Bitcoin is one of the most volatile investment targets of all financial markets.
Bitcoin, which continues to plunge and soar, is also a popular financial product for investors and traders who can invest and trade well.
However, many investors and those who are interested in Bitcoin are worried about its too violent price movement.
In this article, I will explain in detail how to make good decisions when buying and selling Bitcoin.
- 1 Basic idea when to buy and sell Bitcoin
- 2 Why Bitcoin tends to move significantly
- 3 Is there a way to predict a crash or a sharp rise?
- 4 Summary
Basic idea when to buy and sell Bitcoin
In buying and selling bitcoins, it is important to consider when to buy and when to sell.
If you enter a buy order during an ongoing price movement or when you think that the price will rise, in some cases it may crash.
To sum up the features of Bitcoin, market expectations can easily turn otherwise. Pump up the investor sentiment and utilize it effectively in trading.
First, let's understand the price movements of Bitcoin and grasp how to judge when buying and selling.
I will also introduce some points to keep in mind in order to make a profit from Bitcoin investment.
What are the characteristics of price movements of Bitcoin?
For those who have just started investing in Bitcoin, the price movement of Bitcoin is susceptible to irregularities. This is because large price movements that seem to be suspicious are likely to occur.
Bitcoin is not a currency that depends on a particular country in the first place. It is a digitally created cryptocurrency.
However, since the issue of Bitcoin, many investors have been paying attention in anticipation of price increases.
As all the information about Bitcoin around the world runs around, it instantly affects the market world.
In the first place, the total market capitalization in the cryptocurrency market is 22 trillion yen, but in the global stock market, the market capitalization exceeds 1,000 trillion yen.
The market function is still fragile, and compared to stocks and foreign exchange, price manipulation is easier.
Due to this background, the price movement of Bitcoin is characterized by violent movement.
How to buy and sell Bitcoin successfully? When to buy and sell is crucial
Venture capitals and investment banks, which have a large amount of capital, are in an advantageous position in Bitcoin investment.
It is a market with a small amount of funds, so if major investors, commonly known as a "Whales," enters, price control is easily done.
What kind of buying and selling should individual investors consider with Bitcoin, which can move more than 5% daily?
The range of price movements tends to be smaller before Bitcoin crashes or soars.
The price fluctuation range is reduced by the so-called range market. If you start moving in either direction, the price will have extremely large movements.
Therefore, instead of trading at the timing of the range market, let's trade in the direction in which movement began to occur.
If you are a beginner, try to buy cheaply and sell high when it crashes.
For an intermediate-advanced person, make a market follower investment along the direction of the price movement.
If it’s impossible to invest by market follower in the direction of big price movements, it is recommended that you place buy and sell orders during the crash and soaring timing and wait for rebounds and reaction fall.
However, Bitcoin moves up and down violently, so be sure to make an appropriate loss cut.
In addition, if you are trading in Bitcoin Forex, make sure that you do not have a forced loss cut due to excessive leverage.
You are trading your valuable assets in the market, so you may want to avoid being tossed about by the price movements of Bitcoin.
Invest in Bitcoin with the intent of avoiding irreparable losses.
Aiming for stable profits, not just for the money
Bitcoin investment has a sharp price movement, so some people hang it in one direction and trade at a large amount.
There are some people aiming for a big payout who have invested in the bubble market from 2017 to 2018 and actually made tens to hundred times more assets.
However, with the recent entry of large-scale investors, the price movement of Bitcoin has become difficult, so there is a risk that bankruptcy will occur someday with the investment method aiming at making a lot of money in a single stoke.
Therefore, the recommended investment method is to create “my rule” that accumulates constant profit.
Make the criteria for buying and selling according to your investment style.
By making a note of investment records, you can make an advantageous investment based on the data.
Why Bitcoin tends to move significantly
Next, I will speculate the reason why Bitcoin tends to easily make big movements.
Bitcoin is characterized with large price movements, so understanding it beforehand will be the criterion for investing.
Cryptocurrency is an immature market
Cryptocurrency is a newly born market, and even with typical bit coins, the market itself is immature.
There are issues such as the examination of laws and regulations by government agencies in each country and the resolution of hacking risks at exchanges, which has made Bitcoin a topic.
In particular, some countries have announced restrictions on cryptocurrency transactions. Such national regulations are also a negative factor.
It is said that long-term market has a bright direction, but the Bitcoin price will be overly sensitive to daily news.
In addition, the price will be affected by half-valued period of Bitcoin and information dissemination such as from SNS depending on major investors, and also due to price movements in the stock and exchange markets.
Make sure that you always have access to the information surrounding your cryptocurrency.
Some holders hold a large amount of Bitcoin
When Bitcoin was born, individuals and organizations involved from this time have a large volume of Bitcoin.
The number of people who own a large amount of Bitcoin is about 1,000, which is 40% of all Bitcoin.
