How to Trade Bitcoin CFDs in 3 Easy Steps
- Open a trading account with AvaTrade AU
- Fund your account
- BUY Bitcoin (go long) or SELL it (go short)
AvaTrade AU is an industry-leading broker, with some of the most competitive conditions available, including very low Crypto spreads!
Understanding Key Factors Influencing Bitcoin Price
Like any financial asset, the price of Bitcoin is dictated by the laws of supply and demand. Bitcoin has always been compared to gold in this regard, in that there is a finite number of coins that will ever be available. Beyond that, market participants will, over time, determine the fair value of Bitcoin depending on its use cases and adoption.
Another major price influencer is media coverage. In its early years, the price of Bitcoin was constrained as the media branded it a passing cloud and a coin for the dark web.
In this age of social media, such negative coverage can scare potential investors. However, positive media coverage of both Bitcoin and its underlying blockchain technology has provided favourable fundamentals for the foremost cryptocurrency and emboldened investors.
Bitcoin trading may be decentralised, but the power of major governments around the world cannot be ignored. Bitcoin has been the subject of frequent changes in regulation in various aspects, including taxation.
Part of the reason the price of Bitcoin fell sharply after the highs of late 2017 was massive regulatory pressures from China.
But regulation is not necessarily a negative fundamental. In some instances, positive regulation serves as a tool to legitimise Bitcoin as a mainstream financial asset, and this can lead to increased demand.
Bitcoin’s price is also influenced by what happens within the Bitcoin community. Part of the reason the price of Bitcoin surged during the COVID-19 pandemic can be linked to the halving that happened in May 2020.
Bitcoin halving is when the reward for mining Bitcoin is halved. This theoretically limits the supply of Bitcoin as the incentive to mine is reduced. With supply limited, demand increases, and the price of Bitcoin increases as well.
There are different ways to buy Bitcoin and gain exposure to the opportunities this exciting asset provides. There are crypto exchanges that allow investors to buy Bitcoin using credit/debit cards or bank transfers.
Exchanges were initially the only way to buy Bitcoin, and they have evolved as the foremost cryptocurrency has attracted interest globally.
When you buy Bitcoin via an exchange, you will be required to open and secure a crypto wallet. You will fully own the coins and can benefit from forks that generate ‘dividends’ for Bitcoin holders.
There are also peer-to-peer Bitcoin exchange sites where people trade Bitcoin for cash between each other. These sites have grown in popularity because they match local traders who can conveniently exchange Bitcoin using local payment methods.
Peer-to-peer Bitcoin trading sites usually offer the coin at premium prices (higher than the market spot price), but they are easy and convenient for anyone to use.
There are also Bitcoin ATMs that resemble traditional ATMs. However, they are not connected to any bank, but rather to a Bitcoin wallet or exchange. Bitcoin ATMs allow investors to buy Bitcoin with credit/debit cards as well as cash.
In most cases, it is easy to locate Bitcoin ATMs near you using maps. While this may increase convenience for some, many Bitcoin ATM users have lamented the high fees charged (usually more than 5%).
In this way, investors do not own Bitcoin, they only speculate on its price changes. If you buy, you earn profits when prices go up; and when you sell, you earn profits when prices decline.
Bitcoin trading via derivatives is attractive for many investors because it allows for profits to be captured whether prices are rising or falling. Derivatives can also be traded with leverage, which makes it possible to gain bigger profits when prices move in your favour.
So how should you buy Bitcoin? This entirely depends on your investing goals and ambitions. When you buy Bitcoin via an exchange, ATM, or a peer-to-peer trading site, you are essentially a HODLer.
“HODL” is a term in the bitcoin community that means holding the coins for a long term. You essentially believe in the future of bitcoin and will never be concerned by periods where the price is declining. You are in for the long haul and will cash out when you reach a predetermined target or when it makes sense to do so.
But if you are a short term, active trader, derivatives such as CFDs will suit you better. Bitcoin is generally a volatile asset whose prices fluctuate wildly. This means that short-term bitcoin traders are exposed to more opportunities when the prices swing between different highs and lows.
Want to join the vibrant Bitcoin market? Open a trading account with AvaTrade AU now!
Why Trade Bitcoin with AvaTrade AU
At AvaTrade AU, you can trade Bitcoin as a CFD. Here is why you should trade Bitcoin with us:
- Security – As a CFD brokerage firm, we do not provide crypto wallets to store your Bitcoin. We simply provide access to intuitive platforms for you to trade real-time price changes of Bitcoin. We are also regulated in various jurisdictions around the world, which ensures that we comply with the highest standards of safety, including holding customer funds in segregated bank accounts.
- Leverage – We offer a leverage of up to when you trade Bitcoin or any other cryptocurrencies. This means that you can extract and maximise your trading during marginal price changes or when you have limited capital.
- Choice of Assets – Alongside Bitcoin, we also offer a selection of other coins and tokens that can be top additions to your portfolio. They include Ethereum, Litecoin, Dash, IOTA, NEO, Stellar Lumens, Ripple, EOS, and Bitcoin Cash.
- Lower Charges – We enable our clients to trade Bitcoin at competitive spreads. This is because, unlike exchanges, we do not need to charge miner fees or other transaction costs.
- Faster Transactions – Open and close Bitcoin trades in an instant. We are backed by multiple, large liquidity providers which makes it possible for us to guarantee fast execution on all Bitcoin trades.
