Bitcoin is a digital currency that is thought to change the world. However, this currency is highly volatile. Indeed, it is not backed by governments and regulated by central banks. Despite the growing number of merchants accepting Bitcoin, many of the activity that surrounds Bitcoin come from traders who hope to make money on value fluctuations. If you are considering investing in Bitcoin, there are many ways to acquire Bitcoin such as:
Registering with an Exchange
Fluctuations in Bitcoin value can be dramatic. Currency fluctuations mean traders can make or lose lots of money. There are many ways you can get Bitcoin; however, the simplest one to buy it is to register with a Bitcoin exchange and buy it using fiat currency. However, picking the right exchange can be tricky since many of them are undependable. If you want to buy Bitcoin from a reputable exchange, do it withPaychain.
Buying and Holding Bitcoin
A lot of people invest in Bitcoin by buying and holding it. These investors strongly believe in the long-term prosperity of Bitcoin. They see any short-term volatility as a simple hurdle on their cryptocurrency journey.
Buying and Selling
Some people invest in Bitcoin and hope to get an immediate return by purchasing and selling it right away. They may do this by depending on the volatility of Bitcoin for a high rate of return when the market moves favourably. Also, many Bitcoin websites today offer leveraged trading where they lend money to investors to hopefully increase their return.
Using the Shorting Strategy
By short selling, investors borrow the asset at a particular price so the investor can sell it to somebody else at the same price. In case the asset drops in value, the seller can purchase it back at the lower price to give it back to the lender. The profit is the difference between the original price when the asset was borrowed and the lower price when it was bought back.
Short selling Bitcoins is possible through trading platforms that look for lenders who are willing to give Bitcoins for a certain period. Also, derivative trading websites can be used. But, before considering a shorting strategy, traders need to understand the concepts of leverage and margin calls.
When investing in Bitcoin and other cryptocurrencies, investors must know what they are doing and invest only what they can afford to lose. Bitcoin is a high-risk investment so it should only represent a small portion of one’s investment portfolio.