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Bitcoin Investing: When to Get Out

June 26, 2019
BY Emma Richards

The big news on every trader’s lips is probably Bitcoin! Once again, Bitcoin has passed the 12K mark as big investors and everyday traders jump in with high hopes. But this article is not about buying Bitcoin. I’m going to talk about selling, or more importantly when to close your trade. Keep reading to see what drives the prices and how knowing the source of volatility will help you Take Profit at a more opportune time.

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What drives Bitcoin prices?

Bitcoin price levels work a little differently from the more traditional trading instruments such as gold or USD. Understanding this will help you understand what happened in 2017 and what will probably happen again later this year.

Bitcoin prices depend on how many coins are available on the market or exchange. For example, if everyone sold all their coins on the same day, Bitcoin would be worthless. It works on the scarcity principle. As people Buy, less and less available. The fewer coins available, the rarer the commodity becomes. Think of it like a printed canvas picture in a furniture shop. There are thousands of them, so the price is low. The Mona Lisa is one of a kind, so the price is high.

As the world—once again—gets Bitcoin fever, the prices will likely rise, but it won’t last forever, and traders are now wondering when to get out.

What happened in 2017

When trading forex, the prices rise and fall like seasons. Certain political and economic events can push prices. With Bitcoin, prices follow volume, so when the world went Cryptocrazy in 2017, so did the Bitcoin price. This meant that those lucky few who bought early saw a massive profit opportunity. Since Bitcoin prices were low at the beginning, it meant that some people had dozens of coins, even hundreds, so when the “fruit” was ripe, they pulled out.

Suddenly, thousands of coins were back on the market and the prices fell rapidly. Those still holding coins quickly lost faith and started selling, and the domino effect finished the job. Bitcoin fell from 20K to 3K in a matter of months, and the news media started talking about how the “Bitcoin bubble had burst.”

Buying BTC in 2019

Firstly, BTC was a buyer’s market when it was in the 3K—4K range. Now that Bitcoin has breached 10K, the profit opportunity is much lower, which means you’re going to have to increase your initial investment and leverage—which presents a greater risk of losses. It’s unclear just how high Bitcoin will go this time, and it is impossible to forecast.

What will happen in 2019

After the Bitcoin price bottomed out at 3K, it held. This was likely the die-hard Bitcoin investors holding on to their coins, waiting for a revival. Once the big investors realized the Bitcoin price was low and stable, they fired up a new pump and dump cycle. This means large investments to pump the prices. Investors around the world then saw the rise and jumped in, then the large investors dumped their coins at a higher price. Will this happen again in 2019?

It’s very likely that Bitcoin and other cryptocurrencies will always have seasons of high and low. Crypto is still young in the global market and still hasn’t found its equilibrium. It’s also very susceptible to public opinion and media influence. In 2017, big name billionaires were throwing around 50K forecasts as Bitcoin passed 10K. This was likely an incentive or motivation for people to invest late after the initial price rallied. It’s possible that Bitcoin will hit 20K again, but you’ll have to plan an exit point perfectly to hit that—and it might crash long before that milestone. 

How to plan your BTC exit

The Bitcoin pump continues and it’s already past 11K. Those investors who got burned last time are thinking a little more strategically this time and so should you if you’re planning to invest in Bitcoin this year.

Since the Bitcoin max price is impossible to predict, your exit point should depend on your personal profit targets. After you’ve invested, choose a realistic profit level and set Take Profit. Stop Loss is also an option, but a better choice might be to monitor Bitcoin on your Exness mobile app several times each day.

The most important thing is to make a plan and stick to it. In January 2018, Bitcoin started to fall rapidly, but many investors waited, convinced that it would bounce back. Remember, profits are only profits after you’ve closed your order. Don’t let greed motivate you to keep an order open too long. A win is a win, even if you could have won more.

Bitcoin will likely be around for many years to come. With each pump and dump cycle, the profit ratios will likely fall, but there will always be opportunity whenever speculation is involved.

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