How to Profit when the Price of Bitcoin Drops

How to Profit when the Price of Bitcoin Drops

How to Profit when the Price of Bitcoin Drops

Posted on December 21, 2017 Admin

The price of Bitcoins has actually gone several notches higher this year. One can imagine the huge leap
experienced by this form of digital currency when one actually takes into account the fact that the price of bitcoins in January 2017 was below $1000 and in December 2017 it has already shot up beyond $16000.
Now, before stirring euphoric hopes let us tell you that with such a huge increase in price within such a
short period of time, the chances of price fall also increase by a large extent.

Today, in the course of the post we will discuss ways in which you can actually profit with the price drop of bitcoins.

How can you profit with the Bitcoin Price Drop?

At the very onset, it is very important to acknowledge the fact that Bitcoin prices will drop soon after
experiencing a major spike. Only when you are prudent enough to estimate practical possibilities instead
of just being floored by the present incredible happenings, will you be better armed with the tricks to cope with the price drop. So, read on in order to unravel the right ways.

Margin Trading

The first – very effective suggestion – which pops up immediately is to resort to margin trading. Margin
Trading refers to a condition whereby a trader is allowed to trade more bitcoins or alt-coins than what he already has in his wallet. For instance, if the trader has only 1 bitcoin then he is entitled to get more bitcoins depending on the exchange itself. Even the fees and the percentage of leverage vary with the exchange. Margin trading allows you to trade in both long and short positions. If you want to earn money with the fall in the price of the bitcoin you can actually go on to trade from short positions. If you are unable to comprehend the graphs, you might as well end up incurring losses. This is the reason why margin trading is regarded as risky.

Fall back on the services of regulated brokers

One of the leading CFD providers – Plus500 actually offers contracts on Bitcoins and a number of other
cryptocurrencies (Availability subject to regulation). You can trade on the falling price of Bitcoin. Besides Plus500, and AVATrade are two other platforms that help you trade CFDs. Of course, they are
regulated and have earned a good reputation in the market. We will definitely delve into details but not
really without telling you that leverage remains a double edged sword. All the aforementioned platforms
offer contracts and leverages while helping you diversify your portfolio. However, do know for a fact that even a diverse portfolio has its own set of risks to contend with.

Leverage is very simply described as the ratio of the amount of capital invested in a transaction to the
required margin. There are various factors that determine the value of currencies. Geopolitical events,
financial news and indicator announcements can lead to significant fluctuations in their values. Traders,
who look forward to earning decent returns on their investments, use leverage to amplify these minor
price movements. With a small deposit or margin you can even go on to manage larger dollar amountsץ

For instance, in regular trading, if the USD/EUR rate jumps 100 pips from 1.405 to 1.505 and you had
deposited $1000, you will end up earning $10 on that trade. Leverage has its own set of risks as has been
mentioned above as well. If you are opting for very high leverage then heavy price fluctuations may cause
substantial losses.

In Forex, if your leverage is 50:1 then you are actually able to place a trade worth 50 times the capital
invested by you. When it comes to Bitcoins you will be able to trade with the leveraged positions offered
by liquidity providers. The bitcoin leverages however are not as high that of the forex leverages—thanks
to the former’s high volatility. Simply put, the chances of making profits are high with high leverage but so are the chances of making losses.

As a newbie, as such, it is thus always advisable for you to learn nuances of risk management – and
unless you’re completely trained in this regard, consider trading with small leverage.

including Stuttgart Stock Exchange and London Stock Exchange. Their audited financials are legally
authenticated. They hold official licenses to offer derivative investment securities in Cyprus, UK, New
Zealand and South Africa.

AVATrade EU Ltd is incorporated in Ireland and regulated by the Central Bank of Ireland. MiFID
(Markets in Financial Instruments Directive) is in charge of providing a uniform regulatory regime for
investment services.

Consider ETF

ETF refers to Exchange Traded Funds. Exchangeable trade funds enable you to keep track of any
commodity including Bitcoin. The fluctuations in the Bitcoin market can be thoroughly analyzed here.
You can estimate the stability of the Bitcoin value and take your return in accordance.


CFD: Easiest Way to Trade Commodities

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