How to trade bitcoin - 7 Hacks to make Money in 2020
Over the last few years, functions and working of bitcoin has been covered by governments, academia, and corporations at length. To some, it is a store of value while others define it is electronic cash meant as a medium of exchange. Both of which are correct, in one way or the other.
Created in 2008 by Satoshi Nakamoto (known by no one), Bitcoin has seen a decade of highs and lows. All of this, at an incredible pace.
From the creation of the first blockchain in 2009 by Satoshi to having a market capitalization of more than $ 180 billions in 2020, bitcoin has truly come a long way.
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Trading Bitcoin for Profit
There is no doubt about the disruptive potential held by bitcoin. From enabling peer-to-peer transactions with full transparency to keeping the banking systems under checks and balances – bitcoin has the potential to do it all.
But this post is not about all that. This is about how to trade bitcoin so you can make money.
In this post, we are going to discuss the various factors involved in bitcoin trading and what all you can do to start making money with bitcoin.
So, before the BTC prices rise up a notch, let’s get started with elephant in the room:
The Volatility of Bitcoin
Early headlines made by Bitcoin included Laszlo Hanyecz paying 10,000 bitcoins for a couple of pizzas in 2009 and then seeing bitcoin reach a 1:1 parity with the USD in 2011.
Few years down the line, bitcoin was a serious thing for most.
Check out this cover by The Economist in the 31st October issue of 2015:
Other debacles such has hacks of cryptocurrency exchanges like Mt. Gox and statements by government and regulatory officials have always had a great impact on bitcoin prices.
One of the biggest factors that make bitcoin a great opportunity for making money in 2020 is its tough-to-gauge volatility. The biggest reasons behind bitcoin jumps and falls over the years are:
Regulation is one of the biggest factors behind bitcoin’s volatility. The correlation between bitcoin prices and actions by regulatory bodies is quite complicated as the effect of each regulation depends on how bitcoin enthusiasts think about the particular law or legislation.
While some regulations can drive the prices up, others can get the market mood towards bearish sentiments. Analysts and economists are yet to crack the direct effect of regulation on the bitcoin prices, but that’s the same about even the conventional markets.
Governments around the world are equipped with necessary firepower to regulate prices for any kind of asset – yes, bitcoin too!
By limiting buying, holding, and selling actions of bitcoin to their public is the one way they can go about it. The other way to control bitcoin prices is to tamper with the cost of doing business related to bitcoin.
So far, different governments have pursued bitcoin in their own special way.
But the important question: Can governments control bitcoin prices totally?
There is only so much the government can do with bitcoin. Just like there are limits to how much bitcoin and other cryptocurrencies can replace government-issued currency as in China.
With a total of three bitcoin halving till date, the event has been a big factor in turning the markets bullish every time it happens.
After the third bitcoin-halving that happened on 11th May 2020, around 900 bitcoins are created on a daily basis, worth more than $8 million at the current rates.
This event happens every four years, or every 210,000 blocks being mined. Once bitcoin halving occurs, the block reward is cut into halves too.
While the total amount of bitcoins being mined in decreased, it is important to note that the markets always turn bullish following the halving of bitcoin.
The World Order
While it’s true that the bitcoin and cryptocurrency markets are fairly isolated from the events happening in the world, it is still composed by people from the society.
So, the fact that events in the world do have an impact on the prices and volatility of bitcoin is not far fetched at all.
Trading Bitcoins for Beginners
Apart from being volatile, bitcoin is a revelation in its own right. From enabling peer-to-peer transactions to being an alternative to conventional financial systems, bitcoin has it all.
Let’s discuss some handy tips on how to trade bitcoin in 2020 to make money:
Dedicate yourself to Technical Analysis
To make sure you don’t end up losing hard earned money while trading bitcoin, you need to have a rock-solid understanding of how the markets work.
Put simply, technical analysis is the art of considering all the real-world market data about bitcoin and analyze it in order to successfully understand and predict where the markets are headed.
Depending on when and how you are doing it, it requires a lot of experience, experimentation, and research. By dedicating yourself to technical analysis, traders can find the sweet spot where they can buy on the dip and sell as the bitcoin prices rise.
