Investing or trading: what to choose when Bitcoin is so unstable?

Investing or trading: what to choose when Bitcoin is so unstable?

In early September, the value of the first cryptocurrency almost reached $11,000, and in October it fell below $8,000. The price jumps of the main digital currency were reflected in the market and the behavior of its players.

The Bitcoin rate had risen to $10,900 by September 6. Then the coin began to lose in value and dropped to $7,840. Despite the price increase at the beginning of last month, it had fallen sharply by October.

According to Statista.com, Bitcoin capitalization in the second quarter of 2019 increased to $205 billion. This is the second result in history. The maximum capitalization was reached during the rally at the end of 2017. Many experts agree that the price of Bitcoin will mainly be in the range of $10,000 – $12,000 with rare exits until the spring of 2020.

Investing vs Trading Bitcoin

If you choose trading, you should carefully and regularly monitor the news and market sentiment, focus on the above mentioned price range and technical analysis when searching for entry and exit points. When choosing longer-term strategies, it is worth remembering the seasonality of the market. The most serious risks for investors are a possible global financial crisis and an annual depreciation on the eve of European and Eastern New Year holidays.

Other experts adhere to the position that now no one can predict how much Bitcoin or any other cryptocurrency will cost in the future, since this is a new type of asset, and now it is impossible to make an honest assessment. Profitability is always evaluated in some interval, and in the case of the main digital coin, it is obvious that the longer the investment period, the higher the final profit. Therefore, it is assumed that the mass investor should invest in cryptocurrencies for a long period of time.

Many traders are of the opinion that with an unstable bitcoin and an incomprehensible position of altcoins, it is better to use the trading style that is most consistent with the goals and capabilities of the market player. That is, if you have the knowledge and experience of conducting transactions in the financial markets, and also have free time during the day, then you can try intraday trading. But if your free time is limited, then investing can be a great solution. Despite the fact that the price of bitcoin is not as attractive as the cost of altcoins, in the long run, investing can also give a good return.

Many people judge the crypto market by the period of 2017-2018, when the price of bitcoin rose from $1,000 to $ 20,000 in just a year, and then the price collapsed. If such tremendous volatility occurs again, it will be equally unpredictable and short-term. The cryptocurrency market is growing up. It is still more volatile than the stock market, but price movements are not as high as before. Therefore, you shouldn’t expect a huge profit of thousands of percent for several months.

There was an important lesson in the history of the “bull rally” of 2017-2018: the last thing you need to do is to give way to emotions. After all, on the one hand, everyone began to buy up bitcoin jumping on the bandwagon, when it was already worth much more than $10,000. Оn the other hand, many market players gave in to panic starting to sell off during the price decline and suffered losses.

However, those who bought cryptocurrency at a high price, in fact, increased the payback period of the investment, but retained the opportunity to make a profit. And those who sold the asset regretted when Bitcoin began to recover this year. Experts believe that the price limit for the first cryptocurrency has not yet been reached. Therefore, they recommend buying at any time and holding the asset for as long as possible.

There is also another point of view. Bitcoin is believed to be best suited for medium-term investments. In comparison with traditional financial instruments, such a strategy will allow not to pay attention to high volatility. The market corrected by more than 50% from the highs of 2017, and now there is an opportunity to participate in a rally that may occur after the launch of the Telegram blockchain. The crypto market will receive an additional 200 million users who will use blockchain technology and increase the capitalization of the entire market.

Conclusion

Over the past few years, many crypto exchanges have launched Bitcoin derivatives. Therefore, today the first cryptocurrency is one of the best tools, both for medium-term investors who want to invest a small part of their capital in a risky and highly profitable asset, and for speculators who use intraday or short-term strategies.

All crypto experts agree that any strategy of behavior in the cryptocurrency market should be thought out and thoroughly evaluated in terms of risks. Traders should turn off emotions and strictly adhere to the trading plan. It is also necessary to see your strengths and weaknesses and invest in cryptocurrency exactly as much as you can spare.

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