In 2021, Bitcoin is soaring again. Its value has already doubled, and experts predict further growth. But what are the best trading strategies? These methods will help you profit from the impressive growth.
This is the simplest strategy you can find, and its name is simply a misspelling. In 2013, a member of Bitcointalk advised holding onto the coins in a bearish market. The idea caught on. When you HODL, you refrain from selling because you hope that the price will surge again. Naturally, a fall is also possible, so risk management is key. This approach is suitable for beginners.
This method is built around protection against adverse market movements. The cryptocurrency is notoriously volatile, so the market can change direction at any time. In order not to lose money, you can open a trade in the opposite direction.
Suppose you borrow Bitcoin from the broker and sell it. You expect the price to go down, so you can buy more coins in the future. But what if the market moves against you? If the price rises, you will owe more than you borrowed. One way to protect yourself is with CFDs or Contracts for Difference.
These are virtual derivatives based on BTC. Their holders make a profit through price speculation, without owning any actual coins. Using CFDs, you can bet on the opposite direction of the price. This way, one of the positions will win anyway — either the actual Bitcoin or the derivative.
This strategy requires you to go with the current trend. You need to use technical indicators like RSI to see if the movement is likely to continue. For instance, the price of Bitcoin surged at the beginning of 2021 due to factors like institutional adoption and big corporate investments. Most experts expect the rise to continue, as the demand is likely to grow. If you see many people getting in on the action, there are reasons to expect further growth.
A breakout occurs when the price reaches a new high or a new low, breaking out of its range. Essentially, you buy or sell at the onset or end of a trend. To spot the best moment, you need to look at the support and resistance levels on the price chart. These lines mark the levels Bitcoin does not fall below and rise above, respectively.
Following a breakout, the value usually becomes highly volatile. The key is to correctly predict its subsequent direction. To draw support and resistance level, you may use the volume, MA, or RSI.
Best Bitcoin Exchanges
Today, BTC is bought and sold on thousands of platforms. Some of the biggest names are Coinbase, Kraken, and Coinmama. They use elaborate security measures to keep your funds safe. Buy, sell and exchange Bitcoin in a few clicks on these and other trusted exchanges.