Trading through bitcoin is now a concept that has almost gone mainstream. Just a decade ago, the term cryptocurrency was a word that many thought were from oblivion. However, as of today, the cryptocurrency market has grown to the tune of over $100 billion by the end of 2017. Despite the significant market cap that bitcoin and other cryptocurrencies enjoy, there are some beautiful and informative tutorials and articles that are very helpful to the any prospective bitcoin trader or user. Trading cryptocurrencies such as Bitcoin for profit is one of the universally accepted money-making endeavors that you can venture in. Today there are more than 800 cryptocurrencies that new and budding entrepreneurs can have a shot at investing in. In this article, we are going to highlight the best trading strategies in the cryptocurrency market today.
Understanding bitcoin’s market nature
The initial and most critical thing that you should be aware of about bitcoin is that it is not being treated as a legal tender or currency by most businesses and countries around the globe. Although you can use bitcoin to make purchases from different stores around the world, it has not gone mainstream like the conventional and universally accepted currencies such as the US dollar and the British Sterling Pound. There are some individuals however who have put lots of trust in the bitcoin cryptocurrency exchange to make large purchases such as buying their holiday home.
Others have invested in bitcoin debit cards that happen to be contactless to make purchases for goods and services anywhere around the globe. It is unfortunate that most investors and entrepreneurs are treating bitcoin like a commodity that may generate a return on investment rather than a currency. The potential utility of the bitcoin cryptocurrency gives it value which keeps on increasing at a high rate. It eliminates third parties and bypasses the conventional financial institutions such as banks with all their bureaucracy and additional fees. Blockchain technology is the network through which cryptocurrencies such as bitcoin can perform transactions in a very transparent manner.
Exchanges are the primary mode of trading bitcoin. These trading exchanges will accommodate your fiat currencies such as the Euro and the US dollar in exchange for one of the cryptocurrencies such as bitcoin liquid pool of bitcoin is maintained by these exchanges which enable users to go on with the withdrawal of bitcoins at any point in time 24/7. Entrepreneurs who want to make a trade can have bitcoins deposited in their wallet on the exchange. They can also use a wire transfer to the bank’s exchange account. The exchange takes note of such a transfer and credits the fiat currency worth of bitcoin in your bank account. From that point onwards, you can start trading bitcoin by limiting orders or submitting to the market. As soon as you sell or buy, orders are matched to a corresponding one, then the exchange can be filled. Most exchanges only provide this structure that is somehow limited whenever they are placing orders. However, more complex orders are now allowed by some transactions in the market that are growing tremendously.
The technology used in trading bitcoin
Most traders who specialize in bitcoin make their manual trades just like the way regular trades are executed. However, the advent of the bitcoin trading technology has seen improvements in the exchange of bitcoins gradually over the past few months. Some automatic traders have specialized on bitcoin that do market trend analysis using algorithms which then have their portfolios adjusted when necessary. Most of the time, these firms have managed to keep their cryptocurrency exchange strategies as a secret that is well-guarded. Other companies will allow you system access to their bitcoin trading platform which trades bitcoins for you at a price.