Bitcoin is a global digital currency not backed by any traditional fiat. As such, its price fluctuations can be extreme.
BTCUSD is the crypto pair representing the exchange rate between Bitcoin and US dollars, serving as the gold standard of crypto and providing price direction signals to almost all other cryptocurrencies.
Price Analysis
The Bitcoin BTCUSD pair is an ultra-volatile cryptocurrency CFD that gives traders an opportunity to trade one of the world’s most beloved digital assets against one of the most widely-held fiat currencies, the USD. It serves as a key guidepost for most other cryptocurrencies as its direction provides directionality signals for many other assets on crypto markets.
Though most analysts remain bullish on Bitcoin, some notable bears exist. Technopedia predicts a price drop beneath $65,000.
Global fundamentals can have an immense impact on BTCUSD prices, from major regulatory events that could determine their future to key investor sentiment events such as election cycles. Investors will seek regulations which support Bitcoin’s decentralisation and blockchain properties – should such measures be introduced, cryptocurrency prices could experience an upward surge. On the flipside, any regulation which hinders its expansion would likely deteriorate it further and be detrimental for BTCUSD prices; furthermore, USD is subject to eight interest rate decisions annually released by US federal Reserve Board and which could cause fluctuations in its price as well.
Fundamental Analysis
Fundamental analysis is an approach which takes into account the underlying demand for cryptocurrency, typically by considering macroeconomic trends and news that affect both USD and its respective crypto.
Investors might anticipate increasing demand for Bitcoin as an inflation hedge as more fiat currency monetary bases expand, often seen as an early warning indicator. To assess its potential further, investors may look at more specific indicators like onchain volume and address creation data to make informed assessments about this cryptocurrency.
Bitcoin, as an intangible hard asset, possesses intrinsic value based on its scarcity and utility as money. Traders can utilize models like stock-to-flow to identify buying/selling opportunities when its intrinsic value matches up with its market price; such models have proved effective at predicting other hard assets like gold and silver’s worth as well. It should be noted however, that much of Bitcoin’s demand stems from speculation regarding its future value rather than certainty of demand.
Technical Analysis
Technical analysis is an approach used to predict market trends by studying past data. It relies on the notion that markets exhibit predictable patterns that repeat themselves, so understanding these cycles may enable traders to make wiser purchasing and selling decisions.
Trend lines are one of the key indicators of BTCUSD and used by traders to assess when an upward or downward move may have reached its peak. The current trend line in the chart below serves as an excellent illustration, showing that momentum may be slowing due to investors waiting for key US economic reports before allocating fresh funds into positions in this pair. If major institutions commit more capital than expected to positions, this should serve as a strong bull signal while otherwise, prices could retreat back toward lower levels.
Position Trading
Position trading allows traders to bypass short-term price fluctuations and concentrate on long-term trends. While this strategy requires thick skin, as trades will almost certainly go against you at some point; but profits can be enormous.
Investing in Bitcoin may seem complicated, but it doesn’t need to be. All that’s required for success is an exchange account, personal identification documents (if required by your broker’s Know Your Client policy), payment method and digital wallet to store purchases – AvaTrade offers many cryptocurrency CFDs – including popular options like BTCUSD pair.
