(4) Buying & Selling Of Bitcoin-Linked Stocks
It is one of the most unbeatable options to ride the volatility of Bitcoins. Like retail investors, several companies do prefer to invest their risky funds in cryptocurrencies like Bitcoin. The stocks of such companies come with their own risks along with a correlation to Bitcoin price movements.
According to a post published in Bloomberg, crypto-linked stocks tumbled as much as 33% as the Bitcoin price slumped as much as 20%.
This severe beating down of these shares occured mainly due to the news of strengthening cryptocurrency crackdown in Asia. Similarly, these stocks are likely to appreciate in valuations along with increase in Bitcoin prices.
Investors & traders can invest or trade in such Bitcoin-linked stocks rather than trading cryptocurrency directly.
Some of the most popular Bitcoin-linked stocks include Square, Overstock, Kodak, Riot Blockchain, DPW Holdings, Social Reality, & many more.
Thus, these stocks provide a good way to ride the volatility of Bitcoin in a regulated stock exchange.
(5) Speculating In Bitcoin Futures
It is one of the most wonderful options to ride the volatility of Bitcoins. Bitcoin futures are standardized forward contracts to buy or sell Bitcoin at a predetermined price at a specified time in future. These contracts obligate buyers to purchase Bitcoins.
Simultaneously, it obligates sellers to sell Bitcoins. Bitcoin futures allow investors to bet on the future price of the red-hot digital currency.
However, you have to pay a premium over the price of Bitcoin in the underlying spot market. Investors or traders can easily trade in Bitcoin futures either at CBOE or CME exchanges.
According to a post published in CNBC, the key difference between the CBOE & CME futures is that CBOE contract represents one Bitcoin, while a CME contract represents five Bitcoins.
Additionally, CBOE settles its futures against a daily price auction from Gemini. On the other hand, CME uses its own Bitcoin reference rate that tracks a number of cryptocurrency exchanges.
Apart from these key differences, trading volume in CME contract was slightly higher as compared to CBOE contract. It was perhaps due to more institutional-level participation in CME contract.
Thus, Bitcoin traders can comfortably trade these Bitcoin futures to play the volatility of the fastest-growing digital currency.
- Buy, Trade And Invest In Bitcoins: Shutterstock