Ah bitcoin! Once the golden child of cryptocurrency, the power of BTC is being challenged by the likes of Ethereum and Ripple these days…. Although, in the eyes of many, bitcoin’s first-mover advantage still holds true.
As somebody interested in crypto trading, you might have an interest in investing in alt-coins like those named above, but to really get to grips with the fast-paced and volatile environment, bitcoin is an ideal place to start – for several reasons.
Given the proliferation of cryptocurrency exchanges available in many jurisdictions around the world, dealing in bitcoin has never been easier. Once you have joined a reputable site, you can begin your journey into this exciting and unpredictable world.
The perks of being available
One of the main benefits of getting started with bitcoin is also one of the most obvious – it is readily available across the various trading brokers and exchanges that you may choose to partner with.
In fact, if a platform doesn’t have bitcoin available to buy and sell, you really do have to wonder why. The answer is unlikely to paint the broker or exchange in the best of lights.
Interestingly, having a wide availability of bitcoin where you choose to trade comes with further perks. On your trading journey, you are likely to hear the word ‘liquidity’ mentioned a lot, and this is – in a nutshell – the amount of a particular currency that the exchange or broker has to work with.
Typically, the greater the liquidity, then the closer the spread – that is, the gap between the Buy and Sell price. If you want to trade quickly, maybe by using a day trading or scalping strategy, then it is essential that the spread of your chosen assets is tight… otherwise, any profits you might make can be quickly eaten up.
It goes without saying that bitcoin is the most liquid of the cryptocurrencies, and so learning to trade with BTC is the most logical of starting points.
Slow and steady wins the race
One of the reasons why penny stocks and ‘cheaper’ coins get so much attention from traders is that their potential upside is almost without limit.
However, the downside is that for assets that few people have generally heard of, or where there is no clear end use or benefit to it, the downside is self-evident. These projects can come and go in the blink of an eye, and your invested capital can disappear with them.
According to the latest estimates, more than 2,000 cryptocurrencies have failed in the past decade – many of them trading at lower prices and simply not gaining any traction with investors.
So another advantage to trading bitcoin is obvious – it’s not going anywhere, for starters, and anybody taking an interest in crypto is likely to dip their toe in BTC first.
It may not experience the huge peaks and troughs in price that it used to – making it an attractive proposition for traders to exploit. However, bitcoin is a global currency that, should you find yourself in a long position, you won’t have sleepless nights over it simply failing overnight.
The price is right
For the most part, and while not an exact science, bitcoin’s price tends to be the least volatile of all the cryptocurrency spectrum.
It’s a solid beast that has been adopted somewhat by the mainstream, and a currency built on such a firm footing is unlikely to see its value spike and fall by huge percentage points even if the market becomes bullish or spooked.
Alt-coins are generally more volatile and exhibit greater swings in price within a trading session, and while those are ideal for traders who are experienced at reading such moves, for newcomers though volatility and unpredictability are two words best avoided at all costs.
Because the order book for bitcoin trades is so solid, it’s much harder for the market to be manipulated. You may have heard terms like ‘pump and dump’ before, which is basically a method that well-financed individuals or groups of traders use to artificially move the price of an asset one way or another for their own gain.
This is very difficult to achieve with bitcoin because the flow of liquidity is so stable and sizable, but for alt-coins the value can be moved easily – and you really don’t want to be on the wrong side of a pump and dump.
Other nefarious tactics, such as spoofing and washing, are more likely with alternative currencies, so newcomers to crypto trading are advised to stick with bitcoin.