Bitcoin Trading Methods

It’s not a secret that Bitcoin is the predominant cryptocurrency all over the world. It’s getting easier to purchase all forms of crypto, no matter where you live. For example, trading Bitcoin in Australia can be done with a debit card for a small fee. The same is true in most other developed nations. For individual traders, there are four typical methods for making a profit with Bitcoin. For example, you can simply purchase a fixed amount of the currency and store it away, hoping for a price increase. You can trade Bitcoin indirectly with CFDs, or contracts for difference, via a Forex broker. Other investors try to day-trade or swing-trade Bitcoin, buying high and selling low for quick profits.

Finally, a more traditional way to get exposure to the Bitcoin market is through the stock market. A number of stocks and ETFs, exchange-traded funds, hold most of their assets in Bitcoin. That gives investors a taste of the crypto market without having to purchase actual currencies. Here’s a look at the pros and cons of the four primary Bitcoin trading methods:

Buy and Hold

Individuals and institutions that purchase Bitcoin often opt for the buy-and-hold method. Like traditional stock and precious metals investors, this new breed of crypto investor is in the game for the long-term profit potential. It’s also the simplest of the trading methods because all you do is purchase Bitcoin and store it in a secure location, typically either an offline cyber-wallet or a paper wallet. The pros are that this method is relatively easy to do, requires few fees, and the long-term gains could be astronomical, while the cons can argue that it’s just an asset-accumulation and not a trading method.

Surprisingly, many institutions are buying Bitcoin as a long-term investment. This is sort of a counter-intuitive point because large institutions tend to stick with blue chip stocks and old-school bond offerings. But the potential for huge gains is the lure that has drawn some of the major retirement funds and corporate buyers into the Bitcoin universe.

Via CFDs With a Forex Broker

This method is also easy to maneuver and offer low fees, but the fact that you can enter and exit the market within seconds makes it an attractive method to strive for large profits in a short amount of time. It also could be argued that you’re not holding onto crypto, there are fees involved, and if you make a bad decision, you can lose your investment rather quickly.

Day-Trading and Swing Trading

Similar to typical stock-market trading, this can be long- or short-term and also require few fees to get started. This route you’re actually holding cryptocurrency, but you’re subject to the high exposure of market volatility, so it may call for a thorough understanding of the crypto market.

Through the Stock Market

Reality Shares (BLCN) and Grayscale Bitcoin Trust (GBTC) are examples of an ETF and a stock, respectively, that allow you to profit from Bitcoin price rises without having to own any cryptocurrency at all. The pros are that you can stay with your current broker and trade these shares like stock and ETF instruments, there is no direct exposure to the crypto market, and you know exactly where your money is and who has it. On the other hand, you are not protected from crypto market volatility, the fees and premiums can be quite high, and you don’t learn how to trade cryptocurrency because you’re really just buying and selling stock or ETF shares.