- Trading Platform – Trade Bitcoin on world-class trading platforms such as MetaTrader 4 and MetaTrader 5. Our platforms are advanced and stable, and investors can trade Bitcoin using numerous advanced order types such as limit and buy/sell stop. We also support automated trading strategies as well as offer numerous technical and fundamental analysis tools.
- Trading Resources – Bitcoin is an exciting yet volatile currency. This is why we offer various handy trading resources to help stay on top of your Bitcoin trading. We have a comprehensive education section where there are numerous relevant crypto eBooks and videos to help you gain the necessary knowledge to navigate the crypto market. We also have an Economic Calendar that will help you stay on top of news and events that may impact your crypto portfolio.
- AvaProtectTM – Trade Bitcoin with the exclusive AvaProtect risk management feature. This unique feature gives you your money back on losing trades during the protected time period.
- Trading Central – Identify some of the best technical setups on your Bitcoin chart using Trading Central which is integrated on all our platforms.
- Multiple Pairs – Trade Bitcoin vs. various fiat currencies and get exposed to even more trading opportunities via arbitrage.
Bitcoin in the News
- November 2012 – WordPress started accepting bitcoins
- November 28ᵗʰ 2012 – First Halving Event took place. This is where the amount of mined Bitcoins was halved, causing half the rewards for miners, for performing the same amount of work. It also prompted an increase in the price of Bitcoin over time.
- July 2013 – Launching of a joint project in Kenya, linking bitcoin with M-Pesa, a popular East African mobile payments system.
- September 2014 – TeraExchange, LLC, received approval from the U.S. Commodity Futures Trading Commission to begin listing an over-the-counter swap product based on the price of a bitcoin, marking the first time a U.S. regulatory agency approved a bitcoin financial product.
- March 2016 – The Cabinet of Japan recognised virtual currencies like bitcoin as having a function similar to real money.
- July 9ᵗʰ 2016 – Second halving event
- August 1, 2017 – First fork in Bitcoin was created: Bitcoin Cash
- October 24, 2017 – The second fork in Bitcoin was created: Bitcoin Gold
- December 10, 2017 – CBOE Futures Exchange (CFE) starts offering Bitcoin futures trading
- December 28, 2017 – Third fork in Bitcoin created: New coin on SegWit2x chain called B2X
- May 11ᵗʰ 2020 – Third Bitcoin Halving Event
- Expected 2024 – Fourth Bitcoin Halving Event
Need Help Trading Bitcoin?
AvaTrade AU offers you the opportunity to BUY (go long) or SELL (go short) on all Bitcoin trades. This service is available to you 24/7. You can use your preferred trading strategies to buy or sell Bitcoin CFDs regardless of which way the currency is moving.
We encourage you to learn more about Bitcoin trading by visiting our Trading Conditions & Charges page.
Please note: The Cryptocurrency market’s high volatility can offer ongoing trading opportunities.
Due to price fluctuation, certain Crypto pairs may be suspended and/or removed from our trading platforms periodically.
When trading with AvaTrade AU you are trading on the price changes of the digital coin, and not physically purchasing it.
Due to price fluctuation, certain Crypto pairs may be suspended and/or removed from our trading platforms periodically.
When trading with AvaTrade you are trading on the price changes of the digital coin, and not physically purchasing it.
Bitcoin trading FAQ
- Is the Bitcoin market subject to manipulation by a handful of investors who control the majority of Bitcoin?
If a financial asset is majority-owned by a handful of investors, their collective actions could theoretically shape demand, supply, and pricing. When the ‘Bitcoin Whales’ decide to hold their stores of Bitcoin, they effectively remove their share from circulation, and from trading activity. This reduces the amount of Bitcoin being bought and sold, which in turn affects pricing. When supply exceeds demand, prices go down, and when demand exceeds supply, prices go up. Long-term investors comprise 56% of Bitcoin holdings, 18% of Bitcoin has been lost, traders make up 15% of holdings, and 11% of Bitcoin remains to be mined.
- Why can you trade Bitcoin 7 days a week but you can’t trade forex 7 days a week?
Bitcoin is the world’s premier cryptocurrency, but it still is a relative newcomer to the scene. Unlike forex, Bitcoin has yet to gain mass adoption. Like forex, Bitcoin is also decentralised. It’s worth pointing out that Bitcoin is not directly controlled by governments or central banks. And, trading is not subject to regular business hours since Bitcoin is a P2P cryptocurrency, and BTC exchanges run around-the-clock. Forex markets run 24 hours a day, 5 days a week for retail traders, but not for institutional traders. Forex trading takes place from 5PM EST Sunday to 5PM EST Friday for retail traders.
- What made Bitcoin’s price rise above $50,000 in 2021?
On Tuesday, February 16, 2021, the price of Bitcoin surged above $50,000. Many cryptocurrency analysts attribute the sharp rise in the price of Bitcoin, and altcoin, to increasing interest from institutional investors. In Q1 2021, major companies like MasterCard, PayPal, and Tesla indicated strong support for cryptocurrencies. In hindsight, the 2017 rally which pushed Bitcoin’s price to $20,000 was driven by speculative retail sentiment, while the 2021 rally was driven by institutional demand. Previously, retail demand for Bitcoin was fuelled by leveraged trades, making the market inherently volatile. Regardless, it remains a speculative asset with questionable intrinsic value.