With the majority of Western society on lock-down due to the devastating impact of Covid-19, the traditional financial markets have plummeted to catastrophic lows in the past few weeks.
Stock exchanges the world over are reeling from the impact of the coronavirus, with old-school investors struggling to stem the flow of venture capital disappearing into the abyss. However, one market has remained relatively resilient in these unprecedented times – cryptocurrency.
With many of our currently participating in quarantine-enforced sabbaticals, or at least working from home, there has never been a more appropriate time to diversify your portfolio into the decentralised world of cryptocurrency – and Bitcoin trading software makes it easier than ever.
Speculate to accumulate
You may be thinking that cryptocurrency, notorious for taking wild value fluctuations in its infancy, will surely follow traditional markets and plunge into chaos soon enough – however, cryptocurrency experts, alongside historical evidence, suggests that the opposite may well be the case.
Digital currency investors remain bullish about the blockchain’s prospects during this fallow period on the stock market, and with good reason. In times of economic hardship, with quantitative easing (the term used for introduction of new money into the supply from a central bank) on the horizon, deflationary assets, like precious metals, tend to experience an uptick in value.
What drives this? Well, as more money is pumped into the system, known as inflation, the additional currency loses value compared to assets which have not inflated during the same period. For example, the precious metal gold, of which there is a finite amount in circulation, increases in value relative to fiat currency.
A little Bit(coin) more
But what does this have to do with cryptocurrency? To try and keep the concept as simple as possible, let’s take Bitcoin as a case-in-point.
Borne from cyberpunk ideals, Bitcoin was created by pseudonymous founder Satoshi Nakamoto to provide a decentralised, digitised currency that allowed its users to make transactions outside of government jurisdiction – with exchanges able to be made anonymously, if the user desired it to be so.
The ‘mining’ of Bitcoin, the term used commonly to describe the technique used to ‘produce’ more of the currency, is rolled out on a limited basis. Without delving too far into the technicalities of Bitcoin mining, which is possibly the topic for another article, let’s look at the basics.
In its first four years of existence, 50 new Bitcoins were mined every 10 minutes. Every four years, the volume of Bitcoin produced halves – which limits the supply, reducing inflation.
On May 14, 2020, Bitcoin will experience another ‘halving’, which means that, every 10 minutes, only 6.25 Bitcoins will be introduced into the market. As a result, while fiat currencies are experiencing quantitative easing, Bitcoin is effectively moving in the other direction – becoming less and less available. The result, for those familiar with supply and demand economics, is that the price inevitably rises.
So, while it is not as finite as precious metals, the volume of Bitcoin being introduced into the system is deflating, rather than inflating – which is exactly what makes it an attractive proposition during these challenging times.
At the time of writing, Bitcoin remains slightly up in value over the duration of the past week, meanwhile stocks continue to plummet.
Bitcoin trading software
So, what’s stopping you? Even casual traders are securing wins by trading cryptocurrency, thanks to the evolution of trading software – colloquially referred to as ‘bots’.
By utilising algorithms and smart trading methodologies built into enhanced trading software, investors can set rules and regulations regarding the types of trades they want to pursue.
After all, ‘bots’ can process data and make analytical decisions far more efficiently than humans, and they don’t need to eat, sleep, drink or walk the dog.
By utilising simple yet effective techniques, such as trend-spotting, reversion to the mean, and pairs trading, you could win big too, all from the comfort of your own home.
For more information on how cryptocurrency trading software works, check out our article on the subject.
Investing in cryptocurrencies carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.