Bitcoin Trading For Beginners: Trade Bitcoin Like a Profi

  • Andrew Strogoff

    Bitcoin trading, how to find best opportunities, factors, affecting Bitcoin’s price

Bitcoin Trading For Beginners: Trade Bitcoin Like a Profi
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Bitcoin is the first cryptocurrency ever, which attracts many traders and investors nowadays. This coin appeared in 2009 and was a kind of a miracle for that period. However, traders and investors paid almost no attention to it.

Nowadays, Bitcoin trading is very popular due to the opportunities that it gives to investors. The price for a coin has reached almost $20,000 by the end of 2017 as a huge number of investors have bought this cryptocurrency. Later, the price declined below $10,000. However, the interest for Bitcoin is high in the moment of writing and this tendency is likely to grow in future.

With this huge uptrend, many beginner traders and investors want to buy the first cryptocurrency, but they make many mistakes that result in losses. We are going to describe Bitcoin trading for beginners in this article.

btc traiding for beginners

What are the main factors that influence Bitcoin price

main factors that influence Bitcoin price

In order to buy BTC, you need first to learn the main factors that may affect its price. However, before you do this, you have to understand that cryptocurrencies have some specifics that distinguish them from traditional fiat money.

The main difference is that they are all decentralized. Traditional currency price depends on central banks’ policies meaning those financial institutions may affect quotes by simply changing their decisions on interest rates, for example.

As for cryptocurrencies, there is no a single body nor issuing them neither controlling their volume. The good news here is that you need no traditional analysis tools to predict Bitcoin’s price. There is no central bank’s meeting to follow or economic data to monitor. The bad news is that you need to pay attention to demand and supply in order to forecast Bitcoin’s price which is not sometimes an easy task to complete.

As for the supply, it is limited by the nature of this system. The total volume of Bitcoins is 21 mln units. It is to mention also that new coins appear by means of a so-called mining (when miners solve several math problems in order to validate transactions and support systems integrity and safety).

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This is a clear advantage of Bitcoin as its price is likely to grow in future due to the fact that the supply is limited. Once the total volume will be reached, there will be no further emission of coins.

The demand for Bitcoins depends on several factors including the possibility of using coins to conduct transactions between individuals and legal entities and cryptocurrency’s investment attractiveness.

Key factors that affect Bitcoin’s demand

Let’s have a closer look at what can influence cryptocurrency’s demand. The first aspect is its effectiveness as a mean of payment. In other words, you need to understand what are the advantages of Bitcoin as compared to traditional currencies.

It is to mention that BTC has met several problems during the past year. The rise of its popularity resulted in a decrease of transactions’ speed and time and increase of its costs. This lack of scalability has made several users to pay attention to other coins such as Ethereum for example, which have no such issues.

Traders and investors need to know that Bitcoins transactions may cost above $5-10. However, even if you pay this amount to miners, there is no guarantee, that your transaction will be executed in the nearest future as other users may offer even higher rates.

Transactions’ privacy

This is one of the most significant Bitcoin’s advantages. There is no financial monitoring of such transfers meaning nobody except you and sender/recipient know all the details of a transaction. The good news here is that you can use it for different purposes including commercial operations. The bad news is that this privacy prevents Bitcoin from being widely officially accepted by governments.

There are countries that allow their citizens to use cryptos, but their number is limited. In addition, there is no general idea how to regulate Bitcoin and altcoins as means of payment and how to describe them. This prevents coins from being easily integrated into an international financial system.

The number of legal entities ready to accept Bitcoin

In 2009, Bitcoin was a kind of a game as there was no a single shop ready to accept Bitcoin as a mean of payment. However, things have changed and nowadays, some companies offer an opportunity for buyers to use Bitcoin and even several altcoin to pay for goods and services.

However, Bitcoin still loses the competition to traditional money because of many factors including high transaction fees, low operational speed etc. There is one more thing to pay attention to. Bitcoin’s price is volatile meaning it may grow or fall for a couple of thousands of USD in several days.

Why this aspect is negative for adoption of cryptos as payment mean? Let’s suppose one online shop has sold some goods for one BTC (the price of Bitcoin was $9,000). In the next couple of days, BTC’s quotes went downwards and reached $7,000 level meaning this online business has lost around $2,000. In order to prevent those losses, businesses have to stay in direct contact with exchanges in order to convert Bitcoins into fiat money.

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Places to change cryptocurrencies

There are several exchanges that offer opportunities to sell Bitcoins and buy US dollars (euros) for example meaning users may easily convert cryptos into traditional currencies and vice versa. This fact increases Bitcoin’s popularity as traders and investors may profit from simply buying coins cheaper and selling them when they become more expensive.

