Download as pdf or txt
Download as pdf or txt
You are on page 1of 10

$1200

$0
2014 2017
TABLE OF
CONTENTS

1 INTRODUCTION

2 HOW TO GET STARTED TRADING BITCOIN

3 CRYPTO IS HOTTER THAN ANYTHING WE’VE EVER SEEN

4 CRYPTO IS NOT JUST ABOUT BITCOIN ANYMORE…

5 WHAT ARE THE RISKS?

6 THE BIG POSSIBLE FUTURE OF CRYPTOCURRENCIES

2
INTRODUCTION

Bitcoin has taken the world by storm as the digital currency continues to make new all-time
highs in price. Internet security expert John McAfee said in 2017 that he believed the price
could reach $5000 in three years… It’s already surpassed that by 3x as of this writing…

With the potential in rising prices, many are left wondering exactly how they can try to
grab a piece of the pie. Before getting involved in Bitcoin, it is imperative to understand
exactly what Bitcoin is. You need to know that they are units of digital currency, and
they are not exchange-traded products like a stock or commodity. There are a few steps
involved in order to purchase bitcoins, including obtaining a Bitcoin wallet for your bitcoins
to be deposited in.

But first, here are three things you need to know before your first trade… If you are looking
to trade Bitcoin, understand these things before putting your capital at risk.

1 2 3
Trading in Bitcoin is Bitcoin could have There is no
highly speculative theoretically leverage when
and could result in a unlimited upside purchasing
total loss. potential. bitcoins.

Be ready for a wild ride and make sure you’re okay risking whatever capital you’re trading with.

1
HOW TO GET STARTED
TRADING BITCOIN
There are several different wallet providers
(such as Coinbase or Binance) from which
to choose. Once you have researched your
options and obtained a wallet, you can
begin buying and selling bitcoins. These
units of digital currency can be purchased
for regular use, as an investment or as
a speculative play. If you are looking to
actively trade Bitcoin, there are numerous
ways you could proceed depending on risk
tolerance, objectives and more. you decide to go with, whether it is chart-
based or otherwise, the key to trading any
The market for Bitcoin appears to be asset is in risk management.
growing by the day, and price volatility
is becoming the norm. Such a trading This is where trading Bitcoin can become
environment can make for quick and very challenging. The lack of a central
significant potential gains as well as quick exchange makes placing a stop loss order
and significant potential losses. impossible. Sure, you can sell your bitcoins if
the currency declines to a specific level, but
One simple way to go about trading Bitcoin there is nothing to say that its value couldn’t
given recent price action is to employ a see declines far beyond your chosen risk
trend following strategy. The price of the parameters. In fact, it is also possible that
cryptocurrency has seen some sharp rises the currency could become worthless if
followed by some sharp declines, but the the network became compromised or
longer-term trend appears to be pointing merchants abandoned it.
higher. A simple strategy would be to wait
to buy until prices see a decent pullback Scaling into or out of positions may also be
from the highs, or pullback to a trend line. useful. For example, if you purchased five
bitcoins at $4000 each, you could look to
Another way to play a volatile market that sell two at $5000 and two at $7000. On the
is trending higher would be to buy on a other hand, you can also look to scale into a
fresh high in price, looking for that bullish buy by purchasing bitcoins and then dollar-
momentum to continue. Whatever strategy cost averaging if the price drops.

2
CRYPTO IS HOTTER THAN
ANYTHING WE’VE EVER SEEN
The cryptocurrency market is hotter than huge discount — but poised for explosive
anything I’ve ever seen before. And the moves higher.
good news is we’re in the midst of an
absolute earthquake for that market! Consider the case of a gentleman profiled
in Forbes named Mr. Smith, who turned
Cryptocurrencies are things with names $3,000 into $2.3 million! What’s he doing
like “bitcoin” or “ethereum.” They’re digital now? According to Forbes:
currencies that are largely out of the
hands of any centralized government. And Just like that, Smith had landed upon a
the fact of the matter is that people from windfall of $2.3 million. “It was absolutely
all over the world are getting rich from insane,” he says. “I quit my job and left on a
these cryptocurrencies… round-the-world trip the following week.”

There are many stories just like that. And


the fact that savvy institutional investors
“I quit my job — including prominent venture capitalists
— are now treating cryptocurrencies
and left on as a new asset class is a major tell
that we’re on the cusp of a permanent
a round-the- transformation. In other words, this likely
isn’t a hype-driven fad that will fade. It’s
world trip the the dawn of a new technology.

following week.” With huge demand from hedge funds,


venture capitalists and big investment
banks like Goldman Sachs… All piling
There are over 984 cryptocurrencies in millions of dollars into bitcoin… And with
existence now. More are coming to market the scarcity and strictly limited number of
every day. And many are shooting higher bitcoins available… Bitcoin could likely go
and higher each and every day. up over time.

How is that possible? Well, these


cryptocurrencies are essentially the
equivalent of microcap stocks. That is,
many are underfollowed and trading at a

3
CRYPTO IS NOT JUST ABOUT
BITCOIN ANYMORE…

The biggest gains going forward probably


aren’t going to come from bitcoin.
Think of bitcoin as the “blue chip” of
cryptocurrencies. Trading at a higher
price, it’s a lot harder for bitcoin to
multiply in price than it is for a “penny”
crypto trading for under $1. That’s why
the biggest gains in this market will likely
come from sifting through the 1,000 or so
“penny” cryptocurrencies.

