While most currency traders are familiar with the major pairs, BTCUSD may present something of an anomaly for traders. It combines one of the world’s leading cryptocurrencies – Bitcoin – with one of the world’s most influential fiat currencies – USD.
Volatility presents many opportunities for speculation in this pairing, yet traders should remain mindful of all factors affecting its price.
It’s a crypto-to-fiat currency pair
The BTCUSD pair combines one of the world’s first and foremost cryptocurrencies – Bitcoin – with one of its most influential fiat currencies – US dollar. This pair offers traders plenty of trading opportunities.
Early in 2021, major institutions began investing in cryptocurrency investments, driving up Bitcoin’s price. Unfortunately, this momentum was dampened by fears of regulation – for instance comments by US Treasury Secretary Janet Yellen suggesting cryptocurrencies were being used for illegal activities caused pessimism within the market and caused its price to dip temporarily before recovering itself over time.
The US dollar is one of the world’s most-traded currencies and its value can be greatly affected by political events or interest rate decisions by the Federal Reserve, making it an excellent option for traders who wish to remain ahead of trends and gain exposure to global financial markets.
It’s a CFD
CFDs (Contracts for Difference) allow traders to speculate on the price movements of an underlying asset. When markets shift in your favor, you will profit; otherwise if it moves against you, losses could occur. Profit or losses become evident upon closing a trade by selling all CFDs you purchased initially – any overnight funding fees and commission charges are taken into account in your return calculation.
CFDs allow traders to take advantage of leveraged products by trading on margin, increasing your trading size and potential returns. But it is wise only to trade CFDs if you possess extensive market experience and understand how volatile markets operate; additionally, be mindful of any associated risks involved with margin trading and leveraged products.
It’s a leveraged CFD
CFD trading provides investors with greater returns by giving access to leverage. Leverage allows traders to control assets of multiple times greater value with their margin deposit; any potential profits or losses will therefore increase exponentially.
CFD trading allows traders to open either buy or sell positions and the resulting profit or loss is calculated based on the difference between opening and closing prices of the CFD. But CFDs carry with them an inherent risk of leveraged loss.
Trading CFDs requires traders to understand and be mindful of counterparty, market, client money and liquidity risks. Furthermore, keeping leveraged CFDs open requires maintaining sufficient margin; should price movements reduce this amount further than anticipated, brokers will notify traders to deposit more funds by issuing what’s known as a’margin call’ notification.
It’s a crypto-to-crypto pair
Bitcoin has experienced an exceptional surge in value during 2020, thanks to institutional money pouring into it and major payment providers including Visa and PayPal recognizing it. Investors were further persuaded to seek shelter in crypto by the coronavirus pandemic as well as negative economic headlines driving them toward crypto.
BTCUSD pairs the world’s premier cryptocurrency with the world’s most influential fiat currency – the US dollar. This pair displays how many USD are required to buy one Bitcoin (the base currency), making this highly volatile and offering enormous potential for speculation. BTCUSD serves as a reference point within the cryptocurrency market and serves as a price direction guide. Furthermore, its fundamental economic qualities mirror those of gold leading to an apparent positive correlation between them both.
It’s a crypto-to-crypto CFD
Bitcoin is an international form of digital currency utilizing blockchain technology to record transactions. Unbacked by any central bank and easily transferrable between users instantly, its price is determined by US dollar activity which accounts for 90-91% of Forex trades globally and accounts for over 88% of central bank foreign exchange reserves globally.
CFD trading BTCUSD CFDs is an ideal way to take advantage of the cryptocurrency’s volatility without buying its underlying asset. Leverage allows for magnified profits and losses; however, when dealing with unregulated brokers like Admirals your money may be at risk; being protected against scams also reduces hacker threats and risk.
