Charts, Price & Trade Bitcoin (BTC)

What is Bitcoin?

Bitcoin is a cryptocurrency – also known as a digital currency. As with other virtual money, it is decentralised, removing the need for banks or governments. In order to do this, every Bitcoin transaction uses blockchain, which is a digital ledger. The blockchain that holds Bitcoin transactions is distributed across a network and there is no company, country or third party that controls it.

Bitcoin was introduced in 2008. It was the first decentralised cryptocurrency to be launched and, in 2010, it became the first cryptocurrency to be used to make a transaction. A man from Florida paid 10,000 BTC for two pizzas, which works out as $275,150,000 in 2023.

What is Bitcoin trading?

When trading Bitcoin, it's worth looking into the two methods that can be used, to inform your decision on how to approach crypto trading. You can buy Bitcoin through either an exchange or broker. Alternatively, you can trade it using derivatives such as contracts for difference (CFDs), where you can speculate on how the Bitcoin market moves without owning the coins themselves.

How to buy Bitcoin

If you want to buy BTC, you will need to research the crypto exchange that you want to use and the best wallet in which to store it. You will also need to work out how to keep your Bitcoin safe and secure.

Should you want to regularly buy or sell Bitcoin, you'll also need to make sure that you keep up with how it is moving. Crypto trading is a particularly volatile market and often many changes can happen in a short space of time, so you will need to make decisions quickly and accurately.

How to trade Bitcoin

By using derivatives such as CFDs to make a trade, you can potentially profit from taking a position on how the Bitcoin market will move. This is making a prediction based on the market's value without owning the underlying assets – in this case, the assets are Bitcoins.

If you make a successful prediction, you could make a profit. However, if the market doesn't move in the way which you forecasted, you could make a significant loss. It's worth noting that, when trading via your Tradu account, you will be using derivatives like CFDs.

What affects the price of Bitcoin?

One for the driving factors influencing the price of Bitcoin is supply and demand. The way in which its price changes depends on how many investors want to buy BTC and how much there is available. If supply is limited and demand is high, the price tends to increase. Conversely, when there is an unlimited supply and demand falls, the value decreases.

Overselling and overbuying can also create significant price movements within the market. This means that Bitcoin is traded at a lot more or less than its expected value for a potentially unpredictable amount of time.

Market sentiment is also influential. Attitudes towards how Bitcoin is perceived can hold sway over how it performs.

Find out more about what affects cryptocurrencies.

Bitcoin trading indicators

Using indicators to analyse the Bitcoin market can help you to make decisions about what moves to make. There are different indicators that you can consult; the one that you choose will depend on the position that you're taking, your level of expertise and your goals. Here are some indicators of which to be aware if you're planning your next move.

Moving average convergence/divergence

Moving average convergence/divergence (MACD) is a popular choice among traders, used for speculating on a range of cryptocurrencies. This is because it can provide strong trading signals.

MACD reveals the current movements of a cryptocurrency, including the direction in which it's moving and the strength of its current position.

With the MACD indicator, there are two lines: the MACD line and the signal line. If the MACD crosses above the signal line, this signifies a bullish trend. If it moves below the signal line, it shows that the market is trending bearishly.

If the price of Bitcoin is moving one way and the MACD line is pulling in the opposite direction, this is classed as a divergence. This indicates to traders that the trend is likely to reverse, or that prices are about to change.

MACD is a go-to choice for many traders because, although the market is changeable, following the two lines can quickly show how things are faring.

Relative strength index (RSI)

The RSI highlights when the price of Bitcoin doesn't line up with its actual value, giving traders the opportunity to profit before the market realigns. Traders use the RSI to find entry points that follow the current trend fluctuations and to see when the market is overbought or oversold.

If you are looking to buy Bitcoin, when the RSI drops beneath 30, it’s oversold – a sign to buy. If this moves over 70, it's overbought. If it goes to 70 and begins to decline, there's a chance to sell.

Bollinger bands

Here, three lines are plotted on a graph. These represent the simple moving average, an upper band and a lower band. The bands are based on recent price movements. As with RSI, this indicator can identify overbought and oversold signals and suggests the level of volatility in the market.

When using this indicator, it's worth being aware of the 'Bollinger bounce', which refers to support and resistance levels. This should only be traded when Bitcoin is not experiencing a trend. There is also the 'Bollinger squeeze', which is when the two bands come together, potentially signalling that Bitcoin's value is set to break out of the resistance and support levels.

What are the Bitcoin trading strategies?

Bitcoin trading lends itself to day trading. This is where traders open and close positions within the same day, avoiding incurring any overnight charges. Day trading cryptocurrencies like Bitcoin is popular as it's suited to the short-term, fast-paced trades that are necessary in this ever-changing financial market.

Some trades run for minutes; others can take hours. The aim is to make several trades across the day, and this is done through different strategies. Some of the main Bitcoin strategies include:

• Trend trading: Traders attempt to predict the future movement of the price of Bitcoin by looking back and analysing its previous performance. There are different types of trend trading, and you can find out more about the different approaches to this strategy in our guide.
• Swing trading: Swing trading is a strategy that aims to capture short-to-medium-term gains. This involves using analysis to predict when a trend might be about to end and price movements will 'swing' in the opposite direction. Ultimately, the goal is to make a profit on these smaller price swings that happen within a broader trend.

To make a profit from any swing trade, traders must take short position at a high and close it when it's low. Similarly, a long trade opened at a low should be closed when it's high.

Trading Bitcoin: instruments to use

When you choose Tradu, you can trade Bitcoin using derivatives such as contracts for difference (CFDs). This means you are speculating on price movements and don't own the underlying asset.

A CFD is an agreement that a buyer will pay the seller the difference in an asset's value – in this case, the value of Bitcoin – between the time at which the contract opens and when it closes.

Trading via CFDs is done with leverage. This means that you can open a full position while only depositing a smaller proportion of the capital, potentially benefitting from making profits without having to put forward the full amount. However, if you aren't successful, the risks of losing money are amplified.

Bitcoin trading with Tradu

Trading Bitcoin with Tradu is easy:

1. Open your trading account: Sign up today, free of charge.
2. Expand your knowledge: Use our guides to trading, the markets and our advanced platform to get the most out of your trades.
3. Develop a strategy: Create a plan to help you to execute professional trades.
4. Start trading: Our platform is full of features designed to help you.
5. Trade different markets: Trade a range of other markets such as stocks, commodities and forex to diversify your portfolio.

Complete your Bitcoin trading knowledge with our other guides.

With Tradu you can trade crypto via CFDs or you can own real crypto where you take ownership of the underlying asset.