BITCOIN TRADING – PROFIT FROM A FALLING BITCOIN PRICE

Bitcoin price has been declining for a year to the consternation of those who want Bitcoin’s price to appreciate, so they can cash out some of their Bitcoin holdings at higher prices for a profit. Many Bitcoin holders may be surprised to learn that it is possible to make equal profits, during times of falling Bitcoin prices, as when the price is rising.
Investing in Bitcoin vs. Bitcoin Trading
Trading and investment are very different ways of gaining profit from the market.
Buy-and-Hold Investment – Waiting for Profit
Investment is typically a Buy-and-Hold approach that seeks to buy an asset when its price is low and to sell it later for a profit when the price is high. The timescale of investment is usually long-term (months or years) and, as a result of the sheer span of time involved, investors assume an easy-going and low-intensity approach to the market.
If an investor buys 10 BTC at a price of $200 each (total assets: $2,000) then, months later, when the Bitcoin price has risen to $800, his Buy-and-Hold investment strategy would see his Bitcoin holding grow to $8,000 for a profit of $6,000. The market then drops from $800 back to $200 over a period of three months during which time the investor must wait for his opportunity to buy for the next profitable run.

This post was published at Crypto Coins News on January 15, 2015.