Bitcoin, whilst being a fairly recent phenomenon (it was created in 2008), has taken the world by storm and gained ample momentum as a currency (or cryptocurrency). Its value has increased by an incredible amount over a very short period of time, meaning that the it is becoming ever more popular as a result. Here are some reasons why market news and analysis can help with trading bitcoin.
Teaches You the Basics
The ability to analyse markets is a useful tool which has transferrable skills, and can teach you how markets work. The bitcoin market, whilst unique, still has behaviours similar to those of other markets, so learning how to read these and base your trading strategy around this can really help with the buying and selling of bitcoin.
You can, for example learn both fundamental and technical analysis, which are commonly applied by professional traders to global markets. These kinds of techniques may have to be adapted to the uniqueness of the bitcoin market, but the principles remain the same.
Used in Forex Trading
With the cryptocurrency increasing in fame and value, many organisations are now accepting bitcoin as payment for products and services. This includes some forex brokers, with even more likely to accept it in the future.
Therefore, checking the forex news as well as tracking bitcoin’s overall value can help with forex trading, as it helps you keep up to date with the latest factors which may influence the value of the cryptocurrency. It also helps you determine the different exchange rates you might trade in, and which currency might be the most lucrative to purchase with bitcoin.
Once you know how the market behaves (the bitcoin market has been on a fairly rapid upward slope) you can start to look at any trends within the market, and factor these into how you trade bitcoin.
You might, for instance, predict an upcoming dip in bitcoin’s value, and exchange the cryptocurrency for another currency in order to buy it back at a cheaper price later on. Successfully predicting these trends could prove to be lucrative in the long run, although it is worth noting that most currency behaviours can be unpredictable at the best of times. Therefore, caution is advised when approaching these types of investments.
In a League of its Own
The fact that bitcoin is the first ever currency of its kind means that it is rarely affected by the same factors which other currencies are affected by. As a cryptocurrency, it does not have a nationality, and as such is not usually affected by localised events like political elections.
This is not always the case however, as bitcoin’s value did drop significantly in January, potentially as a result of China shoring up the Yuan. Therefore, following bitcoin related news events like this could help you to predict how it may react in the short term future.
As individual and unique bitcoin is, market news and analysis can provide insight into how the market for the cryptocurrency behaves. Regular techniques will require adaptation in most cases, but provide a decent foundation for getting to grips with bitcoin trading strategy.