Trading binary options based on BTC has quickly become one of the most popular and potentially profitable methods of investing. The value of bitcoin in relation to other currencies (usually USD) changes dynamically almost from minute to minute, which makes it very interesting from the point of view of binary options. Physically acquiring real cryptocurrency or using CFDs for longer periods of time are also considered very interesting investment options.
Currently, there are also platforms that accept bitcoin and other cryptocurrencies as methods of funding user accounts. This allows investors to top up their account and get paid out in Bitcoin, Ethereum, as well as a range of other digital currencies.
How Bitcoin binary options work
Bitcoin binary options are basically uncomplicated financial contracts that allow traders to speculate on the price of the oldest cryptocurrency. On the day and time the contract expires, only two outcomes are possible: win or lose. If the trader's prediction is wrong, the trading platform will keep the entire deposit paid. However, if the trader's predictions come true, the trader will receive the initial payment back, as well as the pre-agreed payout.
The volatility and unpredictability of the BTC rate often make it an extremely interesting investment proposition for novice traders who do not yet have much knowledge about trading with binary options. Such an inexperienced investor can get spectacular financial benefits if he is able to predict the market.
Types of contracts
All BTC binary options traders will easily find several variants of Bitcoin-based binary options contracts, which are offered by the most reputable platforms and exchanges. At this point, it should be added that which supplier is the most suitable for a given investor depends largely on his approach as well as the chosen investment strategy.
Up/Down – Sometimes also referred to as High/Low, this is the simplest type of contract. In this model, investors speculate whether the strike price of Bitcoin at option expiration will be higher or lower than the current market price.
Touch/No Touch – this type of binary options is where traders predict whether BTC will “touch” one of the price levels set at the time of creating the option. These levels are set higher and lower than the current price.
In/Out - Sometimes referred to as Range or Boundary options. In this variant, upper and lower values are set. Traders then decide whether the BTC price at option expiration will end inside or outside of these ranges.
Ladder – This type of binary options is not fundamentally different from Up/Down contracts. In this variant, instead of using the current market price, the broker sets predetermined levels, which are then spread up or down. The farther the trader's chosen zone is from the closing price, the more that trader can earn. This is a particularly interesting type of binary options for Bitcoin traders. This is because this solution is a great fit for assets that show significant price fluctuations.
How to trade BTC binary options
First of all, it must be made clear that not all platforms and exchanges offering Bitcoin binary options are created equal. With this in mind, there are several important factors to consider.
In the first place, every trader should check which platform offers the best payouts and potential winnings on BTC binary options contracts. An important element is what is the minimum required deposit that must be made in order to start trading. Beginner traders and novices should definitely prefer a brand that offers accounts with the lowest initial fee possible.
Another factor that affects the comfort of the trader is whether the platform offers a wide range of deposit and withdrawal options. Some brokers even accept payments in Bitcoin itself.
Other issues to consider are whether the online broker is licensed and regulated. There are many rogue projects operating in the binary options and crypto space.
Traders who value the technical aspects may emphasize how intuitive and user-friendly the trading platform is for trading binary options, in which the underlying instrument is Bitcoin.
Finally, some brokers offer lucrative sign-up bonuses. These welcome offers very often include free trading capital and numerous other discounts. Traders interested in binary options related to Bitcoin should also carefully check the withdrawal conditions before opening an account.
To successfully trade Bitcoin based binary options, you need a good strategy.
For investors who are fundamental analysis enthusiasts, this will generally mean keeping abreast of market developments, such as new regulatory restrictions on the use of digital currencies or announcements that a company or companies in a particular sector plan to accept Bitcoin payments. This type of data certainly helps investors who use binary options to finalize the appropriate contract, as well as to take advantage of the expected increase or decrease in the value of the oldest cryptocurrency.
Traders who prefer technical analysis by their nature rely primarily on charts and stock indicators. The leading Bitcoin binary options brokers offer a whole range of interactive charts with many analytics tools for drawing and analyzing. It is a very effective tool that helps traders to identify patterns and trends related to Bitcoin, allowing them to then choose the right binary options contract.
3. Strike price and expiration
One of the fundamental advantages of Bitcoin binary options contracts is that traders are aware of the potential win rate and possible losses they may incur from the very beginning if they make a mistake. Often, however, it can be difficult for novices to choose the correct strike and expiration price. Practice shows that the best strategy that novice traders of Bitcoin binary options should choose is the one that is focused on maximizing the chances of profit while minimizing possible risks. This assessment should in most cases be based on the plan defined in step two.
4. Monitoring and shutdown
An important fact is that the investor may hold some binary options contracts until their expiration to ensure that the initially adopted strategy turned out to be correct. However, an even more important element of bitcoin binary options trading is that some platforms and exchanges may allow traders to close a trade early if the market moves against the trader. However, this is often associated with the payment of an appropriate commission. However, in any case, the investor should carefully check the terms of the contract. This is because Bitcoin binary options may have rules and provisions that prevent an investor from leaving the market early.
Successful and profitable Bitcoin binary options trading requires practice, experience and knowledge. For this reason, all investors should constantly improve their own competences and skills and additionally draw conclusions from the wrong strategies adopted in the past. The best way to develop investors' knowledge of Bitcoin binary options is to follow the advice of experienced investors, as well as to take advantage of social trading opportunities. Demo accounts are another great way to hone your trading skills in an environment free of the risk of losing your invested money.
