How to Take Advantage of Bitcoin Price Volatility

A lot of people criticize bitcoin for its price volatility. While it is true the value per BTC has gone through its ups and downs over the past nine years, these price swings create interesting opportunities. Taking advantage of bitcoin price volatility has become easier over the years, even though few people seem willing to partake in this venture.

Bitcoin Volatility Can Be A Good Thing

One of the primary reasons people want to take advantage of bitcoin price volatility is to increase their holdings. People who have either earned their bitcoins or bought them at a cheap price are always looking to improve their cryptocurrency portfolio. Having more coins means there is room for more profits in the future if the bitcoin price continues to go up.

As bitcoin’s price becomes more volatile, there are plenty of opportunities to sell bitcoin at a high price and buy back in when the value dips lower. This can be done by using centralized exchange platforms and peer-to-peer trading platforms. This latter option is usually a safer bet, as sellers can even charge a slight premium rate to liquidate a part of their bitcoin portfolio.

One thing traders need to keep in mind is how it may be difficult to predict when bitcoin will be volatile. Most people who take advantage of bitcoin price swings use technical analysis to gauge opportunities. It is also possible to take advantage of the price momentum without buying or selling bitcoin directly. Various trading platforms and exchanges offer leveraged margin trading.

To be more specific, users of those platforms can bet on the future price of bitcoin. In fact, they can leverage their position based on their long or short position. If people feel the bitcoin price will go down, leveraging a short can be quite a lucrative endeavor.  The same applies to people opening a long position on the bitcoin price, hoping the value will go up. Some traders have a long on bitcoin for quite some time now, as the value kept climbing these past few months.

Merchants often decided to hedge against bitcoin volatility at any given time. This is why they usually rely on a bitcoin payment processors who convert incoming payments to fiat currency right away. If merchants were to embrace bitcoin volatility – even with fractional amounts of every transaction – they could make a profit. Diversification of a portfolio applies to both consumers and enterprises, even though the latter group may not embrace bitcoin price volatility anytime soon.

In the end, it is not hard to see why one should look at bitcoin price volatility as a blessing. While it is annoying sometimes, every means of payment is volatile in its own right. Fiat currencies, stocks, digital assets, and bitcoin are all subject to price swings. However, with bitcoin, anyone in the world can take full advantage of the price movements, whereas traditional finance is a walled-off garden very few people have access to. Taking advantage can be done in multiple ways, even if the user is not willing to part with their own bitcoin portfolio.

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