It seems that Bitcoin traders tend to fall into two distinct categories, either you are taking a long-term view and see a strong potential for great returns as the market matures and the currency’s use evolves, or you like the idea of trading for a profit as the price rises and falls.
Whether you are someone who likes the buy and hold approach when it comes to cryptocurrencies or you want to get earning with Bitcoin straight away, the fundamental question is still whether it is possible to turn a profit.
Where we are right now
It is good to have a sense of perspective when it comes to the Bitcoin story so far and appreciate where it has come from in a relatively short space of time.
Less than ten years ago the market capital for Bitcoin stood at around $1 million. Barely three years later this figure stood at close to $16 billion, which is an impressive rise by anyone’s standards.
What it also demonstrates is that between those two dates and figures there was a large amount of price volatility and some spectacular highs and lows.
However, even when it was seemingly on its knees, Bitcoin was still the dominant cryptocurrency, and there are going to be similar peaks and troughs as we move forward in time.
Volatility is to be expected and every investor in Bitcoin must have this self-awareness built into their trading strategy.
It is also highly relevant to acknowledge that Bitcoin is still on a journey of acceptance and as technology and uses evolve it should help to fuel more demand for the cryptocurrency, which could boost its value in response.
In light of the fact that Bitcoin can still be viewed as being in a developmental phase, this is a core reason why some investors are taking a long-term view and believing that this might be a good moment in time to buy and hold.
Swings in price
As already stated, because this is still an investment opportunity that is still in its infancy, in comparison to other more established investment mediums such as stocks, it is to be expected that there will be bumps in the road when it comes to values.
Using the same argument that increased usage and acceptance of Bitcoin will fuel a rise in value, there are going to chances to take profits if market sentiment drives the price higher than you originally paid.
If you are a trader who loves the money-making potential of market volatility, Bitcoin could be viewed as a great investment medium because it offers the chance to take advantage of regular swings in price.
A more mature market
Despite the presence of price volatility as a regular feature of cryptocurrency trading, in general, there has been a noticeable shift in the extent of this volatility as the Bitcoin market starts to mature.
In simple terms, as acceptance of Bitcoin becomes more widespread and it becomes more mainstream it has meant that price fluctuations have not been as wild as they were in the early days.
That doesn’t mean there is a lack of trading opportunities, far from it, but it does seem that trading Bitcoin is unlikely to be such a wild ride because there is greater price stability brought about by the wider adoption Bitcoin.
Every day offers promise
Knowing that wild price fluctuations are not so regular with Bitcoin could be viewed as good news for short-term traders as it could mean that losing might not be so painful if you can close out at a price that is not so far away from your original trade.
Despite the reduced volatility in comparison to previous times, it is still not unusual for the Bitcoin value to rise and fall in whole dollar amounts throughout the day and that means that every day presents potential opportunities to generate a profit.
A learning curve
Despite the fact that there are definite chances to make money trading cryptocurrencies at the present time it should also be appreciated that understanding how the market works and behaves is a continual learning curve.
Having that mentality that you always learning and honing your technique should help you to keep concentration levels high and inspire you to keep up to date with current market trends and research so that you have information that could be crucial to your trading performance.
As with any form of financial trading, staying in control of your emotions as best as possible and remaining focused are qualities that will often stand you in good stead in your quest to generate regular and consistent profits.
Suffering losses goes hand in hand with making profits and it is wise to take an overview that it is the cumulative gains that really matter at the end of the day.
Is mining right for you?
It is worth approaching the subject of mining and discussing briefly whether this is an angle that might be suitable as part of your Bitcoin trading strategy.
Mining is a whole different ball game and although the gains can look attractive it should be noted that it requires a high level of computer skills and processing power at your disposal.
The so-called rigs that you can set up to do this mining will often cost many thousands of dollars and it is not an aspect of Bitcoin trading that is suitable for those with limited investment capital and a lack of computational power and know-how.
All things considered, you might decide that the best trading strategy for you, if you are new to Bitcoin trading, is to make a direct investment in the cryptocurrency.
It is a simple strategy that involves buying Bitcoin directly and then commence trading it against other cryptocurrencies, but it might allow you to cut your teeth and open up new ways to try and make money from this dynamic market.
Could this be the year that proves there is still plenty of mileage in trading Bitcoin?