Understanding how candlesticks work:
The very first thing about technical analysis is understanding how candlesticks work. The candlesticks are rectangular objects on the price charts in green or red/pink colors.
The height of these rectangles shows the difference between prices of bitcoin at the start and end of the period you are analyzing. For example: if you are looking at the price trends of bitcoin over a month on a daily basis. The length and color of candlesticks show the behavior of markets on the particular day. If the rectangle is green in color, it means the price at the end of this particular day was higher than the price it started with.
How volume works:
Volume is another important factor in bitcoin trading. A lot of beginner’s think that it is an unimportant number that is just there for the show. But it is important to understand that all the other metrics can be read or analyzed only if the volume is taken into account.
Whether you are looking to predict the market’s behavior in the next couple of days or over the next few months, volume plays a big role in it. Low volumes over a sustained period of time can be taken as a signal of low enthusiasm or confidence in the markets. Very high volumes in a short period of time can also signal unpredictable behavior.
If a trader is too focused on the candlesticks and volume, and not take moving averages into account – they can end up making the wrong trades as they won’t have the complete picture.
The two types of moving averages that you should know about are SMA (Simple Moving Average) and EMA (Exponential Moving Average). Simple moving average is fairly simple, as the name suggests. It is the average closing price for the period you are analyzing.
EMA, however, is not that simple. When we take the average of the given days, the days are given different weightage based on their proximity to the day you are making the prediction for.
Bitcoin Trading Tips
Whether you are looking for how to trade bitcoin or other cryptocurrencies such as Ether, Ripple, and Litecoin.
Play with different coins
Not getting obsessed with a single currency is very important to make real profits over a sustained period of time. Nothing different from the conventional markets where they say not to put all your eggs in a single basket.
The reason we say this is because the cryptocurrency markets are fairly diverse in nature now. There are various projects that cater to a totally different audience and hence behave differently at any given time.
For instance, Ripple (XRP) and Stellar are involved with the banks and financial institutions. Regulations and announcements related to them will be different and have less impact on the rest of the cryptocurrencies.
The same way Ethereum is into Enterprise Blockchain implementation while EOS and KIN are betting big on different mobile apps and hoping to build a big user base of different communities that eventually start using their currency for various tasks.
Trade with a plan
As the saying goes: Failing to plan is Planning to fail. When you start trading bitcoin, make sure that you always have a plan for it. Even if it is a small trade, you must be able to back it and justify it with numbers.
Even if you are going with a hunch, make sure that you verify the details that the hunch is based on. The waters in bitcoin trading are rocky, make sure you have a robust and stable plan to chip away the risks and emerge with profitable trades.
Bitcoin Trading Platform
A bitcoin trading platform is needed to bid, sell or buy bitcoins. There are endless platforms out there. Some platforms do offer video tutorials on how to trade bitcoin. Depending on your location, needs and your trading know-how, you might want to start with one of the market leaders:
Best Bitcoin Trading Platform
- TD Ameritrade – Best platform for US citizens – open an account
- Fidelity – Best platform for beginner’s – open an account
- Coinbase – Overall best Cryto Exchange platform – open an account
- Binance – The World’s Leading
Cryptocurrency Exchange – open an account
Best Bitcoin Trading App
- Robinhood – Overall best mobile APP platform – open an account
- Blockchain – The safest and most popular wallet – open an account
- Blockfolio – Best App & tracker for UK citizens – open an account
- Coinmama – The easiest App for beginner’s – open an account
Making money with Bitcoin
Trading bitcoin is a great way to create profits and a career in the long run, yes. But the beginners often seem to stay puzzled about exactly what they can do to make money with bitcoin.
In this part, we are going to discuss the various ways of making significant money with bitcoin. Let’s begin:
Start accepting Bitcoin for payments
It’s true that bitcoin is used as a peer-to-peer transaction and not a store of value. But that’s for the distant long run, perhaps. The bitcoin prices are increasing on a regular basis and don’t seem to stop anytime soon.
If you have a skill or service that you sell to others, you can start charging them in bitcoins and cryptocurrency in general, instead of fiat currencies.
