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Trading with Bitcoin – The basics

By Guardian Nigeria
27 January 2024   |   1:33 am
Since its debut as the first official cryptocurrency, Bitcoin has grown as a popular digital coin marked by volatility in the exchange market

Since its debut as the first official cryptocurrency, Bitcoin has grown as a popular digital coin marked by volatility in the exchange market. Why has it attracted traders and investors, and what are its associated risks? Bitcoin has a limited supply of 21 million total blocks with about 19.6 million in circulation, piquing interest in speculators because of the possibility of returns. In this guide, we will explore the factors influencing Bitcoin’s market price, how to buy and sell Bitcoin, and trading techniques.

Understanding Market Factors

Because it is a limited resource, Bitcoin’s scarcity influences its market price, thus driving investors to increase their demand for electronic cash. The more limited the supply, the greater the demand, potentially leading to an increase in value. Crypto exchanges, such as ChangeNOW, are marketplaces where buyers and sellers can discover these cyber coins and impact their availability.

Over the years, other crypto assets have emerged and given Bitcoin competition. As these coins divert investors’ attention away from Bitcoin, they also drive away demand and cause a decline in its valuation. Other cases affecting its price are currency exchanges, where traders attempt to allocate their assets across multiple currencies to reduce their risks.

As a decentralized currency, Bitcoin is subject to various regulatory landscapes. Some governments adopt it as legal tender, but others ban it from their payment systems. Restrictive environments can increase volatility and yield price swings.

How to Buy and Sell Bitcoin

Before you trade Bitcoin, you need a digital wallet to store your crypto assets. These wallets protect your funds, and you need them to perform transactions.

Next, you should find a reputable broker with the following:

  • A proven security system
  • Positive user feedback
  • An effective customer service team
  • An extensive knowledge base

Interacting in the cryptoverse is risky because you can lose all of your assets, so it is crucial to consider your privacy and data security. Some crypto exchanges allow you to trade anonymously, so you do not need to share personal information. Others let you build your portfolio and safeguard your wallets.

After considering the above facets, it is then time to purchase Bitcoin. Input the amount you would like to buy, and ensure you have a valid bank account or cyber wallet to conduct the transaction. Depending on the crypto exchange, you can use fiat currency or even other cryptocurrencies to buy Bitcoin. After verifying your details, you should receive Bitcoin in your online wallet within minutes, depending on the amount you purchased.

Most exchanges allow you to sell back your Bitcoin or exchange it for another digital coin. The transaction process is similar, except it is the opposite. Remember that any transactions with crypto will incur network fees to motivate miners to authenticate and validate transactions.

Trading Strategies and Tools

To maximize your earning potential, you can employ various techniques and instruments to aid the trading process. The methods you use depend on how you want to trade. Here are some procedures and gadgets to use.

Methods

Day trading is a high-risk technique where you focus on short-term market fluctuations and act quickly. You watch bullish and bearish movements and attempt to make your trades accordingly.

Under arbitrage, you take advantage of price differences between crypto exchanges. You acquire Bitcoin from an exchange offering a low price, then sell it on another, indicating a higher price. However, it would be best to observe the exchanges to profit from this method constantly.

Devices

Some cryptocurrency exchange platforms provide fundamental and technical analysis tools to study the market and predict its future changes.

With fundamental analysis, you assess the political, legal, and industry news that can affect the market price. For instance, if a nation adopts Bitcoin, you may expect the price to increase. This analysis technique does not orient itself around current pricing but rather external circumstances.

Technical analysis takes a different approach to studying the market. You may examine charts to see price movements and patterns and deduce future values. Depending on your options, you can investigate trends further with statistics, such as moving averages, to make an informed decision.

Employ the Power of Crypto Exchange Platforms

If you want to buy Bitcoin in Nigeria, cryptocurrency exchanges can help. They provide the tools to choose how you will trade, including market statistics and up-to-date price trends. Remember, buying and selling crypto coins like Bitcoin comes with risks due to unpredictable price movements. While you may witness a bullish movement one second, it can become bearish the next, so trade wisely.

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