Bitcoin trading and news

Bitcoin trading and news

Apart from all the above-mentioned aspect that you need to consider in order to profitably trade BTC, there are also some other important things to pay attention to. Almost every day there are news that may have either positive or negative influence on this industry.

Events are very important as they help investors and traders to understand whether this or that coin is promising. When we hear, for example, that China is going to impose new bans, we need to be prepared for the rise of volatility as China is a very big player in this industry.

However, when a country promises to adopt cryptos or make any steps to facilitate cryptocurrencies’ circulation, we may suppose that this event will have a positive impact on the whole industry.

Bitcoin regulation

Bitcoin’s traders and investors pay much attention to cryptos’ regulation in different countries. There is no general approach to it as every country has its own opinion on Bitcoin in particular and this industry in general.

In Japan, for example, Bitcoin is adopted as a payment mean. As for the US, cryptocurrency here is regulated as a commodity. Bitcoin’s regulation has a significant impact on the whole market. There are several exchanges in Japan for example. As for China, such companies had to leave the country as there were no conditions for them to continue their activities.

Community’s opinion

When trading Bitcoin, you need to pay attention to everything that happens within the community. To do this, you may sign up for different forums and social media in order to get actual news. Community opinion may have a significant impact on price.

Let’s say Bitcoin developers prepare a huge update that is likely to increase transactions’ speed and minimize fees. This news will have a  positive influence on Bitcoin as this coin has serious scalability issues in the moment of writing.

Sometimes it is useful to listen to some experts who make their forecasts on Bitcoin. Famous Winklevoss brothers, founders of Gemini exchange, think that Bitcoin is promising and this cryptocurrency may be treated as gold in future.

Such comments may positively influence Bitcoin as those persons have some weight within the cryptocurrency community. Investors are likely to increase volumes, which will affect Bitcoin in future.

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Bitcoin trading and technical analysis

All traders and investors nowadays try to use a technical method to forecast Bitcoin’s price. This is another way to predict prices even without paying attention to fundamental factors. However, it is strongly recommended to combine both methods in order to make trading and investing more effective.

There is no difference between stocks, Forex or cryptos technical analysis. You have the same tools such as technical indicators, candlesticks, levels and the others. However, before you start Bitcoin trading, you need to understand that this cryptocurrency is volatile meaning it has a wide range of fluctuations even within a day.

This allows traders to gain more as BTC/USD’s fluctuations for example, may reach more than $200 per 24 hours and even more. However, high volatility increases risks as well.

Main steps to start Bitcoin trading

Before we make a point, we would like to give you a brief guide on the main steps for every trader or investor to start Bitcoin trading:

Main steps to start Bitcoin trading

Here we make a point in this Bitcoin trading guide. In order to trade like a professional investor, you need to pay attention to several aspects and be prepared to work hard.

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Top 10 Blockchain ETFs to Buy in 2019

  • Alex Morris

    Are top Blockchain ETFs simply tech stocks in expensive clothes? Find out whether you should invest in Blockchain ETFs if you are hesitant to buy Bitcoin

Top 10 Blockchain ETFs to Buy in 2019
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Why should investors buy top Blockchain ETFs?

Blockchain has become one of the major buzzwords in the tech space over the recent years, and it comes as no surprise that many want to capitalize on the revolutionary technology. That prompted the appearance of Blockchain ETFs where old meets new.

ETFs can be bought and sold in the form of stocks. While cryptocurrencies are generally deemed to be extremely risky, Blockchain ETFs that are comprised of the most established stocks on the market are considered to be a much safer choice. U.Today has come up with the list of top 10 Blockchain-oriented ETFs to invest in 2019.    

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BLCN

BLCN invests in stocks of the companies that are dealing with Blockchain. The ETF has more than 60 stocks. The advisory board of BLCN consists of crypto influencers who decide what stocks they should invest in.

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Despite a bumpy start, Eric Ervin, the CEO of BLCN, is not deterred by disappointing numbers, taking a long view into the future. He believes that the technology is still too nascent, and we are dealing with a long-term investment.

BCNA

Reality Shares has yet another Blockchain ETF, and its focus is placed on China, the second largest stock market in the world. Ervin claims that China is betting big on the DLT technology — it has almost three times the amount of patents the US has. Not surprisingly, Alibaba is their main holding, but the fund also has exposure to China’s A-Shares — before they invest in a particular stock, they assess the number of Blockchain-related patents as well as the degree of innovativeness. Eventually, they only select the companies with the highest score.

