Day traders are always on the lookout for ways to invest in order to make a quick profit and one way of achieving this goal is to use Bitcoins as their main asset. As Bitcoin is a very volatile commodity, varying dramatically in price with barely any warning, this makes day trading with Bitcoins very exciting and appealing to investors.
What is Bitcoin Day Trading?
Whereas some forms of investment are held for months or even years, day trading is the practice of making profit from short term stock or commodity movements, with the timescale being as short as one minute. As Bitcoin is still a relatively new currency it has quite a small market cap and therefore fairly small sums (by the standards of expert day traders) put into or taken out of the market are able to make the price move significantly in one direction or another. This effect will then be amplified by traders who want to piggyback on the next major market movement. This is especially pronounced during times of low volume, leaving the market vulnerable to manipulation by traders who have a lot of bitcoins and who drop them onto the exchange at a strategic point to make a big profit shortly after. Although Bitcoins have only be around for a few years, their value and popularity has increased dramatically in that time. This makes Bitcoin the ideal asset for day trading because it has a potentially massive profit potential and the volatility of the cryptocurrency only adds to its day trading potential, since volatility is the key driver behind the day trading market. The more volatile the chosen currency pair, the better the currency for day trading, and this accounts for why Bitcoins are becoming ever more popular as an underlying asset among the day trading community.
The Future of Bitcoin Day Trading in the Financial Markets
It is reasonable to assume, based on previous and current market trends, that Bitcoins will continue to increase in popularity as an underlying asset for investors who are interested in day trading in the years to come. Already increasing numbers of top FX trading brokers are offering Bitcoins as one of their tradable currencies, pairing them against high performing currencies like the US Dollar and Euro. Although currently the three most popular trading pairs are USD/EUR, EUR/GBP and USD/GBP, it has been speculated that within the next five to ten years, this could all change thanks to the interest in the Bitcoin cryptocurrency. Indeed, it has even been suggested that by the end of the next decade, the BTC/USD trading volume may even exceed that of some of the most popular existing currency pairs such as the Euro/US Dollar pairing. Whether or not this will be the case remains to be seen, however traders can all rest assured that digital currencies are definitely here to stay and will be playing an ever-greater role in day trading in the years to come.