The most awaited event by the crypto ecosystem is 4 days away from happening, while the price of BTC continues to rise with ease. If you are interested in taking advantage of Bitcoin Halving to invest, CFDs are an excellent tool.
About Bitcoin Halving
The Bitcoin code is programmed to execute a protocol approximately every 4 years, Halving. Designed to halve the production speed of new Bitcoins and reward members working in your network.
During his 11 years of life he has gone through 2 Halving, and today we are a few hours from witnessing the third.
On both previous occasions, the price of Bitcoin was impacted by this event. Many hope that this time it will not be the exception, which will occur right in an unprecedented economic environment.
To miners, the drastic reduction in rewards sounds like a negative, but this could only be for the short term. Investors who are betting on the project continue in a positive vision, which in itself is already eliminating much of what could be a negative scenario for Bitcoin before its Halving.
Today we see Bitcoin fully strengthened, able to rebound from a recent low of $ 3,850, seeking the 2020 high zone, above $ 10,000.
What is Halving for?
Halving’s main objective is to maintain the sparse nature of the project. At lower supply, with stable or increasing demand, the price of Bitcoin is expected to increase.
Despite the fact that the past does not ensure what will happen in the future with the price, it does show a vision of the sentiment of investors regarding the deflationary nature of the project.
The conditions are not the same either. While for some, the collapse of the economic system could be beneficial for Bitcoin, others are of the opinion that this asset is not prepared to face a situation as it is. Fluctuations depend on consensus, and what the price shows today is positivity for the future.
Why is it worth investing in CFDs to take advantage of Bitcoin’s Halving?
CFD, acronym for Contract for Difference, in Spanish, Contracts for Difference. As the name implies, they are contracts by which two parties agree to make an exchange between the entry and exit price of the asset to which the agreement is anchored.
Being such a versatile tool, many advantages emerge from its use. That is what we will see next, of course not everything is pink, some cons also exist.
- As long as there is liquidity, the position can be closed at any time: Unlike futures contracts, CFDs can be closed when the trader wishes, allowing greater flexibility for different strategies.
- It operates in any direction: Because it is a contract between 2 parties, the operator can even open positions for sale, being able to take advantage of any type of trend.
- Leverage: Probably one of the best advantages of using Contracts for Difference. Using this tool you can open positions with a purchasing capacity much greater than your capital. Generally, brokers offer between 10x and 100x leverage, which means that with a capital of USD 100, and a leverage of 10x, you can open trades of up to USD 1000.
- Stops for loss: Unlike wallets and exchanges, using CFD you can set the starting price, in order to control and reduce losses.
- Leverage can work against you: If you don’t fully understand the risk of using leveraged instruments, your capital can easily go bankrupt. Leveraged products allow you to earn money with fluctuations no matter how small, but also lose it, for this reason you must know this tool very well before using it.
- Volatility can become your enemy: If you use leverage, the volatility of the underlying product must be taken into account. As I was saying, profits can be as high as losses, no matter how small the movement, so high volatility can be a problem if you don’t control the risk. Luckily, there are stops for loss, so establish a trading plan and don’t risk more than you are willing to lose.
How can I take advantage of Bitcoin Halving with CFDs?
Searching to buy Bitcoin in the real market can be really difficult for an investor with little capital, because it will need the price to move a lot to obtain attractive benefits.
Bitcoin CFDs are undoubtedly one of the best options to solve this problem.
When buying Contracts for Difference you can speculate on any type of movement, whether they are predicting small fluctuations and profiting thanks to leverage, such as ups and downs because it is a contract for an underlying asset.
According to your forecast, you could open a CFD purchase transaction on Bitcoin right now, if you expect Halving to have a positive impact. But, in the opposite case, you expect the reaction to be negative, you can also execute a position for sale to take advantage of the movement.
A recommended broker to carry out these operations is Plus500, a totally reliable service, with a simple platform, and with all the tools you need to make investing with CFDs a successful activity.
Managing risk will always be a priority when using leveraged products, and with this broker you can establish profit and loss stop orders, making your pre-established rules easier to comply with when investing in Bitcoin.