Date:
22nd Sep 2020
Author:
CryptoGT
The Best Bitcoin Strategies for 2020-21
Article Table of Contents:
Hedging Against Fiat Assets through Cryptocurrency CFDs
Captalising on BTC Volatility with Scalping
Trading the BTC Trend
Riding high on the back of a declining US Dollar, massive stimulus measures and rising economic uncertainty, Bitcoin (BTC) has gained more than 60% in 2020. The rising volatility in the fiat markets has led investors to flock towards save haven assets like BTC, which they perceive as having long term value. Even when compared to traditional safe haven assets like gold, experts argue that Bitcoin’s non-correlation with monetary and fiscal policies and its “non-confiscatable” characteristic offer investors huge financial freedom. In Q2 2020 alone, BTC rose 42%, its 4th best quarterly gain since 2014.
The economic devastation due to Covid-19 is forecasted to continue well into 2021. Major financial institutions, that were initially wary of digital assets, have now added BTC to their portfolios, showing a certain level of distrust in the fiat markets.
The deflationary properties of the digital currency can make it a worthy hedging tool in your portfolio as well. Take a look at some ways to trade BTC in 2020-21.
Captalising on BTC Volatility with Scalping
Trading the BTC Trend
Riding high on the back of a declining US Dollar, massive stimulus measures and rising economic uncertainty, Bitcoin (BTC) has gained more than 60% in 2020. The rising volatility in the fiat markets has led investors to flock towards save haven assets like BTC, which they perceive as having long term value. Even when compared to traditional safe haven assets like gold, experts argue that Bitcoin’s non-correlation with monetary and fiscal policies and its “non-confiscatable” characteristic offer investors huge financial freedom. In Q2 2020 alone, BTC rose 42%, its 4th best quarterly gain since 2014.
The economic devastation due to Covid-19 is forecasted to continue well into 2021. Major financial institutions, that were initially wary of digital assets, have now added BTC to their portfolios, showing a certain level of distrust in the fiat markets.
The deflationary properties of the digital currency can make it a worthy hedging tool in your portfolio as well. Take a look at some ways to trade BTC in 2020-21.
Hedging Against Fiat Assets through Cryptocurrency CFDs
Seen as the digital version of gold, BTC can provide opportunities to hedge against the inflation risks in fiat currencies. One way to do this is through derivatives like Contracts for Difference (CFDs), where you can speculate on the price direction of BTC against a fiat currency like USD or EUR, without actually owning either asset.
This is a useful strategy to hedge against exchange rate risks. The massive amount of liquidity injections by governments and central banks, to prop up their economies, is likely to continue for some time. The US Dollar, usually considered as a safe-haven asset, has also been declining, and is forecasted to be on a decade-long decline trajectory, driven by the new Fed policy of average interest rate targeting. On September 4, France announced a €100 billion stimulus package and the US is expected to follow suit.
In CFD trading, you gain the flexibility to trade both rising and falling prices, choosing to go long or short, based on your price predictions. With proper risk management tools, Bitcoin CFDs could offer a way to take advantage of BTC’s price volatility against depreciating fiat currencies.
This is a useful strategy to hedge against exchange rate risks. The massive amount of liquidity injections by governments and central banks, to prop up their economies, is likely to continue for some time. The US Dollar, usually considered as a safe-haven asset, has also been declining, and is forecasted to be on a decade-long decline trajectory, driven by the new Fed policy of average interest rate targeting. On September 4, France announced a €100 billion stimulus package and the US is expected to follow suit.
In CFD trading, you gain the flexibility to trade both rising and falling prices, choosing to go long or short, based on your price predictions. With proper risk management tools, Bitcoin CFDs could offer a way to take advantage of BTC’s price volatility against depreciating fiat currencies.
Captalising on BTC Volatility with Scalping
Cryptocurrencies like Bitcoin are known for their high volatility, which is why CFD trading strategies like scalping can be suitable. In scalping, traders take advantage of extremely small price movements, entering and exiting multiple positions in a day or even in an hour. The aim is to have a high win/loss ratio, with as many small successful trades as possible.
