Bitcoin (BTC) trading has gained a lot of attention from the investor community over the past few years. The bull run of bitcoin back in 2017 took the entire financial world by storm. Since then, people are looking forward to getting into the crypto game in order to gain a quick buck. But bitcoin trading since December of 2017 has not proved to be very beneficial overall as the entire market has been in a bear run for quite some time. A lot of people have lost a large amount of money owing to bitcoin trading. Here are a few things that you need to know about this world before getting in.
It has only been just over a decade since bitcoin erupted out on the financial scene. We have seen in the past that every technological innovation takes time to grow, mature and gain acceptance in the community. Same is the case with bitcoin. There are a lot of shortcoming and issues associated with bitcoin that make bitcoin trading an unattractive option for investors in the community.
One of the biggest issues in this regard is volatility. The price of a bitcoin is very volatile. One day it is seen shooting up showing major greens and the very next day, bitcoin is down on its knees with the entire crypto market coming crashing down. As bitcoin has the highest market capitalization among the rest of cryptos, the market usually follows the trend followed by bitcoin. As a result of this volatility, a lot of people lose a lot of money owing to bitcoin trading.
Another one of the major issues is manipulation. Since the market capitalization of the entire crypto market is very small as compared to the banks and institutions, the price of bitcoin is prone to manipulation by big whales present in the game. Whales are usually accused of shifting the market in order to gain personal profits. This largely destroys the reputation of bitcoin in the financial world and the mainstream media. It is one of the burning issues associated with bitcoin right now. This is one of the issues due to which the United States Securities and Exchange Commission (SEC) has not approved a bitcoin exchange-traded fund (ETF) as of yet.
The bitcoin world is also filled with a lot of scams and illegal activities. Since there is an absence of regulatory frameworks and laws, many people have lost a large amount of money owing to scams and fraudulent activities. Before entering into the bitcoin trading world, one has to tread carefully.
The risk involved with bitcoin trading is also on the higher side owing to the issue of volatility. So before you decide to enter this world, know the traps and issue associated. Volatility, manipulation, and scams are one of the few issues associated with this world. Problems like custody and liquidity also persist. The bull run of 2017 proved to be quite beneficial for people back then but now, before entering the bitcoin trading arena now, one has to factor in all these issues and risks associated. This might not be the best time to enter the market.