The Bitcoin has seen quite a rollercoaster ride over the last few years. Even this year, its price has been swinging wildly. Back in January, the digital currency was worth well under $200. Right now, the price has gone up above $410, with a 70 percent gain over the last month. It’s a fascinating thing to watch, but for those traders that like to make informed decisions, it can be very frustrating, too. The most concerning thing about all of this is that no one is really sure why the price swings have been going on lately. It makes intelligent trading of the asset downright impossible to do.
At its most expensive, the Bitcoin topped out at $1,150. Then, with news of online warehouses being hacked into, Bitcoin’s value tumbled. Now, security is seemingly strong, but once again, there is volatility. The difference is that this time, prices are moving up. At the beginning of October, the Bitcoin was worth about $240. There has also been a lot of good news coming from this sector, especially when you look at how people are using smartphones more and more to make purchases, and this leaves open a big hole in the market that companies like MasterCard, PayPal, and others are trying to fill in. Bitcoin is taking advantage of this, but 70 percent in a month is still quite extreme. Experts are not sure why it’s taking off so quickly.
As a trader, how can you approach this? It’s a worthwhile question; it seems like there is tons of money to be made on this, if only you can time your trades correctly. The problem is that because the asset is still so new, it’s hard to know how to trade it correctly. Using the same technical analysis tools that you would for a currency pair or for a commodity will have limited success, but they might not be the best way to approach it. Many binary options brokers offer Bitcoin as a currency pair, usually coupled with the U.S. dollar, but this isn’t quite accurate. In other words, there’s not yet a tried and tested way to take advantage of all of these price swings. It’s possible, yes, but certainly not easy at this point. Not yet, anyway.
The fact that the asset is climbing so quickly in price should be a cause for concern. Usually, when an asset has such a meteoric rise, they come crashing down. This is likely to happen again here, but it’s not guaranteed, especially if Bitcoin does find a major foothold in the market. If this were to happen, price would keep rising until it levels off. The best way to approach Bitcoin for a cautious investor right now is to just observe. There’s still time to act, but it’s hard to know when that is for now. If you do want to act on it, try using binary options where your risk is limited. Purchasing the asset outright, especially after such a quick rise, has a lot of risk, as does shorting it. There’s simply far too much uncertainty about Bitcoin to do so without risk. Another option is Bitcoin mining, if you have the technological know-how to do so safely. This can be costly to set up, but once in place there’s little risk involved. Even if Bitcoin tumbles, it will still have value. And the upside is much greater than the downside. This is a long term prospect, though, and does not have the same immediate returns or losses that trading does. For short term traders, binary options are really the only safe way to approach this.