In the crypto world technical term, these large volume holders are called "Whales."
Whales have a large market share and can manipulate the price of Bitcoin in the direction they want.
When price fluctuations of nearly 100,000 yen occur during the day, it is also observed that Whales may tackle and move the market.
Therefore, a large price fluctuation is likely to occur immediately after confirming the data that a large amount of Bitcoin has been transferred. You can check the remittance record in the distributed transaction ledger for Bitcoin.
As a more practical information medium, there is an account that immediately grasps the movement of Whales on SNS.
Catch the movement of Whales in real time and try to detect the signs when a violent price movement will occur.
You can check whale trends with Whale alert.
There are no rules for high and low stops
Cryptocurrency exchanges do not have clear market rules, which are common throughout the world.
Usually in the stock market, when the price movement moves too much in one direction due to good or bad materials, trading restrictions are set.
The so-called "stop high" and "stop low" rules have the effect of suppressing the occurrence of crashing and soaring.
However, in the cryptocurrency market, there is no limit to abnormal price movements such as "stop high" and "stop low".
It is still a high-risk market from the perspective of investor protection. However, this is one of the reasons why it is a popular financial product because it can take a wide price range.
Bitcoin can rise by more than 10% in a short period of time when the crypto market is funded. The reverse is also true, and it is characterized with the strong trend that is more likely to continue.
Is there a way to predict a crash or a sharp rise?
As mentioned above, there are various factors that can cause a sharp price movement in Bitcoin.
There is no way to predict the price movement of Bitcoin completely, but you can predict it to some extent by suppressing some patterns.
The pattern of Bitcoin slumps and surges always changes according to market trends, so be sure to verify the price movement yourself.
Hacking damage on the cryptocurrency exchange
In Japan, in January 2018, a large-scale outflow problem of NEM stored by a major exchange Coincheck Co., Ltd., occurred.
Hackers attack the exchanges on a daily basis and strive to build strict security on each exchange.
However, hacking attacks that exploit vulnerabilities on exchanges often cause cryptocurrency leaks, and if hacking damage is officially disclosed, it is very likely to crash.
Since 2018, hacking damage is increasing on exchanges around the world, and the market reaction tends to be quick.
Since it is recognized as a temporary bad thing, the price may gradually return after the crash, so you should trade flexibly.
When a topic about cryptocurrency regulation comes out
The distribution of cryptocurrencies is extensively wide. With an internet space, you can trade and send money in any area.
In each country, there is also a concern that cryptocurrencies such as Bitcoin will seriously affect the conventional economic foundation.
Cryptocurrency regulation issues tend to be viewed as bad news, that builds information that is more like to crash.
For example, there have been many cases of illegal money transfer by criminal organizations using cryptocurrency and the use of Bitcoin for money laundering.
Not only that, in the release of new cryptocurrency, called ICO, there are many projects with only names, and the reality is that cryptocurrency is distributed as a scam.
It should be confirmed if it is a qualified ICO currency due to the succession of many victims including individual investors.
Some companies want to enter the market in earnest, and some organizations have clear projects, so it is in the process of unifying regulations.
Different countries have different attitudes towards cryptocurrencies, and views differ depending on the regulatory authorities in Western countries, South America, Africa, Russia, China, the United States, and Japan.
Due to the interests involved, the current situation is that making common regulations is difficult.
When a good event occurs in Bitcoin
Bitcoin has several factors that cause its prices to soar.
- Bitcoin is used as an evacuation destination for assets due to concerns about the international situation.
- The half value is reached once every four years
- Entry into bitcoin-related business by major companies
- Deregulation of cryptocurrency market by country
- Entry of institutional investors
The fundamental factors described above are the factors that significantly increase the price of Bitcoin.
Anxiety about international affairs includes the impact of the sharp fall in the global stock market, intensifying trade friction between the United States and China, credit insecurity in developing countries, and excessive inflation.
If the country's currency cannot be relied on, it will be easier for the wealthy people to choose Bitcoin as a refuge for assets.
The reason why Bitcoin is so popular is that you can manage your assets as long as you have an Internet connection.
The maximum number of Bitcoins that can be issued from the development stage is fixed, and the value of the currency can be maintained by limiting the number of issues to circulate in the market.
Furthermore, there is a characteristic that the participation of organizations with capital is being actively bought as it leads to the activation of the market.
A deeper understanding of the materials that tend to soar can help you get around in actual markets.
This time, we introduced the characteristics of basic buying and selling of Bitcoin, and the background factors of the sudden and sharp rise, which are the basis for trading.
Although the market trends surrounding Bitcoin have been attracting attention, they are still immature markets.
So, let's think about the timing when the price movement of Bitcoin becomes intense when news about the cryptocurrency market comes out.
For Bitcoin transactions that continue to plunge and soar, it is recommended that you manage your funds based on your own trading rules without overdoing it!