Trading a highly volatile digital asset like Bitcoin can gain you a substantial profit, especially when you use the right strategies. Cryptocurrencies have gained the reputation of functioning like wealth-generating tools, but it’s crucial to identify the perfect trading strategy for your portfolio. Bitcoin might be the oldest digital currency, but it’s still seen as an emerging financial technology, so you should act cautiously.
Like other commodities, you can buy Bitcoin with a credit card and trade it in crypto exchanges. Bitcoin was created to function as a store of wealth and payment currency, enabling easy transfer of value. You can send Bitcoin across the border without dealing with any third-party or central authority required to validate transactions. The potential behind Bitcoin’s technology is quite promising because it could generate high profits due to its increased volatility. Bitcoin, together with other seasoned digital assets, is a highly traded asset and has registered a meteoric rise. However, during the bear market, it has become the ideal asset to add to one’s portfolio because its prices dropped, allowing investors to purchase more. Let’s note that cryptocurrencies have plenty of peaks and troughs, so they are ideal investment tools in the long run.
How to start trading Bitcoin if you just joined the crypto market?
Before you plan a Bitcoin trading strategy, you must decide if Bitcoin is the right digital currency to add to your portfolio. You can choose from numerous cryptocurrencies, and purchasing more than one is recommended to lower the risk associated with investing in alternative assets. If Bitcoin is the ideal asset for your needs, you must select a trading platform that makes it easier to trade according to your strategy.
Since the introduction of the Ordinals, more investors have become interested in Bitcoin because it has become an enticing project that can help them make an extra income. You can join the trend and purchase this volatile asset as its price is still low and expect a moment when it fluctuates to the other extreme to sell it. However, before buying Bitcoin or another digital currency, you need to gain sufficient knowledge of how the market works so you can safely navigate it and reduce your chances of losing funds.
Proven strategies to make money with Bitcoin
What differentiates a successful from an unsuccessful investor? An effective trading strategy. A well-skilled trader devises a winning strategy based on research that maximizes their winning chances. Depending on the nature of the market and their skills, they can choose from a broad range of Bitcoin investing strategies.
Scalping
Crypto traders choose scalping because it’s low risk, they can employ bots to handle some of the actions, and the potential profit increases. As a beginner, you can leverage scalping to build small wins and make a profit from accumulating their sum. As a scalper, you need to use a large amount of liquidity to take advantage of Bitcoin’s price changes so you can benefit from a fast turnaround. The time span between the price changes can be a few seconds or minutes. Be prepared even to wait a couple of hours if you want to capitalize on an increased trading volume. As mentioned earlier, you can even use automation to manage frequent trades according to an established set of signals.
Range trading
If you use this strategy, you can capitalize on non-trending markets by using support levels and candlestick charts to find stable high and low prices. You’ll have to learn more about specific terms for this strategy, like resistance which refers to the price above the current value, and support, which is the price below the present value. When Bitcoin’s price fluctuates between support and resistance levels, you can buy at the support level and sell at the resistance level to make a profit.
It’s crucial to keep an eye on the volume when using this strategy because the market trends help you figure out what patterns the market is subjected to.
Arbitrage
This is another effective strategy to profit from trading Bitcoin because it implies buying it on one exchange for a lower price and selling it on another for a higher one. You must always keep an eye on several exchanges to see if the price for crypto pairs, including Bitcoin, vary from one to another, so you can take advantage of the price disparity. The key to leveraging this technique is to make accounts on multiple exchanges and stay connected with the markets. This strategy is far from simple, and you must use multiple tools to monitor the markets and determine if the prices are stable. Arbitrage is a popular method seasoned crypto investors use because the sector is unregulated and different exchanges have differences in prices.
Sentiment and news analysis
This strategy requires you to gain in-depth market knowledge because it involves predicting. You need to take into consideration human actions and reactions to what happens on the market instead of paying attention to price trends. You should try to predict if the Bitcoin demand will fall or rise by analyzing different information sources and looking at the social consensus on the digital currency.
It’s essential to take your information from reliable news outlets and stay connected with social media to track the market’s sentiment. Twitter is one of the most used social media platforms to research what happens in the crypto market. The more positive tweets about Bitcoin, the more likely it is for its price to move upward. If, on the other hand, you observe that the public tweets negatively about Bitcoin, its price will probably go downward.
Key Takeaways
Making a profit from trading Bitcoin involves gaining knowledge about the market. Even if you’re a beginner trader, you can make wealth from crypto trading using the right strategies. Make sure you devise a strategy that matches your trading style and fund it on thorough market research. The above strategies are quite popular among beginner and seasoned traders, so you should definitely try them.
