Most investors know that the best day trading strategies can be quite lucrative. This approach to market investment can apply to many different asset classes. However, the fast-paced price movements of bitcoin and other cryptocurrencies offer some of the best trading opportunities in the world of finance. Many financial experts suggest there is a wide variety of reasons which explain why this is likely to continue to be the case, so let’s discuss some of the factors involved when day trading in cryptocurrency. Bitcoin and other cryptocurrencies aren’t formally backed by governments or other traditional financial institutions. In some cases, certain traders will buy or sell bitcoin using leverage, and the transactions are recorded via decentralized ledgers that utilize digital technologies (known as blockchains). Due to the fact that transactions are anonymously recorded, cryptos are generally associated with financial practices that are conducted online.
However, with the advent of crypto credit cards and bitcoin ATMs, these traditional expectations are already changing rapidly. A growing number of supporters in Silicon Valley and on Wall Street have already started to argue that cryptocurrencies are actually the future of all money. Is the world really destined to begin using digital currencies in an exclusive way? Crypto proponents argue that digital currencies are resistant to theft and fraud, which creates some major advantages for regular consumers that buy and sell goods on a daily basis. Other crypto advocates aim to regulate these assets so that they can involve traditional banks and other large financial institutions in a way that is more conventional in nature. If these efforts are successful, there could be major changes ahead for the financial markets and victories might actually win over some of the skeptics.
Once cryptocurrencies play a more active role in everyday life, consumers will likely guide the trend that determines the market valuation of bitcoin and the other major cryptocurrencies. Experts in global finance have said that long-term weakness in the U.S. dollar and emerging discussions involving the potential for regulation in the digital currencies could fuel incredible spikes in the market’s demand for cryptocurrency. Bullish crypto day traders suggest that the strength in price trends that has emerged since the inception of bitcoin shows that cryptocurrency truly has a future in the market. If true, this creates substantial investment opportunities for day traders looking to buy and sell the market trends that are unfolding in these worthy assets.
That said, it’s also important for day traders to understand that the controversial and volatile history of digital assets has also prompted any traditional traders to question the safety of positions. Bitcoin has been thought of as a risky, volatile asset for almost all of its history. In stocks, volatility is measured using the VIX, however, cryptocurrencies do not yet have such a market instrument. But the latest resurgence of cryptocurrency day trading might be the primary evidence which shows that cryptocurrency can even be thought of as a “risk-off” investment vehicle.
In other words, many experts have suggested that bitcoin and the other major cryptocurrencies could be a safe-haven market play in cases where gold, stocks, or bonds are experiencing some volatile and tumultuous trading activity. After all, day traders must remember that bitcoin has skyrocketed during many market instances where the bonds were volatile while the S&P 500 and Dow Jones Industrial Averages were in decline. Perhaps, this suggests investors might be ready to turn to cryptocurrencies during periods of volatility in stocks and bonds as a way of finding new safe-haven assets. For experienced day traders, enhanced volatility levels are nothing to fear. In fact, these are the types of market situations which have the potential of generating the most profit.
As a result, the heightened volatility that is often associated with bitcoin and the other major cryptocurrencies might even be thought of as a tremendous day trading advantage. Skilled day traders can often turn above-average volatility levels into new investment opportunities that can actually benefit from both rising and falling crypto asset prices. The world of digital currencies is often considered to be dangerous territory for newer day traders. Several different reasons explain why this is often thought to be true: cryptocurrencies are often highly volatile in the short-term, they lack intrinsic value, their use has not yet been governed by strict regulations, and institutional capital levels are relatively low (when compared to bonds and the stock markets). Although it should be noted that new rules from global government agencies are likely on the way, and many experts believe this may have a significant impact on crypto volatility.
Looking at the history of crypto price moves, many day traders might remember that there were important events that occurred in December of 2017. This was the period during which bitcoin hit a record high of $20,000, and investor enthusiasm began to gain rapidly. Since then, crypto prices have been coming down gradually, however, we seem to have formed a clear base at higher levels. Ultimately, these back and forth price movements offer day traders an opportunity for good returns in both rising and falling markets. For those that are trading bitcoin using the short-term perspective of a day trader, it’s also important to remember that financial news is known to influence crypto prices. Analysis by many crypto experts also suggests that day trading investors should consider buying bitcoin and other cryptocurrencies when they are experiencing dips in price valuations.
As long as the fundamental outlook remains strong (while crypto adoption is gaining momentum), the outcome is likely to continue to be bullish for bitcoin and the other major cryptocurrencies. For day traders, these long-term trends can play a critical role in short-term decision-making practices. Is bitcoin on a path to secure a long-term foothold above the $10,000 level? If this is the case, leaders in the G20 will probably need to catch up to the rest of the world and get to work regulating cryptocurrencies. Unless these bodies actually believe that traditional fiat currencies are the only way to move forward, it is looking highly likely that crypto day trading will have its greatest days in the years ahead.
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