The latest all-time high of Bitcoin (BTC) is $58,000 in February 2021. The price of BTC has more than doubled this year. One of the major drivers for the new Bitcoin bull is institutional interest. For example, Tesla announced the purchase of $1.5 billion worth of Bitcoin in its SEC filing on 8 February 2021.
The institutional interest in Bitcoin started in 2020, where many have considered 2020 is the year that paves the way for BTC to go mainstream. We have seen companies across different industries start buying Bitcoin or integrate crypto into their service. For example, the 169 years old insurance firm, MassMutual bought $100 million worth of Bitcoin and the payment giant PayPal added crypto buying and selling service to its millions of users.
Looking forward to 2021, factors that influence the price of Bitcoin surrounding regulation as well as the adoption and integration of BTC by major financial giants.
Henri Arslanian, the Global Crypto Leader at PwC predicted that Banks and institutions are going to roll out their crypto plans in public this year, and he also expected that more “forward-looking” private banks will consider Bitcoin as the source of new revenue.
Earlier in 2021, BlackRock, the world’s largest asset manager, planned to include BTC as one of their derivative products by filing with the U.S. Securities and Exchange Commission (SEC).
Regulatory issues surrounding Bitcoin are another highlight in 2021. VanEck, the investment management firm filed with SEC for a Bitcoin ETF named “VanEck Bitcoin Trust” on 30 December 2020, which claimed to hold physical BTC. Wall Street analysts suggested that the new BTC ETF can potentially create a price spike by the huge imbalance between the supply and demand for Bitcoin.
It is expected that as more institutional players are getting involved in the space, the supply and demand gap of Bitcoin will be widened, further creating an imbalance that is necessary for the Bitcoin rally.
The Bitcoin derivative market has seen a huge growth in trading volume. According to the crypto research firm, Skew, there is an open interest of $11 billion recorded on the world’s largest derivatives exchange, CME Group on 6th January 2021.
The Bitcoin derivative boom was led by the need for a more efficient way to trade BTC. With Bitcoin futures, investors can use leverage to maximize their exposure to Bitcoin’s volatility with relatively small capital.
Leverage is a financial instrument that enables traders to buy or sell any asset that is greater than their deposit amount. There are different leverage levels to choose from, for example, the world’s longest-running cryptocurrency exchange, BTCC offers Bitcoin & Ethereum futures contracts with leverage levels ranging from 10x, 20x, 50x, 100x, and up to 150x.
To open a position in margin trading, traders need to have a specified portion of their deposit amount known as margin to be used as collateral for the particular trade. Maintenance margin is the amount that traders need to maintain and keep the specified amount to its minimum level. If the trader’s account equity falls below the maintenance margin threshold, a margin call would be triggered to alarm traders to fill the fund up to its minimum level.
Leverage is considered a double-edged sword, where amplification not only applies to gain but also loss as well. It is important to choose the leverage level carefully that suits your risk appetite.
For example, Mark decided to open a position with a $1,000 deposit, he chose the leverage of 1:6 which enabled him to open a position worth $6,000. If there is a 20% increase in profit, he will earn $1,200 as a result and he will have $2,200 in his account balance. However, if there is a 5% loss instead, with the leverage of 1:6, Mark will lose $1,200. If he doesn’t use leverage in the first place, with a 5% loss, Mark would only lose $200.
To protect and safeguard your assets during extreme market conditions, it is important to set up the stop-loss order to manage your risk. Stop-loss order helps traders to manage trading risk by an automatic setup to close the position once the specified price level has been met.
In terms of negative balance protection. BTCC is the only exchange in the industry that covers user’s 100% negative balance rather than letting all profiting users share the losses. A negative balance is defined as the amount that is less than their deposit amount.
Launched in 2011 in Shanghai, China. BTCC has been operating for over 10 years without any security incident. The exchange specialized in crypto derivative products and offers a diverse range of futures products that suit the needs of different traders. For example, BTCC provides daily contracts, weekly contracts, and perpetual contracts, which have different expiry dates.
The interface of BTCC has a simplistic style, which is particularly user-friendly to newbies. The platform is also very friendly to small traders, as the minimum deposit only requires 2 USDT, and you can start the trade with as low as 0.5 USDT. New users can try out the demo account at the BTCC app with virtual currency.
As there will be more institutional interest and recognition for Bitcoin as a safe and promising asset in 2021. It is not late to get the benefit from Bitcoin’s value by the derivative futures contract. New users now who make the first deposit at BTCC will grab up to 2,000 USDT trading bonuses.
Go For A Free Account on BTCC and Try Your First Bitcoin Leverage Trading Today!
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