Bitcoin currency was up by 20% in July 2020 alone. It is rallying ahead of gold, which saw a jump of 8% in the same month. It suggests that in times of financial crisis, bitcoin is the new gold that traders and investors are banking on.
When you are looking at trading in bitcoins, you need to know what drives the prices of bitcoins. Following the current bitcoin news will allow you to identify situations where people want more liquidity. This will result in them investing in commodities like gold or cryptocurrency, both highly liquid.
Here are the top 6 reasons why, as a bitcoin trader, you should be updated on the latest news in cryptocurrency.
Global Events and Their Impact on Bitcoin Prices
Events that impact the world also affect the prices of cryptocurrencies. For example, the recent COVID-19 virus outbreak led to a strong correlation between bitcoins and the U.S. stock markets. The S&P index and bitcoin prices fell sharply in March 2020 when the outbreak was declared a pandemic.
It becomes tough for us to monitor the impact of such developments, but, thankfully, the current bitcoin news facilitates that. You can get updates on how such events impact the prices of cryptocurrency and likely future trends. If the prices are falling, it can be an opportunity for you to create a long position and vice versa.
When you are current on the news surrounding bitcoins, you can manage risk better. Upcoming events like government policies and trade deals allow you to predict future prices and take long or short positions. The high amount of liquidity that it offers can result in huge profits in a short time. If you don’t keep abreast of any news relevant to bitcoins, you may end up with huge losses.
Get the Benefit of Diversification
Investors can mitigate risk by diversifying their investment portfolio. According to Nobel prize-winner, Harry Markowitz, investing in a diverse set of asset classes helps minimise risk.
You can look at stocks, bonds, metals and commodities, real estate, currency, and cryptocurrency as different asset classes that you can allocate your investments to. Following the latest bitcoin news lets you know when valuations are cheap to buy.
New Release Updates
Bitcoins have a ceiling of 21 million, and most traders believe that 94% of this will be released by 2024. Whenever there is speculation in the news about the possible release of another batch of cryptocurrency, the prices become highly volatile. If you are a trader, following the bitcoin news will help you take trading calls in the currency.
Be Aware Of Scams
The recent Twitter scam relating to a promise of double the money for immediate bitcoin investments is an eye-opener for the investors. Being current with bitcoin news helps you be updated on such frauds and protect your investment. When you know about the ongoing scams, you can report any such messages and save your bitcoin investment.
Impact of Weakening Dollar on Cryptocurrency
Dollar value against other currencies fluctuates based on several factors. This can impact your bitcoin investment as you need dollars to purchase bitcoins. A favourable dollar will result in you having to pay less per bitcoin. You will know about these fluctuations in bitcoin values if you track the latest bitcoin news.
The growth trajectory that cryptocurrency has seen over the past decade is far from over. Bitcoins continue to pique interest among traders and investors alike. If you plan to start investing in bitcoins, or already are a trader, being updated with the bitcoin news will help you plan your investment strategy in the crypto space wisely.