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BLOK

Amplify’s ETF was launched simultaneously with Reality Shares in mid-January of 2018. BLOK also intentionally excludes the words ‘Bitcoin’ and ‘Blockchain’ from its full name. Prior to that, the SEC issued a warning after a lot of stocks shoehorned these trendy words despite not dealing with crypto at all (case in point: Riot Blockchain (RIOT), which immediately saw its stocks skyrocketing).    

BLOK owns the stocks of IBM, NASDAQ, Overstock and other behemoths that are keen on the Blockchain technology.     

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Notably, there is one key difference between BLOK and BLCN — Amplify is an actively managed ETF.

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BKC

Back in May, BKC joined the crowded Blockchain ETF space. Brian Kelly, a Bitcoin permabull and a constant CNBC contributor, spearheads the fund. The holdings with the highest weighting in the fund include Overstock.com, GMO Internet and Global Unichip. Kelly states that BKC is a top-of-the-mind option for those who would like to invest in cryptocurrencies without dealing with enormous price swings and security issues. Overall, BKC holds the stocks of 32 companies.

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KOIN

The fund utilizes artificial intelligence in order to discover new Blockchain stocks. It specifically targets stocks with related keywords.   

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Since the list of KOIN’s holdings includes many big-name companies in the likes of Microsoft and Visa, it is definitely a safe bet for investors, but the predominance of conventional stocks makes it hard to make sizeable gains. Investing in companies with low market capitalization is considered to be a huge risk for such funds.

LEGR

First Trust Indxx has three groups of Blockchain stocks:

  1. Stocks of companies that have already come up with their own Blockchain-related products (for instance, IBM).   

  2. Those companies that are already utilizing the Blockchain technology, but they use technology that has been developed by other companies.

  3. The last group of stocks is attributed to those companies that are only dipping their toes in Blockchain.

Such a diverse approach to investment is considered to be one of the main advantages of LEGR. However, the fact that the fund rebalances its holdings to other stocks only twice a year makes it less attractive than other options.

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LDGR

A Blockchain ETF is supposed to be more than tech stocks in expensive clothes. LDGR actually offers to invest in companies that have a proven record of investing in Blockchain-related stocks. Just like in the case with KOIN, it cherry-picks the companies with the help of AI.

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According to the company’s CEO Lewis Bateman, they are exclusively focusing on investing in stocks of those companies that already have Blockchain-related patents. Mastercard Inc. and Royal Bank are among their top holdings. It hasn’t been an easy run for LDGR, but the same can be attributed to practically any other ETF that was launched after January. However, Bateman claims that this LDGR stands out among the rest of earlier launched funds because of its robust buildout.    

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LINK

LINK is the first entry on our list that actually features the word ‘Blockchain’. In its portfolio, this actively managed fund features stocks of 31 global companies that are dealing with the nascent technology. Raj Lala, the CEO of Evolve ETFs, is a firm believer in the disruptive potential of the DLT, and the fund is an opportunity to capitalize on that.         

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Things didn’t go particularly smooth for this fund since its stocks have shed more than 20 percent of their value since LINK’s inception in May. Hut 8 Mining Corp is at the top of its holdings list with a 10.8 percent share.

HBLK

Harvest Portfolios was responsible for launching the country’s first Bitcoin ETF, HBLK, which focuses both on large-scale and small-scale Blockchain businesses. Notably, this became the very first Canadian ETF that got the green light from regulators. Back in February, the Ontario Securities Commission approved the ETF.     

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The main purpose of this ETF is to become an entry point for investors who are seeking access to the burgeoning tech sector. Subsequently, they buy the stocks of already established companies.   

BKCH

In June 2018, the Horizons fund was listed on the Toronto Stock Exchange (yet another Canadian Blockchain ETF on our list). In 2018, Blockchain ETFs became the salient feature of the country’s biggest stock exchange.  

Yahoo! Finance

The fund’s chief executive officer Steve Hawkins claims that he is not sure how big the adoption of the Blockchain technology is going to be, but the investments are necessary for building out the technology. BKCH, according to Hawkins, is focusing on well-established companies (the holdings of this ETF include the stocks of Nvidia Corp. and Digital Realty Trust Inc.).

What differs Blockchain ETFs from Bitcoin ETFs?

Since there is a lot of confusion, it is worth pointing out that no aforementioned Blockchain stocks are dealing directly with cryptocurrencies. The Winklevoss brothers were on track to launch their own Bitcoin ETF, but they didn’t get the approval from the SEC. Bitcoin ETFs are seen as a catalyst for the next bull market, but SEC commissioner Hester Peirce (better known as ‘Crypto mom’), claims that it could take years for the much-anticipated approval.  

Hopefully, this article helped you pick up the best Blockchain ETF! Stay tuned with U.Today!   

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