Is it about time to start trading Bitcoin?

The price of bitcoin (and other cyptocurrencies) is surging, specially in the last months which it’s been constantly reaching historical highs making it a very interesting instrument to monitor…

But is it really the time to start trading it?

Read on to see what I think about this…

Cryptocurrencies Regulation

There is no doubt that the future of human transactions are cyptocurrencies: bitcoin, ethereum, ripple, etc.

But it might take a while before that happens.

There are so many things that need to happen before that, the most important of them all: regulation.

The legal status of these cryptocurrencies is still undefined… Some countries restrict their use, while others have explicitly allowed them.

So once most countries agree about how to treat and trade with cyrptocurrencies, its going to have periods of massive volatility.

Cryptocurrencies Volatility

I want you to look at both, the Bitcoin and Ethereum charts:

Bitcoin Daily Chart

In the case of Bitcoin, one day it reached it was trading above the USD$2,700 mark, two days later it was trading below 1,900.

That’s more than a 30% variability, in just 3 days…

Ethereum Daily Chart

Now look at Ethereum, one day it was trading around USD$110, 3 days later, it traded at USD$230, that’s more than a 100% change in just a few days…

That’s a lot of volatility my friends… not tradable.

To put this into perspective, currency pairs vary around 1%, 2% at most in a regular day…

So to answer the initial question, no, I don’t think its time to start trading Bitcoin or any other cryptocurrency.

At least, not in the way we trade currencies or other instruments, with leverage.

Long Term Investment

If you have the possibility to buy some cryptocurrencies (specially the ones mentioned above), and have some spare capital to invest (for the long term)… You might want to try it.

Which one should I invest in?

Look at this chart from Bloomberg, about the market share of these three cryptocurrencies:

(Maybe in Ethereum?)

Again, with no leverage, it might be a very good long term investment. But is very risky as well. So you need to really think and analyze your posibilities.

For me, I think I’m going to wait… So I will be on the sidelines on cyprtocurrencies for the time being.

Your Turn

Whats your take on cyrptocurrencies?
Have you traded them?
What broker do you use to trade them?

Tags: , ,


Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • AVATAR 007

    Hi Raul, you are absolutely right. I strongly agree with you. One of my friends literally forced me to look at the price and volatility and future. I looked at bitcoin, the charts and patterns on which we heavily rely on trading, and also volatility index. I couldn’t understand why and how it’s moving, and no reliable correlation factors. I also agree with you, not to trade with any kind of leverage, until we have enough understanding and experience of the nature of the instruments. Thank you so much for your discussion and your valuable insight. Much appreciate it.

    Kind Regards Borhan

    • Raul Lopez

      Hey Borhan! long time no see!! How is everything?

      Yep, maybe in the following months we’ll get a better understanding of what all these cryptocurrencies are up to…

      Until then, I’ll stick to the forex market, indexes, commodities, etc.

      Cheers,

      • AVATAR 007

        Hi Raul
        Thanks a lot for your response. Yup, it’s been a while though, but the most important and valuable trading advice I got from you Raul. Please keep it up. I will be in touch now on. Can you please send me the link or timing of you lessons. I like to attend or see the recording at suitable time. Pleas keep posting and update any markets news or events that help us trade better and responsibly. Much appreciate your efforts.
        Cheers
        Regards Borhan

        • Raul Lopez

          Will do Borhan! Thank you again…