Bitcoin & Cryptocurrency Trading

There is a lot of money to be made trading Bitcoin and other cryptocurrencies.  2016 & 2017 have seen an explosive growth in cryptocurrency value.  In October 2017, the leading derivates marketplace, the Chicago Commodity Exchange indicated that it will launch futures for bitcoin before the year-end.  Cryptocurrencies are here to stay and are gaining popularity with Forex traders.

Best Bitcoin & Cryptocurrency Brokers

What is cryptocurrency trading?

Cryptocurrency trading is Forex trading, but a cryptocurrency as one of the two currencies in the pair.  The best example of a cryptocurrency is Bitcoin that is seeing explosive growth and adoption by different financial institutions around the world.

How to start Bitcoin trading?

You can trade bitcoin with any Forex broker allowing the trade of BTC with another currency.   The brokers above will allow you to trade BTC and a handful of other cryptocurrencies within their real account or demo account.  You can get started just as with trading regular currencies, where selecting a broker is the first step.

How to learn Bitcoin trading?

With the high volatility in the Bitcoin marketplace, the little fundamental analysis required to trade cryptocurrencies, and the limited leverage offered by brokers for this asset class, makes learning to trade Bitcoin is quite unique.  To learn to trade Bitcoin, you must learn to understand chart data and analyze trends (technical analysis).  This is the main tool that you will use to decide how to enter and exit your trade.

How are Cryptocurrencies different to normal currency?

Over the last decade, the supply of money has grown exponentially which was the greatest growth in the supply of money in history. Our money system is controlled by the Central Banks, which in fact is a fiat currency system that has the power to create money. All currencies around the world are government fiat currencies. The real issue with the fiat currencies is that the more of a currency that is in a system the more the prices rises. Subsequently, this will cause inflation to rise and the value of the currency to drop.

Both Bitcoin and gold are similar in that there is a finite supply, which is a huge difference from fiat currencies.  There is a limit to how much Bitcoin can be mined as well as there is a finite supply of gold in the world. There is also a certain predictable rate at which Bitcoin is being mined, similar to the somewhat predictable rate at which gold is being added to the market. Bitcoin mining is the process of creating new Bitcoins through the use of special software.

Cryptocurrencies are a great alternative to traditional cash money and are already referred to as the new Gold standard. The most popular cryptocurrency is Bitcoin with the biggest market capitalization in excess of $42 billion, which represents 40% of all crypto-currency market capitalization.

How many Cryptocurrencies are there?

By July 3, 2017, there were 34 active cryptocurrencies.  The table below shows the top 10 crypto-currencies, by market capitalization (as of July 3, 2017). There is a growing number of alternative cryptocurrencies to Bitcoin that can be traded the same as Bitcoin.


Benefits of Cryptocurrency Trading Versus Forex Currency Trading

The main benefit of owning a cryptocurrency is using it as a store of wealth because the fiat money suppliers can use their purchasing power quite dramatically. What cryptocurrencies like Bitcoin, Ethereum, Ripple and other coins give us is a secondary choice, which actually solves the problem of inflation at the same time.

Unlike traditional currency trading, there is no central bank to manipulate the Bitcoin prices the same way Central banks manipulate the exchange rates. Also, Bitcoin trading is free from taxes and broker fees.

In essence, Bitcoin is a digital currency or a virtual currency created, stored and exchanged on the Bitcoin network, unlike currency trading which is traded over the counter. Bitcoins can’t be debased or devalued by more money printed through quantitative easing programs because the total number of Bitcoins is limited to 21 million.

Why Trade Bitcoin & Other Cryptocurrency?

Cryptocurrency has high volatility creating more trading opportunities.  Forex volatility has fallen to near record-lows in the past 10 years to less than 1%, while Bitcoin has had extreme volatility readings of 30% with an average volatility reading of 10%. More volatility means more trading opportunities and bigger profits, but at the same time, it also increases the sizes of the losses.  Because of this larger volatility, you will find that cryptocurrency brokers offer much lower maximum leverage for these trades.

Analyzing Bitcoin is easier because you don’t have fundamental data like GDP, CPI Inflation, unemployment rate or the business cycle. All cryptocurrencies are not influenced by these macro fundamental data which in essence will make the price action much easier to be read.

Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.