Bitcoin is one of the most volatile cryptocurrencies.
Here are some stats:
In the last 12 months, it has exhibited a growth of around 1600%, but the price has depreciated by more than 150% over the past five months.
If we look at the short term, Bitcoin shows an average 2-4% change every day. In the last month, it has traded at the lowest price of USD 29,300 and the highest price of USD 42,565 – a difference of a whopping 69%.
While many anti-crypto individuals and experts criticize cryptocurrencies for such high volatility and price fluctuations, this volatility is what presents the opportunity for traders to make money.
If you want to become a Bitcoin trader and earn profits, volatility is your friend. And if you are a new trader who doesn’t know how to leverage volatility, you can use PrimeXBT’s Covesting Module to follow other successful traders’ strategies.
Not only this you can place your bet with any of the bitcoin casinos in the USA to take the advantange of the crypto market volatily.
Here’s a quick guide to making money with Bitcoin’s volatility on PrimeXBT.
Go Long on Bitcoin
There are two ways to earn profits from Bitcoin’s volatility. One way is to go long – buy Bitcoin, and the other way is to go short – sell Bitcoin.
Let’s talk about going long first. Suppose you have a bullish view of Bitcoin, which means you feel that the price of Bitcoin will increase in the upcoming hours or days. In that case, you can take a long position on Bitcoin by buying Bitcoin.
In all, going long means buying Bitcoin at a lower price and selling it at a higher price, thereby making a profit.
PrimeXBT allows you to go long on Bitcoin (or any other cryptocurrency) in three ways.
- You can buy the underlying asset, which is Bitcoin in this case.
- You can do leveraged trading. [PrimeXBT offers 1:100 leverage on Bitcoin, which means you can buy Bitcoin worth USD 100,000 on capital of USD 1,000. ]
- You can subscribe to the trading strategies of other successful Bitcoin traders.
Go Short on Bitcoin
If you have a bearish view of Bitcoin, which means you feel that the price of Bitcoin will go down, you can take a short position by selling Bitcoin. Now, you might be thinking: how can you sell Bitcoin without buying it?
Here’s where the concept of short selling comes into the picture. If you are an experienced trader, you probably already know about short selling. If not, here is a quick explanation.
Short selling refers to investing or trading in an asset by selling it at a higher price and buying it at a lower price, thereby making a profit. In short selling, traders borrow assets from the exchange to sell. Then, you buy the assets, keep the earned profits, and return them to the exchange at the buying price.
The entire process is automated and takes place online, and you don’t have to borrow or return assets manually. By simply clicking Sell and Buy, you can short sell Bitcoin on PrimeXBT.
Example Of Long/Short With Bitcoin Price Volatility
Let’s understand how going long and short works with an example. Suppose 1 BTC is currently trading at USD 35,000, and you feel the price would increase in the near future. So, you can initiate a Buy order at USD 35,000.
Be sure to consider the time frame of your trade. Do you feel that the price will go up in a few hours, few days, or a few weeks? Based on that, you’ll need to enter your position and manage your trade accordingly.
For example, let’s say you think the BTC price will reach USD 37,000 by the end of this week. So, you can buy 1 BTC (or more) and wait for the price to increase. If the price reaches your target of USD 37,000, you can sell BTC and make a profit of USD 2,000.
This is an example of a successful long trade on Bitcoin.
Now, let’s consider an opposite scenario. 1 BTC is trading at USD 35,000, but you feel the price might slide down to USD 33,000 by the end of this week. In that case, you take a short position, and if the price reaches USD 33,000, you can buy your assets and earn a profit of USD 2,000.
This is an example of a successful short trade on Bitcoin.
Use PrimeXBT’s Covesting Module
If you are a new trader, you might be wondering how you can predict if the Bitcoin price would increase or decrease. There are several strategies available in the market. One of the most common and effective strategies is price action trading.
In price action, you need to identify the trend of the market and important support and resistance levels. When the price would reach those levels, it would either reverse (reversal) or cross the price (break out or break down).
As a new trader, understanding the aspects of technical analysis can be challenging.
Here is where PrimeXBT’s Covesting Module comes into the picture. Covesting is a platform where new traders can follow the strategies of successful traders.
The platform lists the most successful traders. You can follow them and copy their trading activity automatically. Hence, you can achieve the same returns as the leading traders on PrimeXBT.
How To Choose the Right Covesting Strategy for Success?
PrimeXBT makes it easier for you to choose the right Covesting strategy. It lists the top traders on the platform, along with the following attributes:
- Total profit
- Today’s profit
- Total active days
- Followers
- Performance (area graph)
- Total follower’s equity
- Rating
Based on this data, you can select a Covesting strategy. Ideally, you should pick a strategy with good ratings, consistent performance, high manager equity, and high total profits.
The best approach is to distribute your funds between a few successful strategies.
When you follow a trader’s strategy, the trader earns a small percentage of your profits as compensation. You can withdraw your earnings as per your preferences (PrimeXBT withdrawal limits may apply).
Is PrimeXBT’s Covesting Module Risky?
Trading, in itself, is a risky business. When you trade by yourself, there is a long learning curve. You need to spend a lot of time and effort learning strategies and understanding how the market works. You may incur losses in the initial phase of your trading journey, but you can make consistent profits when you gain expertise and experience.
Using the Covesting Module is like giving your money to a wealth manager and letting them trade with your money. If they make profits, you make profits, and if they lose, you lose. Therefore, the Covesting Module is also risky.
However, since you follow experienced traders with proven strategies, the chances of incurring huge and consistent losses are low, and you can expect to be profitable in the long run.
Conclusion
The high volatility of Bitcoin makes it difficult to trade for new traders. But once you develop the right trading skills and strategies, volatility becomes your friend and can help you earn consistent profits in the long run.
New traders who aren’t confident enough to trade by themselves can use PrimeXBT’s Covesting Module to follow the strategies of top traders and earn similar returns.
However, with so many Covesting strategies available, new traders must do proper research and analysis before following a trader’s strategy.
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