Bitcoin Trading?


Relevant for Cautious Holders of Bitcoin

Despite the confirmation of $100,000 bitcoins and trading volumes that top out at $7.5

million per day, the market also remains largely opaque. You can’t just buy bitcoin with a broker or through an exchange without signing up for multiple accounts and spending hours explaining what exactly you do and don’t own. Most of the trading is done on the


exchanges themselves; people speculate and buy and sell bitcoin with little trading on the back end. It’s a risky business


because of the unpredictable price movements, and because the market is too small to offer buyers the protection that markets in other countries do, such as liquidity, liquidity, and regulation.


Overall, the market has been likened to penny stocks with massive swings. One thing that’s helped somewhat is the reduced concentration of trading, but the volatility of the exchanges themselves creates dangerous patterns and displays of momentum. Trading


volume and price have held relatively steady, and while prices have been volatile, they seem to be heading to a less volatile range. The bitcoin market seems to be a bit less volatile, a bit more grounded. Trading volumes are still large but within a limit. It’s an unfortunate irony.


Andrew Van Dam, Senior Market Analyst, Multiplatform at Globex Technologies, Inc., provides analysis, news, and trading tools for digital currencies. You can trade bitcoin using the tools below. For more information, click here.


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Setting the precedent for future legal guidelines on bitcoin transactions was established with the First-Time Purchase Order Rule, written in 2013. This rule is one of many regulations that regulate bitcoins in the US. It was established to prevent an emerging price bubble that would allow an arbitrage trader to buy bitcoins and immediately sell them at a profit.


Fast forward to February 2014: a bitcoin trader who bought $2 million in bitcoin, lost his deposit, and got the loss in cash through a brokerage account. The subsequent lawsuit was won by the trader, who called the loss the result of “unfair conduct,” claiming that his brokerage did not set aside a deposit of $2 million, as required by the SEC’s first-time purchase order rule.


The fact that this was the first time in history a bitcoin deposit was lost is troubling, as it does not leave much room for interpretation, much less a firm liability for the transaction. In the US, a good portion of the $41 million worth of bitcoin that was sold in the same time frame is currently being collected by the various exchanges, exchanges that were not in the market during that time.


This situation has created some concern within the industry, and the bitcoin trading community will wait for the outcome. Regardless of how the decision goes, it’s important to understand that the first-time purchase order rule is one of several regulations that could be applied to the trading of bitcoin. As of now, the regulation is aimed solely at the purchase of bitcoin, not the trading of bitcoin.


“If the SEC were to use the bitcoin market to set a precedent, they would be opening up a whole new door to trading, and a whole new challenge for the bitcoin marketplace,” said Dr. Scott Nelson, Head of Cryptocurrency Consulting and Trading at Chainalysis, a cybersecurity firm that provides trading and threat intelligence services for financial institutions.


With the growing market of bitcoin, the future is becoming less certain. While a lot of traders think the future is up in the air, others believe that a firm monetary authority will set standards for bitcoin trading. Some economists even say that regulation is the best way to prevent a bitcoin market collapse.


Is bitcoin a bubble?


Views on bitcoin continue to range widely. Some economists are afraid that bitcoin is a bubble waiting to burst, and others believe that bitcoin is something more substantial. According to Giorgos Kaunas, professor of economics at UC Irvine and author of the book “Electronic Money and Economic Growth in Greece: A Quantitative Analysis,” bitcoin should not be considered a bubble. “If bitcoin were a bubble, it would be failing in the short term, as it’s starting to fail right now, and will fail eventually,” he said.



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