BITCOIN TECHNICAL ANALYSIS (BTC US DOLLAR)

The first and most popular cryptocurrency

Currently, the Bitcoin is the cryptocurrency that has the biggest nominal market price and the largest market capitalization. Its importance is such that it is considered unique, treating the rest of digital currencies as Alternative Coins (altcoins). In this group, we can find open source systems such as Ethereum, Ripple or Litecoin.

High volatility

There are many factors that condition the high volatility of Bitcoin´s price. Similarly to what happens with common assets and the currency pairs in the foreign exchange market, the increasing or decreasing interest of the public raises and/or lowers its market price. However, it also has certain specificities such as the absence of current regulation or pressure from governments. This keeps its value in constant movement, that the individual investor should frequently confront with the Bitcoin technical analysis.

Bitcoin mining

The introduction of Bitcoin futures on regulated trading venues was regarded as a significant milestone in bringing the digital currency closer to mainstream investing. While some sceptics still believe that crypto assets are too risky and speculative for long-term investment purposes, crypto enthusiasts hope that futures trading would bring institutional money to the industry. Let's have a closer look at what is a Bitcoin futures contract and how to capitalize on it.

In essence, Bitcoin futures represent an agreement to sell or buy a certain amount of an asset on a particular day at a price that was fixed beforehand, and to that extent, they are no different from any other derivative financial instrument of the kind, be it futures for corn, oil or soybeans.

Companies and businesses buy futures to fix the price for a specific time period, which gives them the luxury of price stability even on volatile markets, while investors often use futures for hedging risks or speculations as the value of the futures contracts is based on the overall performance of an underlying asset.

In December 2017, two Chicago exchanges - CME and CBOE - launched Bitcoin futures trading, and thus unlocked the cryptocurrency market for institutional investors. The exchanges guarantee that the parties of the futures contract fulfil their respective obligations based on the applicable legislation. It means that the market players that were discouraged by an unregulated stance of the digital asset got a handy tool to gain exposure or hedge Bitcoin and benefit from the price fluctuations.