Bitcoin is the product of the virtual world that we all are now familiar with. While everyone is keen on investing in Bitcoin, not many possess the requisite knowledge or the skills to understand cryptocurrencies to be able to make better trading decisions. Crypto trading is a full-time job that demands a lot of dedication, time. and effort. However, not everyone is able to put away that much time.
Thus, trading apps such as Bitcoin Prime have cutting-edge algorithmic technology that can provide investors with high profitability by conducting fundamental and technical analyses. Also, here are 8 significant bitcoin trading secrets that every investor can take advantage of to maximize their earnings.
- Finite supply: The supply of bitcoin cannot be renewed like the supply of regular currency or that of stocks and shares. The creator of bitcoin had put a limit on the number of bitcoins that could ever exist and that is 21 million. So, if the demand for it increases in the coming years, its price is bound to rise.
- Integration with other banking systems: The value of bitcoin is bound to be influenced by the extent of its integration with banking frameworks or any other payment system that may emerge. If the integration process is successful, it will have a positive effect on bitcoin and its price is likely to increase.
- Decentralized network: The cryptocurrency market does not work through a centralized server or currency network like physical currencies. Rather it works through individual-to-individual transactions, and these transactions are added to a blockchain which is a sort of digital ledger recording the transaction data.
- The market cap rule: Rather than buying a bitcoin when its price is low, it is better to invest in it when its market cap is high. In the same way that a company’s market cap is more indicative of its value than its total sales, bitcoin’s market cap is indicative of its success.
- Choosing the trading style: Day trading, trend trading, and hedging are some of the trading styles of bitcoin. Each has its plus and minus points and investors have to choose the right one suitable for them, after analysing each.
- Importance of speculation: To trade in bitcoin, the investor has to speculate on the probable rise and fall of bitcoin price. The exactitude of this speculation, along with the market movement, will decide the investor’s profit or loss, as the case may be.
- High-risk investment: Bitcoin is a volatile asset, mainly because of its limited supply. This makes it a very high-risk investment because the value of bitcoin may increase or decrease steeply over a very short period. As such, the profit that some people make in bitcoin trading can be as staggering as the loss that some others incur. Such a situation leads to some people considering it as a highly profitable equation while others think of it as the substitute for a Ponzi scheme.
- Setting a level for profit/loss: Because of the way the value of bitcoin see-saws, it is preferable to have a cut-off line at which trading should be stopped. Even if a person is consistently making profits, he should stop when the profits reach a pre-decided level. And there is no need to emphasise that if someone is consistently losing, he should stop as soon as he can.