Bitcoin is an increasingly popular digital cryptocurrency and market. You can trade 24/7/365, even weekends and holidays!
Bitcoin can be an unpredictable market, and it’s essential to gain an in-depth knowledge of its fundamentals before trading it. This includes understanding any regulatory risks that could impact its price.
What is Bitcoin?
Bitcoin was invented in 2008 by an unknown individual or group using the pseudonym Satoshi Nakamoto. It functions as a peer-to-peer network without centralized authority or banks; managing transactions and issuing new Bitcoins are handled collectively by all members of its community using blockchain technology. Bitcoin possesses properties both of a currency and commodity; its value based on acceptability, divisibility, durability, fungibility (interchangeability) and portability.
Bitcoin’s supply is fixed at 21 million and divisible into eight decimal points; its smallest unit, known as a Satoshi after its creator Satoshi Nakamoto, has become widely popular with those who believe in decentralisation; its price fluctuates rapidly depending on public sentiment and speculation.
Bitcoin can be purchased and stored securely in digital wallets on both your computer and mobile phone, acting as an exchange medium and being transferrable online to other users.
What is the BTCUSD pair?
The BTCUSD pair combines Bitcoin – one of the leading cryptocurrencies – and one of the world’s leading fiat currencies, US Dollar. Its price reveals how many USD are required to buy one unit of Bitcoin as its base currency.
Keep in mind when trading crypto-to-fiat pairs such as BTCUSD that when trading cryptos-for-fiat pairs you are not purchasing or selling actual cryptocurrency but instead are simply speculating on price movements of the underlying asset, thus significantly lowering entry cost implication compared with investing directly.
BTCUSD is a highly popular choice among traders as it combines one of the world’s highest market capitalisation crypto coins with the world’s most traded fiat currency – USD. Furthermore, its highly volatile nature creates incredible opportunities for speculation; driven by global economic events such as COVID-19 lockdown or factors like May 2020 “Bitcoin Halving”, which reduces new Bitcoins entering circulation.
How to trade the BTCUSD pair?
The BTCUSD pair combines one of the world’s premier cryptocurrencies, Bitcoin, with one of the most influential fiat currencies – the US Dollar – in an indicative exchange rate. This pairing shows how many US Dollars (the quote currency) it takes to purchase one Bitcoin (the base currency).
Traders have two options when trading this pair – CFD trading or purchasing it directly through traditional crypto exchanges such as Cytreex or Coinbase. CFDs offer low entry price implications with leverage up to 200 times and technical indicators which can be used to develop trading strategies.
The BTCUSD pair is highly volatile and its price can be significantly influenced by news and events in both countries, especially those which affect political instability or interest rates in either. As the most widely traded cryptocurrency, Bitcoin’s price movement has an outsized influence on other crypto markets – as does global liquidity, inflation rates and economic trends which affect this pair.
Why trade the BTCUSD pair?
Traders are familiar with many major and exotic currency pairs, but this pair stands out by using one that doesn’t represent traditional fiat currency as its component.
The BTCUSD pair is an exciting trading instrument that enables you to speculate on Bitcoin’s price movements relative to the US Dollar. Since 88 per cent of all central bank foreign reserve holdings consists of US dollars, their effect can be felt globally.
This currency pair provides traders with an ideal speculative vehicle, with long or short positions available to trader. Leverage trading also can increase gains but also risk exposure; AvaTrade provides several trading strategies and account types tailored towards BTCUSD, such as cryptocurrency CFDs which give greater trading flexibility while managing trading risk more efficiently.
