A complete guide to investing in Bitcoin

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Learn everything you need to know about investing in Bitcoin in this comprehensive guide to the most popular cryptocurrency. Check out our experts’ list of the best Bitcoin brokers.

Best Brokers to Invest in Bitcoin

Bitcoin trading with regulated brokers

Before we delve into the different ways of trading Bitcoins, one recommendation is essential: look for a regulated broker. Unless you are a genius when it comes to Bitcoin trading, you should, without hesitation, turn to an official expert. Moreover, given its unstable nature, when trading Bitcoins the importance of trusting the broker is even greater than with any other currency.

There is a lot going on – and this is not a game – suffice it to say that the collapse of Mt Gox and other Bitcoin trading platforms has resulted in the loss of more than half a billion dollars worth of Bitcoins. Surely you don’t want that to happen to you.

How to trade Bitcoin

There are two ways to trade Bitcoin: buy the cryptocurrency in the expectation that its price will rise and make a profit by selling it in the future; or invest in its value, without actually acquiring it. This second possibility – which involves not having the currency in question – is the most common and is how CFDs work.

It is important to note that this is a leveraged product, so even if the initial amount deposited is low, future exposure to the performance of a larger position can be made. This is not trivial, as it can multiply profits, but also losses when trading Bitcoin.

Some of the trading apps such as eToro allow you to buy/sell Bitcoin or trade cryptocurrencies with CFDs.

Bitcoin trading platforms

There is a wide range of Bitcoin platforms on offer. Many of them also allow trading with other cryptocurrencies, such as LiteCoin, DarkCoin or Namecoin. But the time will come to talk about the others, in this text we will focus on the best bitcoin platforms.

A bit of Bitcoin history

  • Year Bitcoin started: Bitcoin was launched on 31 October 2008 and became officially available on 3 January 2009.
  • Early price: prices were generally tradable in the early days of Bitcoin trading. The first (and curious) real-world transaction consisted of 10,000 Bitcoins for 2 pizzas.
  • Volume of Bitcoins exchanged (daily): thanks to the blockchain (a permanent record of all transactions – of all kinds – that take place) it is easy to make an average: this is set at between 250,000 and 300,000 Bitcoin transactions per day.
  • First intermediary to accept Bitcoins for deposits or withdrawals: one of the first bitcoin brokers was FX Primus.
  • First broker to include Bitcoin as a trading instrument: Plus500 was one of the first to decide to trade Bitcoin. It was also a pioneer in offering another cryptocurrency: LiteCoin.

Factors influencing the Bitcoin exchange rate

Bitcoin is different from other currencies. It is not official and therefore does not have any support behind it, for example, a precious metal. This means that the determination of its value is subject to a series of rules that have nothing to do with those that affect conventional currencies and that, by nature, it oscillates with great volatility.

Also because of this special feature, Bitcoins are at the mercy of influences very different from those that normally affect the markets where Forex brokers operate. Speculation, government regulations and the fact that large companies accept it as a valid payment option are some of these factors.

The influence of two of them on the value of Bitcoin is highly significant: it is an uncontrollable currency, which means that any attempt at government regulation generates decreases in its value. At the same time, its growing acceptance by businesses causes its value to rise.

Bitcoin is a free currency. Free from manipulation and with less control, also for traders. We return to the first paragraphs of this article to recommend, once again and more strongly, that you should always use a regulated Bitcoin broker, a Bitcoin platform that you can trust.

Trade Bitcoins with CFDs

CFDs allow for positive returns, regardless of how the market is moving. Given the high volatility (as mentioned above) affecting Bitcoin, CFDs are an ideal product to trade Bitcoin.

On the other hand, it should be borne in mind that CFDs are affected by significant leverage, and this – we will not tire of repeating it because it must always be appreciated – means that profits can multiply, but if the business goes wrong, losses will also grow dangerously.

Another aspect to pay attention to when trading Bitcoin is that the continuous movement (repeated volatility) can cause the bitcoin broker to change the spreads or margins at any given moment. If this is to be avoided, Bitcoin platforms that fix these concepts in advance (without the option to change them) should be used: for this purpose, look for brokers that offer fixed spreads.

Related content:

  • Investing in Ethereum
  • Cryptocurrency Trading
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