First Trade Securities: Your Bitcoin Investment Gateway

Bitcoin is a risky investment, but there are several ways to invest in it, both directly and indirectly. One way is to buy and sell Bitcoin on an exchange, but you can also trade it by speculating on its price movements using CFDs. This is a leveraged derivative, meaning you can predict Bitcoin's price movements without owning any coins. Alternatively, you can invest in companies that use Bitcoin technology, such as blockchain, or participate in Bitcoin mining.

Trading Bitcoin through CFDs

CFDs are derivative financial products that enable traders to speculate on the rise and fall of Bitcoin's price without needing to own the currency. This means that traders can take advantage of Bitcoin's price movement without the need to buy or securely store the digital currency. For example, a trader can enter into a contract based on Bitcoin's performance relative to another cryptocurrency, such as Ethereum, or a fiat currency like the US Dollar.

CFDs are leveraged products, which means a trader can open a position for a fraction of the total value of the trade. This enhances the potential gains for the trader. However, it is important to note that high leverage can also increase the risk of losses. Therefore, it is recommended that traders have a good risk management strategy and conduct thorough research and analysis of the market before trading Bitcoin CFDs.

Another advantage of trading Bitcoin through CFDs is the regulatory framework that provides safety for client funds. Brokers offering CFD trading are regulated and must follow set rules and regulations to ensure the safety of their clients' money. This includes protection from hacking or stealing, which is a concern for those who own and store cryptocurrencies.

Investing in Bitcoin mining

Investing in Bitcoin can be a daunting prospect, especially for those new to the world of cryptocurrency. Bitcoin mining is the process of creating new Bitcoins and releasing them into circulation. While it can be profitable, it is important to consider the costs and risks involved.

One of the most popular ways to invest in Bitcoin is through a mainstream brokerage platform like Robinhood Markets Inc. (HOOD), which offers crypto trading with 0% commission on cryptocurrency trades and purchases. Another option is Coinbase, which allows you to trade thousands of cryptocurrencies. Traditional brokers like Fidelity Investments also offer bitcoin investing for 401(k) accounts.

Before investing, it is important to understand the lack of investor protections in the cryptocurrency market. Bitcoin investments are not insured by the Securities Investor Protection Corporation (SIPC) for exchange failures or theft, unlike traditional stock brokerage accounts, which enjoy protection of up to $500,000. While some exchanges provide private insurance, this does not protect against individual online breaches, such as password theft.

Additionally, it is crucial to use a secure, private internet connection when making any financial transactions online. Avoid buying Bitcoin using public internet connections in places like coffee shops or hotel rooms.

When investing in Bitcoin mining, it is important to consider the costs of electricity and hardware. For example, the AntMiner S9, a popular mining platform, may bring in about $179.10 worth of Bitcoin in a month, but at average residential power rates, you could be paying over $100 a month to operate it, not including the cost of the hardware. However, these calculations can change if the price of electricity goes down or the value of Bitcoin increases.

Finally, remember that the value of Bitcoin is volatile and subject to significant fluctuations. If you believe that the value of Bitcoin will rise over time, you may consider potential month-to-month losses as a long-term investment.

Buying and 'Hodl' Bitcoin

Buying and Hodl Bitcoin

Buying Bitcoin is often the first step for investors entering the world of cryptocurrency. There are many ways to buy Bitcoin, from stockbrokers to dedicated exchanges and even in-app purchases in some crypto-linked applications. Here is a step-by-step guide to buying and holding Bitcoin:

Step 1: Understand the Risks and Investor Protections

Bitcoin and other cryptocurrency investments are not insured by the Securities Investor Protection Corporation for exchange failures or theft, unlike traditional stock brokerage accounts. Some exchanges provide private insurance, but this doesn't protect against individual online breaches, such as password theft. Additionally, if the value of Bitcoin drops, you could face significant losses.

Step 2: Choose a Platform or Exchange

You can buy Bitcoin through various platforms and exchanges, including traditional brokers like Robinhood Markets Inc. (HOOD) and Coinbase, which offer crypto trading with zero commission in some cases. You can also use money transfer apps, Bitcoin ATMs, and Bitcoin exchange-traded funds (ETFs). PayPal is another option, allowing users to buy Bitcoin directly and make purchases with it through the "Checkout with Crypto" feature.

