The latest crypto news is that Bitcoin is booming—again. 2020 was the golden year for one of Bitcoin’s biggest breakouts, as the oldest cryptocurrency hit all new highs. Bitcoin’s price flew up almost 300% over the course of last year, solidifying its place even further as the leader of the crypto pack. Not only that, the crypto was even used as a hedge against inflation by billionaire hedge fund managers like Paul Tudor Jones, as well an investment opportunity for large public companies like MicroStrategy and Square to put large portions of their assets. The icing on the cake was when PayPal added Bitcoin to their platform, giving users the ability to store Bitcoin and make purchases via their PayPal accounts. All in all, Bitcoin sure flexed its muscles as the biggest cryptocurrency on the market last year. Let’s take a look at what Bitcoin has been up to so far this year in the markets, and what the latest developments could mean for those who invest in cryptocurrency like BTC as CFDs.
Bitcoin is blasting off
The king of crypto soared past its 2017 apex of $20,000 to hit a solid high of $40,000 on the 7th of January 2021. However, in true wild crypto style, Bitcoin (BTC) prices then plummeted down below $30,000, after which they made a recovery to $34,807, rising by 7.4% in just one day. This coincided with Ethereum reaching its all-time high of $1476, as it continues to get stronger and stamp its mark as the second largest crypto on the market. So far, Bitcoin (BTC) is up over 17% since the year began. According to industry experts like Michael Sonnenshein, the CEO of Grayscale Investments, Bitcoin has been likened to gold in terms of it being a safe-haven investment, unlike many other instruments which have seen sharp declines in price over 2020, or simply been unpredictable.
BTC still somewhat volatile
In true Bitcoin fashion, the crypto maintains extreme levels of volatility as BTC prices often shoot up or down by over 10% in a single day. However, the price of Bitcoin overall has jumped by 250% since October. Although some analysts from JP Morgan have concerns that if BTC prices don’t hit the $40,000 mark anytime soon, there could be a bulk departure. Cathie Wood, the chief executive of Ark Investment Management, said, “I think we’re going to hear about more companies putting this hedge [bitcoin] on their balance sheet … particularly tech companies who understand the technology and are comfortable with it.” According to Ark’s research team, Bitcoin’s overall value could sky rocket to between $1 trillion and $5 trillion within the next five to ten years.
What’s next for BTC?
With such an explosive start to the year, investors around the world are wondering what’s next—will Bitcoin prices maintain their upward trend or are they due to plateau? Many people believe that the blockchain technology used by cryptocurrencies, along with decentralized finance (DeFi), is the way forward, with the potential to change the traditional financial system forever. While some Wall Street investors believe that Bitcoin is in a bubble, there is trading data that suggests that many people feel positive about Bitcoin as we forge ahead into 2021. Bitcoin investor and advocate MicroStrategy will be holding a “Bitcoin corporate strategy” summit in February to show other companies why investing in Bitcoin has worked well for them. The summit promises to be attended by thousands, according to MicroStrategy CEO Michael Saylor. MicroStrategy owns over 70,000 Bitcoin which adds up to just over $1.1 billion. “They all want to figure out how to plug bitcoin into their balance sheet or their PNL. We’re going to publish our playbook, all of our accounting guidance, our legal guidance, all the work we did over the course of months to get ready to do this as a publicly traded company. And we’re going to open source it, making it available to everybody with the thought of saving them millions of dollars in weeks or months to make this an easier transition,” Saylor explained. This effort could further solidify Bitcoin’s place amongst large companies as an appealing option for asset investment. The future appears to look bright for crypto’s shining star, and for those who are considering BTC as a future addition to their portfolio, it may be worth keeping an eye on this bold instrument as 2021 continues to surprise us.
Investing in BTC prices
The thing with Bitcoin is that it never fails to surprise us, going from historic volatility to an investment asset by major public companies today. But for some investors, the volatility of Bitcoin and other cryptocurrencies can present both opportunities and risks. Trading CFDs or Contracts for Difference allows you to take advantage of price movement volatility in both directions (increases as well as decreases) without having to purchase the underlying asset (in this case any actual Bitcoin).
But before you invest in cryptocurrency like BTC or Ethereum as CFDs, there are a few tips to help you get started. The first is to do your homework, researching extensively on the type of cryptocurrency you’re thinking of trading. Follow each cryptocurrency’s performance and get up to speed so that you can make an informed decision. Whether it’s Bitcoin, Ethereum, Ripple or Litecoin that piques your interest, it’s important to get your head around the crypto before committing to it. Next, make sure that you find a reliable broker so that you can feel comfortable and secure with your CFD investments. It’s a good idea to do a review of online broker options first and look for regulated brokers. Why is it important for a broker to be regulated? Regulated brokers will be registered with an authority, which provides high standards of quality and conduct for the broker to adhere to, acting like a sort of “insurance” for brokers and clients alike. You can literally search for review of online broker platforms and survey the results.
Lastly, before you invest in cryptocurrency CFDs, take advantage of your broker’s demo account so you can get the hang of spotting potential investment opportunities and taking advantage of them by opening and closing deals. The more you know about what you’re trading, the better informed decisions you’ll be able to make.