Bitcoin’s volatility creates the opportunity for traders to profit from purchasing and selling this virtual currency. However, it can also lead to significant losses for traders. This volatility is why some investors don’t want to put their hard-earned money into this cryptocurrency. Ideally, Bitcoin trading or investing is not a good venture for the faint-hearted.
Several factors cause Bitcoin volatility. For instance, new Bitcoins’ release is limited. Ideally, Bitcoin’s production doesn’t change even when its demand increases. Therefore, this cryptocurrency’s price increases as long as buyers increase.
A new government regulation, a hacked crypto exchange, or Bitcoin devaluation in a country can also interfere with Bitcoin’s price. And this trend may not change any time soon, and investors need ways to cope with this volatility.
How to Cope with Bitcoin’s volatility
Most people use crypto exchanges to purchase and sell Bitcoin. Platforms like Bitcoin Era makes buying and trading this virtual currency relatively more straightforward. Perhaps, you can use this link to send a message to the platform’s management requesting more details Bitcoin Era App homepage. Nevertheless, these digital platforms allow people to trade Bitcoin more straightforwardly.
But coping with Bitcoin’s volatility requires traders to do more than jump in and start trading this virtual currency. Ideally, you should monitor the crypto market closely. Use a tracker to monitor price movements and buy when the value of this digital currency hits a certain point.
Trading Bitcoin may require knowledge to profit from the activity. However, you can use a digital tool to automate your trading. That way, you can monitor and understand price movements and decide to purchase or sell Bitcoin to avoid losses.
Another way to cope with Bitcoin’s volatility is holding onto your tokens. Some people invest in Bitcoin in the long term. That means purchasing and keeping Bitcoins, waiting for the cryptocurrency’s value to increase. Ideally, this approach works for a person that is not rushing to profit from their cryptocurrency. Nevertheless, you should also monitor the market to know when to sell your tokens at a price higher than you bought them.
Also, you can use buy stop orders or stop-loss orders. Stop-loss orders tell the crypto exchange to sell a specific Bitcoin amount when the price reaches a certain level. For instance, you can use a stop-loss order to trade Bitcoin when its price hits $4,800 if you buy it at $200. That way, the crypto exchange will look for a buyer immediately after the price hits this level.
If the crypto market has quick movements, the price may fall below $4,800. However, you will limit the losses using these orders. If Bitcoin’s price rises above $4,800, you will sell the tokens for a loss without profiting from the movement.
Nevertheless, these orders protect the investment against significant losses. At the same time, they can help you vain from Bitcoin’s volatility. A buy-stop order tells the crypto exchange to purchase Bitcoin when it reaches a specific price point. For instance, you can place a buy order for Bitcoin when it comes to $4,500 if the market overacts, assuming it will return shortly afterward. That way, you can land a bargain.
Bitcoin’s volatility creates opportunities and losses. Some people make significant returns from their crypto investments due to this volatility. However, you can lose your investment if not careful when Bitcoin’s price fluctuates. Whether the price swings downward or upward, predicting it is not easy.
Nevertheless, Bitcoin’s overall direction is upward because its price has increased since its introduction. A person who bought this cryptocurrency in 2010 and held it in their digital wallet is now wealthier than they were back then. Thus, keeping your Bitcoin for the long term could be better to profit from this cryptocurrency.