Inexperienced traders often have a difficult time developing a strategy to trade so easy after buying bitcoin. In order to develop a strategy, the first step is to educate yourself on the unique aspects of the asset. In this article we outline several properties of the asset and the market that should be considered.
Reasons to Adopt Trade So Easy Strategy
Before we outline the actual properties of Bitcoin as a portfolio asset, let’s review the reasons for buying it. There are reasons investors choose one asset or another, and having clear goals is the first step to developing a solid strategy to trade so easy. You may feel one or more of these reasons coincide with your own, but these are the most common:
- Store of Value: while intended originally to be a peer-to-peer electronic cash system, it has recently evolved to be a good store of value.
- Self-Sovereign Money: Bitcoin is not issued by a bank or government. Consequently, it also cannot be confiscated by said banks or governments, and can be transferred to anyone, at any time, anywhere in the world.
- Non-Correlated Asset: while there is some debate on this, Bitcoin is touted as non-correleated despite instances when it does behave similarly to the stock market. For the most part, Bitcoin’s price moves more closely to Gold’s price vs. stocks.
- Fiat Distrust: Recent events and economic instability has caused many to question the value of fiat money. Bitcoin in particular is likely to move closer to mainstream adoption as monetary policies foster fear of hyperinflation.
- Liquid Asset: Unlike gold, businesses, real estate, fine art, private equity, stocks, bonds, or many other financial assets, Bitcoin can be liquidated into cash easily, and without the need to share personal data. It can also be sent anywhere, anytime, in any amount to anybody without the need for a bank or middleman.
- Currency of the Future: As institutional money enters the market, futures trading increases, and banks start to offer custodial services, Bitcoin will continue to gain credibility. However, market capitalization needs to increase before it will be widely used as a currency.
- Trading Opportunity: Former currency traders are starting to enter crypto specifically due to its volatility. Traders can make money off volatile movements in the immature crypto market.
New Player’s Strategy to Trade So Easy
The last two years (2019-2020) has seen a lot of action in the crypto market. Bitcoin reached approximately $14,000 in June 2019, dropped below $4,000 in March 2020, and is now hovering just above $10,500. An 8% monthly average price change for Bitcoin is very attractive to traders. They see a real opportunity to make money trading the volatility. Hedge fund trend-followers are starting to step into the market, and institutional interest in derivatives such as cryptocurrency options has increased.
While still a small market, FX veteran traders are stepping up with newfound interest to trade so easy in the decentralized crypto market. While the FX market trades more than $6.5 trillion per day, crypto exchanges currently trade about $130 billion daily. Long-term implications of changing monetary policies could significantly change market liquidity. Concerns over a more inflation-tolerant Federal Reserve stance is making investors look at Bitcoin more closely.
With Gold near all-time-highs, some investors feel a pullback is ahead signalling less upside possibilities. The more volatile, less adopted Bitcoin with its small market cap only 2% that of gold, offers growing possibilities. Even a very small 1% allocation of Bitcoin can have a huge impact on a portfolio given BTC is up ~46% to GLD’s ~25% thus far in 2020. While risky, Bitcoin has a lot of upside potential and is starting to appeal to those looking to protect their capital.
Hodl or Trade as the Best Easy Strategy
As the crypto market becomes more liquid, Bitcoin will become less volatile. So you may be asking yourself which is the best strategy to trade so easy? Actively trading (buy low, sell high, buy more dips, rinse and repeat) or hodling (buy and hold as price increases) Bitcoin? Honestly, this has to be determined by each individual investor based on their own risk tolerance level and investment goals.
Bitcoin is both a hedge against financial uncertainty and its price tends to go up over time. So whether trading or hodling, it is a worthwhile option to consider if you take the time to fully educate yourself. The key to success will be having realistic expectations based on data analysis, and good risk management practices based on individual tolerance levels.
If you’re new to trading, consider copy trading experts to learn from professionals and decrease the risk of loss due to inexperience. If your goals are long-term, dollar-cost-averaging your buys and hodling your Bitcoin securely offline is another option. Taking this route can result in less worry about news, negativity, volatility, or daily price. Since its creation, the price of Bitcoin has never gone below its 200-week moving average – only up. While there are certainly no guarantees, as long as current patterns remain intact, this 200-week moving average should hold as a floor for the price. At the very least, learning about Bitcoin as an asset is something everyone should do.
