Many are exploring alternate sources of income, and Bitcoin Cash Trading is amongst the latest fever gripping most entering the crypto market.
Bitcoin Cash, or BCH, is growing in popularity amongst Day traders, making substantial money. As a result, many have adopted BCH, and many more are joining the ever-growing BCH community.
You may have heard of Bitcoin but must be wondering, “What is Bitcoin Cash?” Let this article serve as your guidance as you get ready to dive in and discover the fun of trading in the cryptocurrency market.
You must be wondering what Bitcoin Cash is.
Bitcoin Cash came into inception in August 2017 after a hard fork of Bitcoin. Bitcoin was tethered with problems that need to be addressed. The scalability of Bitcoin was the issue that made the Bitcoin network slow during transactions. To address this problem, an updated version of Bitcoin was the solution. For this reason, Bitcoin was hard forked to create Bitcoin Cash.
Bitcoin Cash runs updated Bitcoin blockchain codes with a few modifications incorporated. Bitcoin Cash works as a payment network and exchange medium, allowing 24/7 peer-to-peer transactions.
Bitcoin utilizes its blockchain technology. Anyone on a decentralized digital ledger can view all the records of Bitcoin Cash transactions. It requires nodes or computers to validate transactions made by blockchain miners, who employ computational capability to solve complex algorithms. One Bitcoin Cash coin is then created after that.
BCH has a maximum limit of 21 million coins, similar to Bitcoin. However, each block size on the former is 32 MB, while the latter has 1MB. Thus, each transaction of BCH is faster and cheaper compared to Bitcoin.
Reasons to Trade Bitcoin Cash
- Low transaction fees: The Bitcoin Cash network uses bigger blocks than the Bitcoin blockchain. This means that a block of up to 32 MB can accommodate more transactions. As a result, there are fewer outbidding disputes and higher fees because users are less eager to have their transactions added to the block after them. The net cost of a transaction is typically around $0.20. The expenses are still less than credit card processing if you want to exchange BCH for a fiat currency, like USD.
- Quick transaction times: The Bitcoin Cash blockchain can produce more transactions per second due to increased block sizes. Bitcoin Cash can process up to 24 transactions, compared to Bitcoin’s seven transactions per second maximum.
- Growing cryptocurrency: Bitcoin Cash was the most widely used Bitcoin fork at the time. In addition, many Bitcoin owners received automatic credit for comparable Bitcoin Cash. BCH quickly gained popularity, which led to its availability on numerous well-known exchanges and platforms. In actuality, Bitcoin Cash has a $2.14 billion market cap and a constantly increasing trade volume of $183 million at the time of writing this article.
Risks involved in Trading Bitcoin Cash.
Although Bitcoin Cash Trading can substantially increase your profit potential, you cannot afford to ignore the potential challenges and risks involved.
- Dangers of volatility: Day traders can undoubtedly benefit from the erratic price fluctuations of Bitcoin Cash, but users should only take risks with money they’re willing to lose. Never put more than 1% of your account worth into a single trade.
- Unpredictable future: The market for Bitcoin Cash and cryptocurrencies, in general, is still developing. Their future is hence a little hazy. Governments’ future actions and decisions to enact legislation are yet unknown. Governments all over the globe are already creating legislation to regulate cryptocurrencies. These rules could hamper the entire decentralization theory.
- Security: In contrast to Bitcoin, Bitcoin Cash is supported by a less skilled development team. The network could be vulnerable to assaults because of the delayed development of security mechanisms. A miner who controlled 51% of the network’s hash rate in 2019 raised security worries. If one individual or group holds the majority, they can inadvertently take over control of the entire network. Developers of Bitcoin Cash at the time just advised refraining from using Bitcoin Cash for transactions until the issue was fixed.
Strategies for Bitcoin Cash Trading
Utilizing Volatility
Day traders can benefit from the big Bitcoin Cash price fluctuations that can happen throughout 24 hours in contrast to stocks that don’t experience as much price fluctuation in a single day. Historical data on Bitcoin Cash prices reveals that they can change by up to 20% in a single day. As a result, investors may enter the market at low initial prices and leave at peak prices. However, this tactic has dangers. Plotting points of entry and exit on your trading graphs and paying attention to data that can indicate volatility is therefore crucial.
Scalping
Scalpers gain from minute movements that compound up over time. They profit from liquidity gaps, bid-ask spreads, and market inefficiencies rather than sticking to their positions. It’s typical to see scalp traders use automated bots to boost the frequency of their trades while entering and quitting a position in a matter of seconds. Scaling solutions are ideal in markets with more liquidity, such as Bitcoin Cash. Advanced traders who have a thorough grasp of the workings of the market might also benefit from it.
Arbitrage
Arbitrage traders make money by purchasing Bitcoin Cash on one exchange at a lower price than it is worth and then selling it on a different exchange for a higher price. The purpose is to make money off the variations in listing costs between the two sites. The disparity in trading volumes among exchanges may cause a price differential. The overall exchange fees that may be incurred when using this technique of trading Bitcoin Cash must be taken into account because they could offset any gains from sales.
Technical Analysis
Using technical analysis, day traders can gain an advantage. This is accomplished using previous market data to forecast future price movements or basing market judgments on real-time price charts. Essential tools that can help technical analysis include candlestick charts, support and resistance levels, trend lines, and others. Utilizing this method with Bitcoin Cash can first appear intimidating, but you can test your strategies on a sample account to become accustomed to various charts and trends.
How To Start Trading Bitcoin Cash?
You need to buy Bitcoin Cash before you begin trading Bitcoin Cash:
- Crypto wallet: Like buying any other cryptocurrency, buying Bitcoin Cash also works. To purchase coins with a debit or credit card, you must first create an e-wallet. During wallet setup, note the private key and wallet address and save it safely. You will require this for making deposits and withdrawals on exchanges and gaining access to your wallet.
- Trading exchange: You can purchase Bitcoin Cash directly from exchanges using fiat money like USD, EUR, or GBP. You can exchange your other cryptocurrencies for Bitcoin Cash on these exchanges if you have any. Some trading exchanges also offer payment facilities like credit cards, bank transfers, or even wire transfers.
- Withdrawal: You can take Bitcoin Cash out of circulation and put it in your wallet whenever you’re ready to cash out your winnings. You risk exposing security holes if you leave it on the exchange platform. This is so that your money isn’t safeguarded in the event of a network attack since the corporation controls the private keys. You are in total command of the private keys while using a Bitcoin Cash wallet.
Conclusion:
The revolutionary improvements in Bitcoin Cash that fill in the holes in Bitcoin have been well-received in recent years. Although its future is still unclear, day traders have several opportunities to make profitable gains. To gain an edge, use shrewd strategies and trading instruments, and remain current on Bitcoin Cash news as you start Bitcoin Cash Trading.
