has a unique vault system which allows traders rapid access to tradable funds.
There are 4 Vaults to hold tradable funds. 3 of which are EUR, USD and GBP and the 4th being BIT’s. What this means is you can store your funds in BIT’s should you wish to speculate on the price of BTC in upward market trends.
Alternatively, store funds in Fiat to protect your trading account balance in times of BTC market downturn.
Traders can internally transfer between vaults depending on BTC price trends.