Final Thoughts on Bitcoin Binary Options Trading
BTC binary options are one of the easiest assets to trade cryptocurrencies using financial derivatives. For newcomers to Bitcoin binary options, they offer a simple investment proposition with risks and potential profits known in advance. The dynamic volatility of the largest digital currency by market capitalization also means that there is a wide range of profit opportunities. In any case, an investor should sign up with a credible broker before trading Bitcoin binary options.
To put it simply, Bitcoins are a worldwide phenomenon and it is not surprising that platforms offering financial services open up the possibility of binary trading using BTC. This is primarily because this cryptocurrency has an incredibly volatile exchange rate, making it ideal for binary trading with all possible expiration dates. The popularity and notoriety of Bitcoin also make this cryptocurrency a prime target for potential scams and the like, and every trader should be aware of this. With this in mind, always trade only with trusted brokers like Tytanid.com
Any trader who is interested in starting trading Bitcoin binary options should at least have a minimal understanding of what cryptocurrencies are. Essentially, Bitcoins are nothing more than digitally created units of currency that can be spent anywhere Bitcoins are accepted. In its foundations, BTC is to be a freely available and easy international trading system that is in no way dependent on central banks and does not charge extremely high fees. The coins are based on a very complex cryptographic algorithm which then generates value through a process known as "mining". Miners, high-tech computer operators, create new coins by running a program that is designed to strictly limit the number and rate of mining of coins, ensuring that they are not devalued. Once mined, coins become available for sale, trade, and exchange. Bitcoins are currently used for global currency exchange and international trade, but world powers have not yet accepted BTC as a means of payment. A few years ago, the number of brokers offering Bitcoin as an underlying asset for binary options trading was relatively very low. Currently, the situation is the opposite. Several binary options brokers now offer advanced trading on Bitcoin as well as some lesser-known cryptocurrencies such as Ethereum, Cardano, Dash, USDT. One of the platforms that offer binary trading using BTC is Tytanid.com. As a consequence, investors now have a wide choice when it comes to finding a platform that offers cryptocurrency trading with binary options.
To buy and sell Bitcoin (instead of speculating on its price), you need a cryptocurrency "wallet". Security and transparency are key in this respect. Cryptocurrency wallets store your virtual currency, so you must trust them completely.
How bitcoin trading works
Recognizing the new investment opportunities associated with Bitcoin and binary options, some innovative owners of online financial platforms have come up with ways to trade binary options in conjunction with Bitcoin. Basically, there are 2 possible ways to trade Bitcoin binary options. To put it simply, the first method is to use Bitcoin as a medium of exchange. The second method is to use Bitcoin as the underlying asset in binary trading.
Bitcoin as a medium of exchange
When it comes to using the oldest cryptocurrency as a medium of exchange, investors will trade various underlying assets in the financial markets with BTC. For example, they can trade the EUR/USD currency pair and bet on it going up or down after the binary option expires. So if their transaction is successful, they will be paid in Bitcoin instead of a fiat currency such as the US dollar.
If you are wondering why a broker would want to accept Bitcoin when they are making money in US Dollars as always before, the answer is very simple. The most important advantage of transactions in Bitcoin is the fact that the transaction cost associated with performing operations using this cryptocurrency is the lowest among all online payment methods. This is the main reason Bitcoin was created. This was done to reduce the cost of online financial transactions. Since the Bitcoin payment system does not have a central governing body, no service fee is paid to a trusted third party when receiving or transmitting a payment.
Another key reason why traders use Bitcoin and other cryptocurrencies in binary options trading is to earn extra Bitcoins. BTC itself is heavily traded globally, and its value against the US dollar and other fiat currencies fluctuates based on demand for the oldest cryptocurrency. By having all trading transactions marked in BTC, the investor is largely able to hedge against the large fluctuations of this cryptocurrency, while earning more from the profits made in trading. Nevertheless, keep in mind that this form of trading is however limited to only binary brokers that accept Bitcoin transactions as a medium of exchange. Simply put, there are only a limited number of financial platforms that offer binary options on Bitcoin and other cryptocurrencies.
Bitcoin as the underlying asset
An additional method of trading bitcoin with binary options is to use BTC as the underlying asset. As mentioned above, Bitcoin itself is traded on dedicated Bitcoin exchanges. Its exchange rate against the US dollar fluctuates extensively in line with the demand for it.
A good example of how external factors can shape the exchange rate of the oldest cryptocurrency is the banking crisis that took place in Cyprus in 2013. The significant loss of confidence in the euro has led global investors to shift their focus from the euro to BTC. This surge in demand for Bitcoin helped boost its value, which eventually almost reached the price of gold. Due to this sudden increase in the value of BTC, some binary brokers started offering binary options contracts that were linked to the value of Bitcoin. To conclude this thread, Bitcoin is traded in exactly the same way as other non-cryptocurrency underlying assets found on most binary options financial platforms.
Deposit and trade with cryptocurrency
Some brokers accept cryptocurrencies as a method of top-up. This allows traders to deposit, trade and withdraw funds in digital currencies. Particularly noteworthy in this regard are decentralized financial platforms from the DeFi sector. The leading platform of this kind is Tytanid.com.