Here’s proof… On Friday, March 17,


2017, a tiny little cryptocurrency called
EnergyCoin was trading at a little over
one third of a penny. The exact price was
.003578 of a dollar. That’s like earning a $9,662 salary… per
day… for more than three full months! Now
Then a powerful super-spike struck I hope you can you see why I’m so excited
and over a 99-day period EnergyCoin about the wild potential of these super-
skyrocketed to 34 cents. That’s a whopping spikes in cryptocurrencies. Practically every
9,566% gain — enough to turn a $1,000 day, I’m seeing astronomical gains from one
investment into a staggering $95,660. alternative cryptocurrency or another of
300%… 400%… even 3,000% — some in as
Imagine if you had a good feeling about little as 24 hours.
EnergyCoin and you had put down
$5,000… You could have collected Beats working for a living, right? But in
$478,300. That’s over $4,800 a day for 99 order to “win” in this market — and to win
days straight. Double that starting stake to big — you need to be able to separate the
$10,000 and you’re looking at close to a real deal from the losers. You’ll need to do
cool million… from one single trade. your own research...

4
WHAT ARE THE RISKS?
So, you’ve seen the potentially lucrative part of crypto currencies, but what are the risks?

YOU COULD LOSE A LOT OF MONEY more technically advanced, other types of
Just because Bitcoin prices have been fraud could also begin to take place.
on the rise doesn’t mean that prices
cannot fall. In fact, if the network were to THERE IS NO BUYER PROTECTION
somehow become completely compromised If you were to make a purchase using
or rendered unusable as a medium of Paypal or a credit card, you would likely
exchange, prices for bitcoins and other have a degree of fraud protection. If the
electronic currencies could decline to zero. funds were sent to a fraudulent seller, those
funds can be called back in the form of a
CRYPTOCURRENCIES ARE NOT YET chargeback. However, no such protection
WIDELY ACCEPTED exists with cryptocurrencies, and all
Although more merchants are now transactions are irreversible.
accepting Bitcoin, this form of money
still has not reached mainstream status. ONLY TIME WILL TELL IF
Don’t expect to pay your mortgage using CRYPTOCURRENCIES ARE THE WAVE OF
cryptocurrencies just yet. THE FUTURE
There has been much discussion already
SECURITY MAY BE AN ISSUE about the future of Bitcoin and other digital
As a new form of money, cryptocurrencies currencies. Although these currencies have
have not yet been fully tested for potential become more popular, they have not yet
vulnerabilities. Cyber crimes are on the been fully tested. It may also be unlikely
rise all over the globe, and digital currency that digital currencies could fully replace
security is sure to be a primary issue as fiat money, as central banks can increase
these products become more mainstream. If or decrease the paper money supply in
a Bitcoin wallet file is lost, for example, all of order to tackle inflation, deflation or other
the bitcoins contained in it are likely gone. economic issues.

FRAUD MAY BE PERPETRATED Bitcoin and other cryptocurrencies could


As cyber crimes rise, so does the amount become the next major vehicle for global
of good old-fashioned fraud. Double spend commerce, or they could prove to be a
attacks are just one example of the types of complete and total dud. Before buying
fraud that may be seen with digital currency. cryptocurrencies, carefully consider the risks
As hackers and cybercriminals become even involved and only invest with risk capital.

5
THE BIG POSSIBLE FUTURE
OF CRYPTOCURRENCIES
With cryptocurrencies such as Bitcoin and Litecoin surging in popularity, people are
naturally going to get curious about this digital form of money. Investors may wonder if
cryptocurrencies could replace fiat money. They may even wonder how high prices for
digital currencies could go.

Unfortunately, there are no concrete answers to these questions. Because the notion of
digital currency replacing fiat, or paper money is still so new, let’s take a look at both
sides of the issue.

Before we get to that, let’s take a look at a brief overview of each type of currency:

• Is produced by central banks


• Can technically have unlimited supply
• Loses purchasing power over time
• Can be manipulated to increase exports

FIAT CURRENCY

• Is a decentralized blockchain digital currency


to be used as a medium of exchange
• Not controlled by any single party,
government or bank
• Has a limited supply
• May not be manipulated to gain
competitive advantage
CRYPTOCURRENCY

6
There is a modern day currency war activities and general acceptance are just
going on right now. Central banks have a few of the hurdles currently being faced
devalued their currency in order to by this new form of “money.” It could take
provide a meaningful advantage when years, even decades, for these electronic
it comes to global trade. Governments currencies to reach a level of reliability that
and central banks have the ability to earns the public’s trust.
increase or decrease the money supply,
depending on their objectives. This can The limited supply of digital currency as
make currency markets volatile and well as its decentralized nature may also
sometimes unpredictable. present serious issues for governments
and central banks. Such a monetary
The dollar has been losing value for system could change the face of money
decades, effectively lowering the and commerce as we know it today, and
purchasing power of everyone holding governments may be reluctant to use a
dollars. Throughout history, fiat system which is not completely under
currencies have lost value over time. their control. It could inhibit their ability to
Naysayers of paper money have long affect the money supply and to maintain
advocated other means to protect wealth inflation targets.
and buying power such as physical gold
or other hard assets. The rise of cryptocurrency has likely
only just begun. As global economies
The question of whether or not digital become more technically advanced and
money could replace fiat is a difficult one, as global commerce increases further,
and likely won’t be answered for some time the possibility of more widespread use
to come. It is important to keep in mind of this form of currency may exist. Don’t
that digital currencies like Bitcoin are only plan on using bitcoins to buy a new
in their infancy. These currencies have not house just yet, however.
yet been fully accepted by the mainstream,
although the number of merchants
accepting them may be rising.

Digital currencies still have much to prove.


Potential security issues, theft, criminal

7
www.investingshortcuts.com

© 2018 Investing Shortcuts


Trading and investing involves risk of loss and is not suitable for everyone. Past
performance is not necessarily indicative of future results. Investing Shortcuts and
their representatives are not tax professionals or financial advisors. Please consult
with a tax professional or Financial Advisor before investing.

You might also like