Scalping requires immense discipline and experience. Smaller timeframes allow you to exit trades at any time, but you need to monitor the pair constantly on your trading terminal.
Scalping requires immense discipline and experience. Smaller timeframes allow you to exit trades at any time, but you need to monitor the pair constantly on your trading terminal.
Trading the BTC Trend
Macroeconomic factors point towards a favourable medium-term trend for BTC. Many analysts also predict a sustained bull run in the long term, where BTC could cross the $20,000 mark by the end of 2020. Among the many factors supporting this prediction is the decline in the US Dollar’s dominance and returns. Along with the relentless surge in Covid-19 cases in the US, the 2020 presidential elections and other factors are likely to continue to add pressure to the currency going forward.
When trend trading BTC, finding support and resistance levels on the charts is important. For instance, BTC price declined below the $10,000 mark several times on September 5 and 6, but found a short term support level at $10,000. The breakdown of the $11,200 mark triggered sell offs, but the $10,000 mark is currently acting as a vital psychological barrier.
The simplest trend trading strategy could be through a combination of moving averages. Here, the indicators that would be useful are the 200-day Exponential Moving Average (EMA), 26 EMA and 12 EMA. The timeframe could be H4.
The indicators would give a sell signal when the price falls below the 200 EMA, and the 12 EMA line passes below the 26 EMA line. The stop loss can be placed above the swing high, while take-profit levels can be fixed at the point where the price reverses and touches the 12-period EMA.
The opposite of this would be the buy signal, when the 26 EMA goes below the 12 EMA. Other popular indicators for trend following strategies include the stochastic oscillator and the Relative Strength Index (RSI).
Regardless of your trading strategy, make sure to use proper risk management strategies to counter BTC volatility and downside risks. At the same time, staying tuned to global news developments is also vital.
When trend trading BTC, finding support and resistance levels on the charts is important. For instance, BTC price declined below the $10,000 mark several times on September 5 and 6, but found a short term support level at $10,000. The breakdown of the $11,200 mark triggered sell offs, but the $10,000 mark is currently acting as a vital psychological barrier.
The simplest trend trading strategy could be through a combination of moving averages. Here, the indicators that would be useful are the 200-day Exponential Moving Average (EMA), 26 EMA and 12 EMA. The timeframe could be H4.
The indicators would give a sell signal when the price falls below the 200 EMA, and the 12 EMA line passes below the 26 EMA line. The stop loss can be placed above the swing high, while take-profit levels can be fixed at the point where the price reverses and touches the 12-period EMA.
The opposite of this would be the buy signal, when the 26 EMA goes below the 12 EMA. Other popular indicators for trend following strategies include the stochastic oscillator and the Relative Strength Index (RSI).
Regardless of your trading strategy, make sure to use proper risk management strategies to counter BTC volatility and downside risks. At the same time, staying tuned to global news developments is also vital.
This website cryptogt.com is owned and operated by Hatio Ltd. Hatio Ltd is a registered company in Marshall Islands, with registration number 90645 and has its registered address on Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960.
Cryptocurrency trading can be extremely risky and can lead to large and immediate financial losses. Crypto assets are highly volatile and can result in significant losses of your capital over a short period of time. Cryptocurrencies markets are unregulated services which are not governed by any specific regulatory framework. The provision of such services is not being directly provided by the Company but through licensed third parties.
CryptoGT does not provide its services to residents of various jurisdictions such as but not limited to the United States of America, North Korea and Cuba.
CryptoGT currently accepts only cryptocurrencies as method of deposit.
Cryptocurrency trading can be extremely risky and can lead to large and immediate financial losses. Crypto assets are highly volatile and can result in significant losses of your capital over a short period of time. Cryptocurrencies markets are unregulated services which are not governed by any specific regulatory framework. The provision of such services is not being directly provided by the Company but through licensed third parties.
CryptoGT does not provide its services to residents of various jurisdictions such as but not limited to the United States of America, North Korea and Cuba.
CryptoGT currently accepts only cryptocurrencies as method of deposit.