An investment in Bitcoin is often associated with the term of the cryptocurrency itself. Nevertheless, the investments in this market do not end with the mere possession of cryptocurrency. There are several ways to invest in Bitcoin and other cryptocurrencies. Bitcoin currently serves mainly an investment and speculative function. To a much lesser extent, it is used to carry out financial transactions, and in the case of payments themselves, the use of Bitcoin is practically marginalized. Due to the fact that BTC is basically only used for investment and speculation, Bitcoin is characterized by high price volatility, which brings more and more groups of speculators to this market.
How to invest in Bitcoin?
You can invest in Bitcoin in many ways – both directly and indirectly, for example, by buying a fraction of BTC on a cryptocurrency exchange. Taking into account the growing popularity of cryptocurrencies and the dynamic increases in their valuation, however, one may be tempted to say that currently, this market should constitute at least part of a well-diversified investment portfolio. Given the rigidly defined supply of Bitcoin, as well as the growing number of applications of other cryptocurrencies, it can be suspected that the valuation of this market will continue to grow. How to invest in Bitcoin?
Investing in Bitcoin on a cryptocurrency exchange
Using specialized cryptocurrency exchanges to buy Bitcoin still remains one of the most popular ways to gain exposure to digital currencies. In their assumption, cryptocurrency exchanges do not differ from traditional exchanges – the Warsaw Stock Exchange or the New York Stock Exchange in New York. One of the most visible differences between the two is the fact that the cryptocurrency market has a seven-day trading week. Assuming that there is no failure of the cryptocurrency exchange itself – investing in Bitcoin through it is possible around the clock, seven days a week.
However, when investing in Bitcoin through a cryptocurrency exchange, it is important to remember that only a portion of them are properly regulated. However, even this does not protect investors from possible fraud and theft of funds, as many of the popular cryptocurrency exchanges have fallen victim to hackers and/or gone bankrupt. The most famous such case was the bankruptcy of Mt. Gox – a Japanese cryptocurrency exchange, which in 2013-2014 was responsible for about 70% of all transactions on Bitcoin. In Poland, there was also a collapse of a well-known and respected cryptocurrency exchange when in mid-2019 the Bitmarket.pl reported “liquidity problems”. Such cases only confirm how great importance security is in cryptocurrency trading. That is why the way we store our cryptocurrencies is so important – special wallets are used for this.
Investing in Bitcoin with CFDs
Contracts for difference are derivatives that allow you to gain exposure to an asset without having to buy it. With CFDs, you don’t own the instrument you’re trading, you just speculate on its price. In addition, CFD is a leveraged product, which means that even with a relatively small amount of funds in your account, you can achieve much greater market exposure, which can result in equally large profits. However, it is not without reason that financial leverage is often compared to a double-edged sword. In case of incorrect analysis and taking a position opposite to the current market situation, possible losses will also be multiplied.
CFDs are an ideal choice for those speculating on the price of Bitcoin and other cryptocurrencies, or for those who want to invest in Bitcoin without the need to create cryptocurrency wallets or register with a specialized exchange. How simple is it to invest in Bitcoin with CFDs?