How to make money trading Bitcoin has become a major hype for crypto-enthusiast and traditional traders alike as cryptocurrencies take the world by storm. Today’s article will look into 5 ways to earn money trading Bitcoin and other cryptocurrencies in both bear and bull markets.
Q: How to trade Bitcoin?
A: Hodling Bitcoin revolves around buying Bitcoin, or other cryptocurrencies, and keeping them in expectancy of an increase in price. This has proven extremely successful for some hodlers in the past but, as of late, as been done at a loss for the vast majority of the crypto-community still using said method.
Spot trading Bitcoin involves buying and selling Bitcoins and other cryptocurrencies to profit from immediate or expected price differences. An example would be selling Bitcoin against TUSD in expectancy of the Bitcoin price falling before buying more Bitcoin was the price has reached rock bottom. The buy-low sell-high mentality is king in Cryptocurrency and Bitcoin spot trading and is one of the staple of the Bitcoin trading strategies.
Bitcoin arbitrage is a risk-free and consistent returns trading strategy whether done across several pairs on the same exchange or across the same pair on multiple exchanges. Arbitrage works by taking advantage of the price differences between pairs or exchanges. An example would be if pair A/B trades at $50 on exchange 1 and at $60 on exchange 2, buy A from exchange 1 and sell A on exchange 2 to profit from the $10 difference in price.
Bitcoin margin trading using derivatives such as futures and perpetual contracts is one of the most, if not the most, profitable ways to earn from trading cryptocurrencies. Cryptocurrency derivatives allow traders to choose a direction and profit from both bear and bulls markets.
Staking cryptocurrencies is a safe and profitable endeavor. Staking cannot be done with Bitcoin but other cryptocurrencies such as NEO, VET, and ARK that use PoS or DPoS. Staking works much in the same way dividends do in traditional finance, it works as a passive income with far fewer risks than trading but the amount received is subject to the same factors such as market cap or price. To stake, you simply need to hodl some of the coins in an approved wallet to get consistent returns over a period of time.
Q: Make money trading Bitcoin in a Bull market?
A: Hodling has been the favored method of profiting from a bull market for most of the crypto-community. Other viable methods include spot trading, arbitrage, margin trading, and staking.
Hodling, arbitrage, and staking can be both profitable and relatively risk-free but would provide the fewer returns.
Spot trading could prove to be riskier than the above strategies but has higher potential returns as an insightful trader would trade in the most profitable cryptocurrencies day by day instead of just hodling onto one type of cryptocurrency.
Margin trading would be the most profitable trading strategy, as traders could profit from micro-movements of the market, but this demand skills, insight, and a high tolerance for risks.
Q: Make money trading Bitcoin in a Bear market?
A: Making money in a bear market can prove far more difficult with some trading strategies but is still a very feasible endeavor.
Bitcoin hodling and spot trading are not recommended as most cryptocurrencies would see their price fall and traders would ,thus, make a loss when using these Bitcoin trading strategies.
Bitcoin arbitrage and staking would still be profiting, and risk-free, cryptocurrency trading strategies but less than they were in a bull market as the assets gained from those would still be in the cryptocurrencies used.
Bitcoin margin trading, particularly using futures and perpetual contracts, would be extremely profitable as traders could profit from the fall in price and the micro-movements of the market. As with the bear market, this demands skills, insights, and a high tolerance for risks as all traded assets could be lost.
This concludes today’s article about how to make money trading Bitcoin, we hope you learned a lot from these Bitcoin trading strategies, enjoyed the read and stay tuned for more great content.