BTCUSD is one of AvaTrade’s most popular cryptocurrency CFDs to trade.
Traders must keep an eye out for fundamental factors influencing Bitcoin prices, such as major institutions investing in it – this would likely act as an uptick for its price.
1. Fundamentals
Many currency traders are familiar with the major and exotic pairs. BTCUSD stands out among crypto pairs as it represents one of the world’s most influential fiat currencies paired with Bitcoin.
Bitcoin acts as the price direction cues for most other cryptocurrencies and has an almost perfect correlation with gold pair as both offer important economic qualities that protect against inflation and hedge against fiat money – so BTCUSD tends to react swiftly when news or events emerge that touch on either aspect.
Furthermore, the supply of Bitcoins circulating is steadily decreasing as more are lost or burned while new ones join the network, thus decreasing total available coins and increasing demand for them. Therefore it makes sense to monitor key metrics about Bitcoin network metrics as well as any macro news or events which might alter fundamental analysis-based estimates.
2. Technical Analysis
The BTCUSD pair represents the price action of Bitcoin against one of the world’s most influential fiat currencies: the US Dollar. This highly volatile pair provides an exciting alternative to traditional forex trading.
Early 2021 saw institutional money pour into crypto markets, providing a significant boost to BTCUSD pair. This trend was further cemented when companies such as Tesla invested large sums into Bitcoin.
Technical indicators like moving averages and oscillators help traders identify trends. A bullish crossover between the 50-day and 200-day moving averages is known as a golden cross and signals potential new bullish movement; on the other hand, bearish crossing between these averages known as death cross could signal that bear market conditions could soon take hold – providing traders with information they need to enter or exit positions with profits in mind.
3. News & Events
Though BTCUSD may have supportive technicals, its price remains extremely volatile in response to news or events involving either cryptocurrency. Any headline drawing attention to Bitcoin will drive demand and price appreciation; negative headlines could spark pessimism and send the pair lower.
Attracting much attention was the recent massive infusion of institutional capital into the crypto market during early 2021, when major companies such as Tesla and MicroStrategy Incorporated invested billions. Furthermore, May 2020 Bitcoin Halving Event reduced mining rewards and limited future supply thus driving demand further upward.
The US dollar (USD) is also an influential force, as any news on monetary policy or interest rates has an immediate effect on its value compared to other currencies. A rate hike could put pressure on this pair; conversely, cutting rates will provide tailwinds.
4. Regulatory Bodies
Though crypto investors have long sought a comprehensive set of regulations to govern this risky asset class, federal agencies remain divided as to how best regulate this burgeoning digital currency market. In the US, the Commodity Futures Trading Commission regulates futures markets of cryptocurrencies as well as exerting jurisdiction over exchanges, brokers, stablecoins and more related aspects of cryptos such as futures markets of futures contracts and stablecoins.
SEC has taken actions against cryptocurrency-related products that violate US securities law. Both CFTC and SEC have worked towards clarifying their respective roles over various crypto issues in recent weeks.
New York’s Department of Financial Services (DFS) is working on legislation that would establish a licensing regime for digital asset brokers and marketplaces, while codifying DFS’s authority to investigate and prosecute violations of law. This could provide positive tailwinds for Bitcoin BTCUSD; institutional investment has already begun entering this space and this trend could accelerate in 2020.
