What is next for bitcoin and how to trade it?

What is next for bitcoin and how to trade it?

There is no denying that 2017 was a stellar year for bitcoin. The virtual currency opened the year just shy of $1000 and rallied to a high, just shy of $20,000. The meteoric rise of bitcoin attracted the attention of the media and investors alike.

The first month of 2018 has been very different and the price of bitcoin has experienced some days of heavy selling, dropping by as much as 20% in some sessions. These heavy falls have come amid a crackdown by authorities on the virtual currency. One such example is South Korea, data suggests that a large percentage of Bitcoin trades pass through South Korea, yet authorities there are saying that they are considering banning the crypto currency, which understandably sent Bitcoin tumbling. China another Bitcoin trading nation, is also cracking down on traders of the virtual currency.

More recently news of a possible hack on an exchange in Japan also triggered a panic sell off. These incidences have highlighted the two major concerns for cryptocurrencies; hacking and authorities clamping down. These concerns are likely to continue growing in 2018.

Starting the year predictions for Bitcoin 2018 pointed to the cryptocurrency trading from anything as low as $1000 to possibly up to $60,000. Given the way the year has started $60,000 is looking rather unachievable, but then at the start of 2017 when bitcoin was $966, the level $20,000 also looked completely unattainable. Perhaps this is the big point about bitcoin, predicting its longer-term future movement is very difficult, however there is no denying its volatility. It is the volatility which makes bitcoin such an attractive asset to trade. Volatility provides opportunity, as long as risk is managed appropriately.

When looking to trade cryptocurrencies traditional technical analysis patterns work well. This is because the charts are a reflection of human behaviour towards an asset or in this case towards the crypto currency.

In 2017, the 50-day simple moving average acted as an important support. It was only breached four times, and quickly recovered, until late December, when it was breached and hasn’t recovered. Bitcoin had not traded below its 200-day exponential moving average since October 2015, which continues to act as a critical support. If you think bitcoin is going to recover this year, another dip towards the EMA could provide a buying opportunity.

Where to trade Bitcoin?

Not all brokers offer trading on Bitcoin. When looking for a broker that trades crypto currencies make sure you chose one that is regulated. Vantage FX is a world leading forex brokerage, which offers its clients the opportunity to trade Bitcoin. It is an Australian based broker, which is regulated by the Australian Investments and Securities Commission.

 

Categories: Finance

About Author