Step 3: Connect a Payment Method

To buy Bitcoin, you'll need to connect a payment method to your chosen platform or exchange. This could be a credit card, debit card, or bank account. Be aware that not all exchanges accept credit cards due to processing fees and fraud risks, and credit card issuers may treat Bitcoin purchases as cash advances with associated fees and interest rates.

Step 4: Place Your Bitcoin Order

Once your payment method is set up, you can place your Bitcoin order. Before you do, be sure to understand any fees associated with the transaction. Have a plan for where you will send your Bitcoin after purchasing it, such as a hot or cold wallet for storage.

Step 5: Hold (Hodl) Your Bitcoin

After purchasing your Bitcoin, you can choose to hold onto it long-term, hoping for its value to increase over time. This strategy is often referred to as "Hodl" in the cryptocurrency community, originating from a misspelling of "hold" in a forum post. Remember that the value of Bitcoin can be volatile, so there is a risk of losses if the price drops.

Trading Bitcoin on short-term volatility

Volatility is a natural part of market activity, and Bitcoin is known for its highly volatile price history. This volatility can be extremely beneficial for traders, especially those using short-term strategies, as it creates opportunities for profit.

Volatility in Bitcoin can be caused by several factors, including:

• Supply and demand: As a popular cryptocurrency with a limited supply, Bitcoin's price is heavily influenced by how many coins are in circulation and how much people are willing to pay.
• Investor actions: Large investors, or "Bitcoin whales," can impact the market by liquidating their holdings, causing other investors to panic and leading to significant and rapid losses.
• Media and speculation: Media outlets, influencers, and industry leaders can create investor concerns or hype, leading to price fluctuations.
• Government regulations: Changes in tax regulations or government stances on cryptocurrency can impact Bitcoin's price and volatility.
• Economic conditions: Economic recession or growth can affect Bitcoin's value, with recessions causing a decline in the stock market and economic growth potentially drawing more traders to the cryptocurrency space.

To take advantage of Bitcoin's short-term volatility, traders can:

• Define goals and risk measures: Ensure you are comfortable with volatile trading by setting concrete goals and measures to mitigate risk.
• Refine short-term trading strategies: Sell positions in parts, use trailing stops, and monitor trade orders to manage volatile exchanges.
• Analyze and target market trends: Focus on cryptocurrencies that are trending upwards and get into the sale before the value accelerates to profit from the volatility.
• Stay updated: Keep up with market developments, new data, and the latest articles on the cryptocurrencies you hold to make informed trading decisions.
• Use volatility indicators: Utilize tools such as the Crypto Volatility Index (CVI), Bitcoin and Ethereum Historical Volatility Indexes, and Bollinger Bands to monitor volatility and identify entry and exit points.

By understanding the causes of Bitcoin's volatility and employing these strategies, traders can maximize the potential for profits in the highly volatile Bitcoin market.

Investing in blockchain-related companies

There are several markets to consider when investing in blockchain-related companies. Decentralized finance (DeFi), for example, is a market that removes financial institutions from their role as third parties in transactions, allowing people to take control of their finances with digital wallets and peer-to-peer lending. Many well-known companies are developing blockchains for business, and some are creating them for in-house use.

When investing in blockchain-related companies, you can consider the following options:

• Cryptocurrency itself: Buying Bitcoin or other cryptocurrencies is often the first step for investors entering the world of blockchain.
• Investment instruments linked to cryptocurrency: This includes options such as Bitcoin wallets, centralized cryptocurrency exchanges, traditional brokers, and money transfer apps.
• Non-fungible tokens: These are part of the emerging metaverse design as ownership of digital assets becomes popular.
• Businesses developing blockchain products: Many established tech companies are investing heavily in blockchain and distributed ledger technology applications.

Some of the biggest blockchain companies to consider investing in include:

• Nubank: A company expanding its cryptocurrency offerings in Brazil, working with Fireblocks to improve security.
• Coinbase: A major bitcoin trading platform that also offers digital payment products for businesses.
• Core Scientific: Provides digital mining and hosting services, along with other blockchain-related offerings.
• MicroStrategy: Developing decentralised identity systems using the Bitcoin blockchain.
• Marathon Digital Holdings and Riot Platforms: Significant cryptocurrency mining companies that are also investing in blockchain infrastructure.

Frequently asked questions