Is it wise to invest and start 6? If this is the question you are facing, this article is probably for you. Go through the entire article to help you make up your mind.
Many investors were upset that they missed the Bitcoin bandwagon when the prices were within reach. When Bitcoin reached its all-time high of $68,000, these same investors regretted their decision.
Bitcoin could not hold its all-time high position for a long time, but it did show the potential of scaling a new record-breaking price trend. Although after scaling a new high of roughly $68,000 in 2021, it was trending at around $18,000.
There was a time when the price trend of Bitcoin was trending in cents, but today at the time of writing this article, it is trending roughly at $19,000. So the market is recovering. However, there is a potential that this all-time high of $68,000 will be broken again.
You must understand that the crypto market is volatile, and there are times when the price trend is bullish and the price reversal is quite sudden. Thus, you get a chance for Bitcoin Trading and make a substantial amount of money by simultaneously aligning your short-term and long-term goals.
You can buy Bitcoin in fractions; thus, you can keep piling up your wealth over a period. You can use this strategy to build up your crypto empire. There are other altcoins in the market that you should not ignore.
It would help if you diversified your crypto portfolio. However, remember that you should invest the amount of funds you are ready to lose.
Many crypto experts predict that the crypto market is bound to boom. However, if we look at the historical data on Bitcoin, we can see a periodic spell of bullish and bearish phases. Although the price fluctuation may be drastic, the price trend might quickly change; over a period, you can see that a bearish trend will remain for some months before the trend changes to bullish.
So the future looks bright if you consider hodling Bitcoin for a long period.
But what about your short-term goals? How do you manage it?
You can still exploit Bitcoin Trading even for short-term goals.
The crypto market never sleeps; the trading continues throughout the year without interruptions. The service might be suspended for server maintenance, but crypto trading continues in the market.
Since a day has 24 hours, you can effectively open up a position and close it before 24 hours, thus saving on crucial charges that are applicable if you hodl them beyond the specified time. Therefore, you get ample opportunity throughout the day to make some profits. This strategy is quite common with Day Traders.
Scalping is another method that you can employ to make a substantial profit. Like Day trading, you open and close the position within the day. However, Scalping differs a bit from Day Trading. When you open up a position in Day Trading, you will keep it open for a couple of hours before closing it.
On the other hand, while Scalping, you will open up the position for a few minutes before closing it. While a Day Trader will make a substantial profit by keeping the position open for a long time before closing it, a Scalper, on the other hand, will frequently open and close the position with small piece changes.
So in Day Trading, you trade a little and make huge profits, and Scalper, on the other hand, will make frequent trades and small profits power trade. Since Scalper makes frequent trades, the amount of profit made is good enough.
There are several crypto exchanges available that offer leverages. You need to pay a small amount called “Margin Money.” The minimum amount required is $100, and you can leverage as high as ten times. Thus, the profit potential is just too great. However, there are a few things to keep in mind; you need to do thorough research to increase your chances of making huge money because leverages are like double-edged swords cutting both ways. If you have leveraged ten times the capital money and misinterpreted the market, you are liable to pay ten times the amount lost.
Another great way for Bitcoin Trading is by using derivatives, namely Bitcoin Options Trading.
Bitcoin Options Trading is a contract between a buyer and a seller where the trade is settled at a predetermined date in the future. So how is this any different from regular trading of Bitcoin?
Suppose you enter a contract in March, and the contract expires on 30th June, and the current price of Bitcoin is trending at $20,000, and as per your research, the price of Bitcoin will be reduced to $15,000, which is called the Strike Price. However, at the end of 30th June, the price has increased to $22,000, which is called the Spot Price; you are incurring a loss of $2,000.
However, you are not required to pay the entire $2,000 but instead pay the mandatory margin money of $50, which might be required at the beginning of the contract.
If the Spot Price of Bitcoin reduces by $10,000 at the end of 30th June, you are making a profit of $5,000. Thus by paying the $50, you are making a profit of $4950.
However, you need to buy these contracts in lot sizes.
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Conclusion:
It is always better to have two trading strategies while trading Bitcoin or any other currencies, one for the long term and the other short term. It would help if you were well informed about the current market developments, and based on your research; you need to invest the surplus amount you are ready to lose and not regret it in the future.
Another thing to remember is that there is no perfect time to enter the market. For example, people who took the risk and believed in Bitcoin in 2010 bought it at a dirt-cheap price. These investors were lucky as now the theory is practically sitting on a gold mine, as against those who saw the potential at the beginning of 2017, when the price of Bitcoin was trending in the thousands.
So if we give into FOMO, those who invested in 2017 should also feel bad that they could have gotten into Bitcoin when it was trending in mere cents.
Today, the price of Bitcoin is roughly $20,000; a few are ready to take the risk and are hedging their bets based on historical data.
