Bitcoin (BTC) is gaining its place on the exchange at a quick paste, and more traders see it as a good investment opportunity over other major currencies. And the history of this digital currency comes only to prove that it can be a valuable asset for those traders who understand how it works and what may trigger its increase or its decrease. And quite an increase that was. From about 20-30 USD, to record values above 1,000 USD, and now settling around 500 USD. Some news about government’s decisions related to BTC and its acceptance, its fiscal regime or its technological improvement can trigger significant increase in BTC value against major currencies.
So, what would be the best strategy when trading BTC? Let’s take a look at one instrument: BTCUSD. What is the information that is relevant and reliable for preparing the trading strategy? When it comes to BTC, there isn’t much news available surrounding this currency. It is a rather small volume currency, with little events that actually influence it. Therefore, instead of digging for info on BTC, one good solution would be to look at the USD and the news around it. USD allows for an accurate fundamental analysis, focusing on economic news (statistics on consumption, production, employment rate in the US), on financial information (Federal Reserve decisions, interest rates, ratings etc). The fundamental analysis on USD includes major macroeconomic data, with direct impact on the evolution of this currency, as they show how well the US economy performs, and where the industry goes. Moreover, it can determine the impact of these factors on the companies and their future moves, that will come back to impact the very same economic conditions. All these data will provide traders with a clear picture of the strength of the American Dollar and will allow them to prepare a strategy regarding future trading decisions. Clearly, a strong American economy, will strengthen the USD, and will help its appreciation against BTC.
Major events in US economy
Let’s take a look on major events that may impact USD. The interest rate changes announced by the Federal Reserve, the unemployment rate, the production data and much more either increases the USD value or lowers it, depending on the specific announcement. This is why most brokers will offer traders a calendar of major events to happen in the near future. If we look at the current calendar regarding the USD, we will find several of these major events. For instance, the US Federal Reserve makes an announcement, each month, about interest rates. This is among the most anticipated news in the economic calendar, with direct impact on USD and on every USD pairs. The Federal Open Market Committee, a FED branch, makes one announcement a month, and the next one in on June 15, followed by one in July 27. Another anticipated announcement, again, monthly done, is the Gross Domestic Product, with the next one to be done on June 30, presenting GDP and corporate profits for Q1 2016 in USA. If the data shows an increase, then the USD strengthens. The first of each month is the day USA announces how many people are employed in the economy, except for agriculture. An indicator of how solid is the economy and how solid will be the USD.
All these, and more have a direct impact on the US currency and can help traders determine how it will evolve against other pairs, including BTC. Such an in-depth analysis will prevent potential losses and support a strong BTCUSD trading strategy despite the lack of news on the BTC itself.