Are you a new or established bitcoin (BTC) trader who could use some guidance to get through the rest of 2022 and start 2023 on a positive note? If so, you’re like so many others who love trading the world’s most popular cryptocurrency but prefer to gather as much information as possible before moving ahead in a turbulent economy. Even in the highly volatile sector known as crypto, where prices can rise and fall significantly from day to day, knowledge is power.
That’s why it’s imperative for traders and investors of alt-coins to review the recent performance of their favorite coin, check out the consensus view of what the next few months hold, examine the pros and cons, learn how to avoid pitfalls, find ways to minimize risk. Of course, all those things are easier said than done. However, a look back at BTC’s year so far can help anyone feel more confident about continuing to trade the leading crypto amid wars, pandemics, and raging inflation.
Q2 Update for 2022
The recent past can often give clues about the near future, especially in the asset markets. What has been bitcoin’s performance for 2022? The crypto has been all over the map, starting the year very close to the d$48,000 level and dipping down to about $36,000 about a month later. By late April, the digital currency stood at the $40,000 mark after a relatively steady rise from $39,500 earlier in the same month.
Likely Outlook for This Year and Next
For serious-minded people who intend to trade bitcoin in the UK, US, Asia, Africa, South America, Europe, or elsewhere for the rest of 2022, consider that the coin’s price sat just below the $6,000 point before the COVID pandemic broke loose. Is it possible that the destabilized world economy after the pandemic drove up demand for BTC? It’s hard to say for sure, but in just two years, bitcoin’s value has skyrocketed, nearly touching the $70,000 line, and not sinking below the apparent support line of $30,000. Here’s where things get interesting. You can check online prognosticators and uncover as many predictions as you wish. For the most part, it’s possible to make a very good case, based on logic and past performance, for BTC to hit the psychologically important threshold of $100,000 before the year is finished.
As you read about the winners and losers in fintech and banking trends you might be tempted by all the benefits of Bitcoin. The benefits of trading, owning, and investing in BTC include the chance to earn outsize profits on an asset that is still relatively new and appears to be testing new highs every few months. Additionally, swing and day traders can use volatility to catch short-term pricing changes and avoid worrying about the long-term scenarios. Based on current events, there are several other advantages. The Ukraine-Russia war and inflation are driving many people away from traditional securities markets and into safe-haven assets that have unlimited upside, namely gold and cryptocurrencies. As for BTC’s reaction to the continuing COVID crisis, history has demonstrated rather clearly that health pandemics tend to rev up bitcoin’s price.
While it is true that crypto can help improve financial health that does not mean trading Bitcoin is foolproof. What’s the downside to crypto at this particular time in history? Aside from obvious value volatility, it’s possible that government regulations in various developed nations could harm the long-term prospects of any digital currency, especially market leaders like BTC. Several governments, notably in the US, the European Union, and China, have already enacted taxation policies toward crypto and have many more laws at various stages of passage. Legal regulation remains the single biggest threat to the future of digital currencies.
Pitfalls to Avoid
How do BTC’s biggest advocates, investors, and traders err? There are plenty of pitfalls you should be on the lookout for. They include placing all or most of your capital into crypto assets. The segment is so volatile that it’s possible to lose half of your money in a single day if you’re not careful. Another big risk is greed, which takes the form of seeking short-term gains on just one or two transactions. Unless you’re extremely lucky, it just won’t happen. If you do want to play bitcoin for scalps, swings, and day trades, consider studying it for several months and making small trades.
Trading to Minimize Risks
Many active traders choose to use CFDs (contracts for difference) to avoid owning the assets underlying the contracts. The goal of those who use CFDs is to earn profit by accurately predicting the direction of future prices. If you think BTC’s value will drop, you would sell a CFD contract on the cryptocurrency. If your guess turns out to be correct, you’d earn a profit. Besides using CFDs, you can simply use small amounts of capital to protect yourself from the high degree of volatility inherent in all crypto transactions.
For those who prefer long-term investing, dollar-cost averaging (DCA) is a sensible and simple way to accumulate a fixed amount of bitcoin once per month, based on what your budget allows. Portfolio diversification is the most frequent tool for capital protection. Consider building a portfolio that includes several different asset classes. For those committed to BTC as a preferred cryptocurrency, aiming for long-term gains rather than immediate profits is an effective way of staying in the market and taking advantage of potential appreciation.