The reason we suggest this is because there are a lot of people who sit on bitcoins and other cryptocurrencies worth thousands and even millions of dollars. But the number of people accepting these cryptocurrencies is quite few.
By accepting bitcoin and other cryptocurrencies, you are basically acquiring assets that grow faster than the fiat and beat the inflation rate.
As we discussed in the earlier parts of this article, people (crypto enthusiasts and developers) solve complex cryptography problems on the blockchain and mine bitcoins. These miners are awarded a part of bitcoins created as a reward. Another great way to make money with bitcoin and other cryptocurrencies.
The task may not be as glamorous as trading bitcoin for USD or other cryptocurrencies like Ether and Litecoin, but one can be certain about making money with bitcoin mining.
Not only this, once you have a set up for bitcoin mining, you can mine for other cryptocurrencies too. There are various models of doing this.
One of the more popular and interesting ways of mining is legal and competitive mining. In competitive mining, miners compete with each other deploying bleeding-edge technologies for GPU and computers that can out-mine their competitors.
But the inefficiency of mining is quite visible in the bearish markets. To account for this, the miners tend to look at other currencies or move base. Another important aspect of mining cryptocurrencies: Mining at subsidized electricity prices.
As we all know, the adoption of hydroelectric power has been rampant. The electricity generated by these hydroelectric plants is more than enough to power the cities and counties they were built for. So, they have started to offer subsidized electricity to mining companies if they move base.
Become an Affiliate
There are good chances that you have already heard about affiliate marketing. These are programs where you basically market products and services of other companies and get a commission out of it.
With so many startups, publications, and service companies involved in the cryptocurrency space now – all of them need affiliate partners too. You could be one, and start earning cryptocurrencies in return for promoting crypto and blockchain projects that you believe in.
To make sure you are successful in the long run, adapt new techniques for community building, email marketing and other marketing skills for your affiliate campaigns.
Participating in Bounty Programs
Just like bitcoin, all the projects and companies entering the market of bitcoins and blockchain in general are pragmatic and inventive. Instead of spending millions of dollars on ads and outreach campaigns, they run bounty programs.
This is a common practice amongst the crypto upstarts. By picking the right programs and products, you can start earning bitcoin and other cryptocurrencies with micro-tasks and promotion work.
Keep. It. Moving.
As you must have figured out by now, cryptocurrency and bitcoin are yet to be mainstream in the real world. This means the markets, the currencies, and the people will adapt with time.
So, it is very important for you to stay abreast with all the developments that happen around bitcoin. Keep Learning! Now you should know about the basics when it comes to bitcoin trading. Leave a comment below and let’s discuss rather you know better tools and more profitable trading tactics.
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FAQ about Bitcoin Trading
Can you trade bitcoin for cash?
Sure you can. Bitcoin is a regular currency. Unlike a FIAT currency (USD, EUR, o.o.) bitcoin is a digital currency. You can exchange bitcoin into cash at any time. There are even bitcoin ATM's available or you can pay in bitcoins for services or goods.
How to trade bitcoin futures?
Bitcoin futures can be traded on several trading platforms. Major platforms are TD Ameritrade, Fidelity, Coinbase, Binance, Robinhood or Blockfolio. Before you start make sure you are aware about the high risk of bitcoin futures trading.
How to trade bitcoin on Coinbase?
Coinbase is a very intuitive platform for bitcoin trading. They offer a lot of how to's and video tutorials to get started. If you need in-depth advice on how to trade bitcoin on Coinbase, then call us today for a 1-on-1 consultation.
How to trade bitcoin on Robinhood?
Robinhood offers the overall best mobile APP platform for bitcoin trading. Unfortunately, there are not a lot of how to's nor video tutorials available to get started. If you need advice on how to trade bitcoin on Robinhood, then call us today for a 1-on-1 consultation.
How to trade bitcoin for profit?
The only way to trade Bitcoin for profit is longterm. Buy some Sathoshi or even multiple bitcoins and leave them in your account. For sure the bitcoin will increase its value in longterm. For short-term profit, the risk is very high to loose money due to the volatile market.