Interest in Bitcoin amid stringent regulatory glare and mixed media coverage, trading in this particular currency has become an enticing side gig which helps to make an extra income. Bitcoin jumped nearly 1,300 per cent in 2017-18, gold saw returns of around 6.3-7.3 per cent. In 2019-20, 2020-21, and 2021-22 too, Bitcoin gained significantly more than gold (see table). However, year to date, Bitcoin fell almost 57 per cent against over 4 per cent positive return by gold.
What Is Bitcoin Trading?
Bitcoin trading refers to the act of buying and selling Bitcoin via an exchange platform. In short, Bitcoin can be traded in many ways. The first way is to indulge in buying and selling of BTC on a cryptocurrency exchange. Another way of trading in Bitcoin is by means of derivative financial instruments, such as Contracts for Difference (CFDs). Trading via CFDs facilitates traders to trade as per the direction of market movement over the very short-term period and allows you to bet on Bitcoin price changes without actually owning any underlying coins.
Understanding Factors Influencing Bitcoin’s Price
Let’s understand the factors which have a huge impact on Bitcoin’s price:
Limited Supply: The price of Bitcoin totally depends upon its supply and demand. Bitcoin has always had a finite number of coins and its current supply is capped at 21 million, which is expected to be exhausted by 2140. A limited supply means that there is a high possibility of change in the price of bitcoin as per its rising and falling demand.
Market capitalization: Bitcoin is known as the largest cryptocurrency in the world as it has a highest market capitalization which means that the users perceive this currency as a more sought-after investment.
Notable And Key Events: Any big news which is directly related to Bitcoin’s security tends to have an effect on the Bitcoin’s overall market price. For example, the ban of crypto in China has led to massive sell-offs in BTC. At the same time, any big development in Bitcoin’s community can lead to a huge rally in BTC.
Smooth Integration: Bitcoin is a cryptocurrency which enables smooth transactions between the two parties and without any involvement of regulatory or centralized authority. Therefore, its image directly depends on its smooth integration into a new-aged payment system. If a lot of corporations or countries accept BTC as a legal payment method, then it can have a direct effect on its pricing.
