Bitcoin or Ethereum – Which is More Profitable to Trade?
Bitcoin or Ethereum?
Bitcoin has reached a price of around $7,000 at this time, while Ethereum is at around $300. We can analyze the trading possibilities through basic number analysis. A $7,000 market is much higher than a $300 one, and therefore it offers much more volatility. It’s more expensive to buy value, and more risky to trade through CFDs. But it’s a fact, the high price market will fluctuate more in price, offering much more opportunity. And volatility is not exactly proportional to price, the bigger market tends to overshoot price targets in both directions, so Bitcoin is even more volatile than the numbers are telling us. And volatility is how short term traders make money.
Bitcoin is more profitable to trade than Ethereum, in all kinds of short term trading. And so it wins hands down over Ethereum. Moreover, Bitcoin will remain volatile because of fundamental reasons too, relating to upgrades, hard forks, and overcoming difficulties. So there will be volatility in the future just like there is now. And this creates big opportunities for traders. it is normal for Bitcoin to go up and down in price by $500 - $600 in a week, at this $7,000 price. So the opportunity to trade this market is very hard to resist.
Then there are those who trade both Bitcoin and Ethereum, and believe that the two markets will stabilize in terms of their trends. So that the rally will continue in a more smooth way for Bitcoin, and that it will maintain a fixed long term ratio to Ethereum. That all sound good, but we don’t know yet what that ratio will be. For example at this time the ratio is $7,000 divided by $300, which is 20. So if the ratio believers are proven right and the long term ratio turns out to be 20 then things will be interesting. This means that when Ethereum, which is less volatile, reaches $500, I would expect Bitcoin to have a price of $500 times 20, which is $10,000. So I can buy Bitcoin every time it will dip below $10,000, during that month or period of time where Ethereum stays at $500. If the ratio hypothesis is proven, the ratio relative to Ethereum can serve as a baseline for deciding when to buy and sell. So we have a rough idea when Bitcoin is overpriced or underpriced for the short term. One thing is certain, Bitcoin will still have greater, out of proportion greater volatility than Ethereum.
What about Investing or Trading Longer Term?
In terms of investing, that’s another story, because Ethereum being at $300, has much more room for upside than Bitcoin. Regardless of which one will be bigger and more widely used, the numbers alone are telling us that in terms of percentage gain, Ethereum will make investors more money. If the ratio hypothesis is proven wrong, and say both coins reach the same value. Then Ethereum already is underpriced relative to Bitcoin, by 20 times! And we don’t really know what will really happen, and how soon it will happen. If such a scenario happens in less than two years, and both coins reach parity, then this will be important to both traders and investors.
You can explore the various cryptocurrency trading platforms, and see which option is best for you. But investing is best done through buying the real coins, while short term trading is better through CFDs, mainly because of better liquidity, trading speed etc.
Both long term investing and CFD trading can be used, in a single strategy involving both cryptocoins. I strongly suggest relying on chart patterns on the daily chart, and not on moving averages or oscillators. I also suggest not relaying on Fibonacci projections. Especially with Bitcoin, these overhyped indicators will not work, as volatility is so high that will definitely result in a series of false signals. The only things that work are chart patterns, LSS pivots and swing trading theory. As far as the ratio hypothesis goes, it’s just that, a hypothesis which may or may not come true. We need to see wider market adaption and many more users, so that the two coins become more mainstream. Only at that time the ratios will be solid enough to use, on their own, for day to day trading. At this time, you can use the ratio of 20, but only in conjunction with other solid trading tools and methods.
What about Trading CFDs on Ethereum?
CFDs can be quoted either in US dollars or Bitcoin, this opens up more trading possibilities as the US dollar and Bitcoin are two different markets. Traders who understand the US dollar may prefer to trade CFDs quotes in USD. But the CFDs quoted in Bitcoin are also very useful. I would assume that there will be less volatility in the CFDs quotes in Bitcoin. That means less risk, for CFD traders trading on high leverage, who want to make a lot of money.
If the ratio hypothesis turns out be true, Ethereum CFDs quoted in Bitcoin will become even less volatile, and prices will rotate around a tight price zone. Which would be ideal for range trading. You will have a solid picture of support and resistance for these kinds of CFDs.
This will be true of many more alt coins, not just Ethereum. But because Ethereum is doing so well, and may even be as successful as Bitcoin, it is widely watched at this time. CFD trading will become a must have tool, for all serious cryptomarket traders. You can find more about CFDs on the Investor Greg Website, so that you gain a greater insight into the hidden benefits of this exciting financial instrument.
How Much Money Can I make Trading Bitcoin and Ethereum?
Trading these two exciting crypto-coins can be enormously profitable. In fact, you can make much more money than buy and hold investors in Bitcoin, because we are bound to see sideways and corrective action more of the time. Bitcoin may go much higher, but the actual rally time will be 30% of the time. 70% of the time will likely be sideways action, which looks boring. But upon taking a closer look, this boring period can be very profitable when traded through leveraged CFDs.
CFDs allow you to make 40% gains when the market moves for example only 5%, through leverage and super fast and liquid, tradable market conditions. You just need to be careful and identify these periods of sideways action, to avoid getting stopped out on a leveraged CFD trade.
As I have said, if these two markets seem too volatile to you, for trading CFDs, you can choose to trade Ethereum CFDs only, quoted in Bitcoin. This way the volatility will be much less, and you can feel safer using higher leverage. Just remember that these CFDs move based on the relative performance of Ethereum VS Bitcoin. And this where you should watch the ratio between the two markets. Trading Ethereum CFDs quoted in Bitcoin, can be as profitable as trading Bitcoin in all kinds of ways, during a major rally phase.
You can also combine long term investing in actual Bitcoin, together with CFD trading in Ethereum. This way the risk on one trade can be offset by the other trade, while the potential for a profit is not totally offset. This will be less profitable overall, but it’s an option for conservative traders.
In any case, you can make the most money through at least partial CFD trading. Buying just real Bitcoin and real Ethereum all the time, will limit your buying power. And returns will be getting smaller and smaller as the markets will be becoming more and more expensive. You have to be realistic here, and always know that these markets will likely rally for 3-4 months during the year, then they will trade sideways for the remaining of the year. So to make millions you need to turn to trading, and more precisely to more sophisticated short term trading. While taking into account the major trends as well.
It will be possible to start trading with $10,000, and make a lot more money, through selected trades in both Bitcoin and Ethereum. Bitcoin will be more volatile, Ethereum will be less, and it will require even more frequent trading. So it will be possible to actually make $100,000 or more, using just $10,000. The important thing is to know the risks, and to adjust your exposure to the market. In my opinion, you need both direct investing and CFD trading, to catch most of the market price fluctuations, that will be there 70% of the time, and make millions. One trading method alone, or one market alone will not offer you the complete picture.
All in all, I do believe that volatility is good, at every level. Both Bitcoin and Ethereum will offer a world of opportunity to traders, both speculators and professional traders who use these two cryptomarkets for doing business. So stay focused on these markets and pay attention to details and the overlooked range bound trading.