How to Trade Bitcoin and Blockchain Suppliers

Bitcoin is now available to trade on many exchanges globally, although GDAX and Coinbase are the most commonly used in the U.S.  Bitstamp, Kraken and Gemeni, along with Coinbase and GDAX are among the few that allow direct conversion from Bitcoin into U.S. Dollars.  

Several other exchanges allow you to convert only into other cryptocurrencies or local currencies.  While it is fairly simple to trade on an exchange although it is also very expensive.  Trading fees are typically around .25% of the value which is approximately $45 for one Bitcoin.  Larger volumes would reduce the fee somewhat, and if you are adding liquidity to GDAX it is free.  

There are other issued to be aware of, such as significant arbitrage, and hacking which is a real threat.  

Futures

The two largest derivatives exchanges in Chicago, the CME and the CBOE recently both opened Bitcoin futures.  While this makes it easier to trade on the price of Bitcoin it is still quite costly.  With margin requirements of 40%, you must have more than 40% of your position value on deposit at all times.  

Leverage

The new futures contracts grant 2+:1 leverage while some exchanges will afford 3:1.   Then there are also the CFD or contracts for difference which is similar to futures and are available at 10:1.  With the swings we’ve seen in Bitcoin, the odds are pretty good that a 10% change in price could wipe out an entire account at that leverage.  In fact, there have been many price drops of 10% or more in 2017, and the 20x runup this year would have taken out any short sellers many times over.  

Blockchain Suppliers

Just like in the days of the 1800’s gold rush, companies of value were the ones selling Levi jeans and pickaxes.  Finding companies that are jumping into the cryptocurrency and blockchain space is an option to consider.  

Bioptix is a biotech company that made diagnostic equipment for the biotech industry, they just announced in October of this year that they are changing their name to Riot Blockchain and delving into the crypto/blockchain space.  Since that announcement, their price has run up over 300%.  Reminds us of the dot-com days when companies would double their stock by adding .com to the end of their company name.

While it is getting easier to trade Bitcoin and cryptocurrency, it still is the Wild West when compared to stocks, options and futures.  

To learn more information on trading Bitcoin such as what Blockchain really is, the real situation on arbitrage, the very real threat of hacking, check out our post What You Really Need to Know About Trading Bitcoin.  Contact Great Point Capital to learn more about successful and proven trading strategies.  

Great Point Capital has been serving the trading community since 2001, specializing in equities and equity options.  We and are one of the very few firms able to offer access to Takion Software Platform, enhancing the trading performance of our 100+ prop traders.  Contact us today to learn more about our proven strategies to help you earn to your maximum potential.