More and more people are interested in investing in cryptocurrencies – and this also applies in Germany. Bitcoin is of course particularly popular. This Crypto currency has been around since 2009 and is not subject to central control, making it unique from the start. However, the price of Bitcoin is very volatile. There are huge up and down swings again and again in a very short period of time. Traders can benefit from it and make huge profits with correct forecasts.
Of course, Bitcoin trading is not a long-term investment. Anyone who thinks that Bitcoin will increase in value in a few years should not pay attention to daily price fluctuations. Trading, on the other hand, is about short-term positions. These can also be turned on or off around the clock – there are no set trading hours for cryptocurrency exchanges.
Trading and Analytical Methods
There are different methods of trading and you should understand the pros and cons of each. In so-called day trading, investors look to profit on short-term price falls or rises. During the course of the day, you typically close several trades that should be closed at the end of the day. Scalping, on the other hand, relies on positions with shorter runtimes. The focus here is on very small profits, so the payoff requires many successful trades. At the same time, risks can be minimized. Finally, swing trading involving larger price cycles should also be mentioned. Individual positions are held for weeks or months.
No matter what kind of trade you decide to enter into, it’s important to stay on top of breaking news. After all, the collapse of cryptocurrency exchange FTX in November 2022 was hardly foreseeable, but it caused the price of Bitcoin and other cryptocurrencies to drop sharply within a few days. These setbacks also come at the end of a year of little good news for the industry as a whole. Therefore, in 2023, traders should expect that news or even rumors about the regulation of certain aspects of cryptocurrencies may cause large price fluctuations in the short term.
Looking at the full year, some analysts are assuming in early 2023 that Bitcoin’s price could even drop to as low as $10,000. In this case, Bitcoin’s market cap would still be around $200 billion, but the decline would still be significant. However, even with falling prices, traders can profit with the right tools. Falling prices are a bigger problem for long-term investors.
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During the month of January, it became clear that long-term forecasting of Bitcoin price is very difficult. The increase was so large that only a few experts predicted it. This development shows once again that trading depends on the right strategy. In any case, you should always be aware of your risk and not trade on your gut.
Anyone following this rule has already taken an important step. Practical stuff like analyzing charts or identifying patterns is the next aspect.However, the work you put into it can definitely pay off for crypto investing
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Source of information: Compiled from COINJOURNAL by 0x Information.Copyright belongs to the author Benson Toti, without permission, may not be reproduced