BTCUSD is a cryptocurrency pair which displays the price of Bitcoin against US Dollar. Bitcoin is currently the world’s most widely held digital asset and its influence can be felt throughout other cryptos.
Investors trade Bitcoin USD for various reasons, such as fundamental analysis, technical analysis or even news considerations.
1. Fundamentals
Bitcoin stands out from other cryptocurrencies as it enjoys support from major companies like Tesla and MicroStrategy Incorporated, providing it with additional legitimacy as an asset of digital value that acts similar to gold in terms of storage value.
Investors use fundamental analysis to ascertain the intrinsic value of assets. This involves considering both internal and external factors like market sentiment, product changes and macroeconomic events in their evaluation.
Investors might take note of the forthcoming block reward halving event in May 2020, which will limit supply while driving demand upward, similar to how reduced corn harvests historically pushed prices up. Furthermore, regulatory fears and media coverage can cause investor pessimism and lower the price of Bitcoin; which may have knock-on effects for other cryptocurrencies pairs as well.
2. Technical
The BTCUSD pair is an appealing option for traders interested in trading crypto CFDs. Bitcoin is an innovative digital currency which can be transferred directly between users using blockchain technology without an intermediary.
As this pair is highly volatile, it is crucial that you understand its influences so as to maximize potential profits. Market demand, investor sentiment and global economic indicators are some of the factors which could have an effect on its price.
Positive attitudes about cryptocurrency could push the BTCUSD pair higher, while pessimism may send it lower. Regulation also plays an integral role in this market; therefore any comments made by influential bodies such as the Fed may have an effect on this pair.
3. News
Bitcoin has quickly become the go-to crypto, capturing professional traders’ attention with its growth. Its price soared 45% year over year as institutional money began flowing into it from companies such as Tesla and MicroStrategy Incorporated buying digital coins; and US securities regulators approved ETFs that track it. Plus, its impending halving will reduce mining capacity further driving demand.
However, negative regulation still hangs heavy over the crypto party. China’s crackdown against Bitcoin mining has had an adverse impact on prices; furthermore, capital gains tax applies in the US for any cryptocurrency gains; any news affecting these factors could have an immediate and dramatic effect on price – hence why it’s essential to stay up-to-date on news as it unfolds.
4. Regulatory
Cryptocurrencies are legal octopuses that don’t fit neatly into established asset classes. Although cryptocurrencies may serve as an alternative form of cash, stocks or bonds, their unique behavior makes them vulnerable to regulatory attacks on a par with more traditional assets.
US authorities now classify virtual currencies as money transmitters and require exchanges to register, implement an AML/CFT program and maintain records with them. Meanwhile, EU’s fifth anti-money laundering directive has significantly tightened up compliance for cryptocurrency transactions as well.
Regulators’ efforts should provide positive boosts for Bitcoin prices; their design of regulations that do not stymie its underlying technology would create positive momentum for BTCUSD as transactions and active addresses respond strongly to regulatory news as shown by their coefficients on the chart below.
5. Trading
The BTC/USD pair connects the world’s premier cryptocurrency with one of the most influential fiat currencies – USD. This pairing enables traders to speculate on its future path.
When trading this pair, it’s essential to remain aware of any developments that could impact either currency. The USD is mostly affected by events within its home country; Bitcoin’s price can fluctuate based on various international factors.
As part of successful trading, it’s also crucial to implement adequate risk management techniques, such as sizing positions and setting stop losses. Furthermore, when trading leveraged instruments like CFDs it’s essential to understand their associated risks; please read our risk disclosure for guidance. Additionally, select a broker with prompt and high-quality customer support so your account remains safe and secure.
