Today’s article features a Bitcoin trading advisory published at xbt.social. The currency pair you trade (BTC/USD, BTC/CNY, etc) does not need to be a habit or a consequence of nationality, but a decision you review at least once a year. Bitcoin makes it easy to change your instruments and broker/exchange.
From the analysis pages of xbt.social, earlier today:
Bitcoin price is unfolding the initial subwaves of the next wave of advance. It is not yet clear, from the price chart, whether the market will respond to the daily chart’s major moving average cross-over by leaping into a rally or if it will trade price sideways waiting for confirmation that advance has all green lights. xbt.social members are patiently waiting for a predefined trade signal that will allow them to step into the advance at a point where a leveraged entry will be optimal.
The question of which BTC currency pair to trade is often raised and this advisory seeks to give you an overview of the global influences to consider.
The most commonly traded pairs are BTC/CNY (Bitcoin/Chinese Yuan) and BTC/USD (Bitcoin/US Dollar).
There are accusations being leveled at some of the Chinese exchanges for exaggerating their trading volume. Furthermore, it is not known how the data presented in the chart is compiled. Does Bitcoincharts.com take the exchanges’ word for their figures, or do they correlate it with transactions in the blockchain? Just like their counterparts in the West, the Asian exchanges are in the business of making market. All the exchanges are, in the final analysis, opaque and not trustworthy.
Regardless of the lack of credibility and issues of trust with the exchanges, BTC/CNY and BTC/USD are the dominant trading pairs. The sheer bulk of traders who opt to trade these instruments bears testament to the popularity of the USD and CNY as everyday currencies. Most banks and merchants accept either and there is liquidity in these currency markets, meaning you can get in and out of BTC/CNY and BTC/USD with relative ease.
The trader’s choice of currency may also be based on practical considerations: it simply depends on what is more convenient for you. For example, if you have a GBP-based bank account then it’s rational to trade BTC/GBP and withdraw the fiat without having to pay fees on exchanging, say, USD to GBP.
There are some longer-term implications as to which fiat currency you want to hold. Traders should further research the points discussed below and consider positioning themselves accordingly.
The Euro is a currency in distress and it is being actively devalued by the European Central Bank. Unless you’re a citizen of the European Union where you need to use Euros on a day-to-day basis, it is probably not a currency you want to be holding in the coming years.
The British Pound is strong but during a global economic slump (such as we’re in) one would expect the British service and financial industry to weaken and the GBP along with it.
The US Dollar – irrespective of one’s view of US foreign policy – is the international currency of choice and after the end of a massive Quantitative Easing program by the Federal Reserve, the US Dollar can be expected to reflate – in other words become stronger and it’s chart shows this.
What about the Chinese Yuan? Does China becoming the new superpower guarantee strengthening of its national currency, and make the Yuan a safe bet?
Possibly, but there is a currency war being instigated in Asia by Japan. The Bank of Japan launched, in 2013, the largest Quantitative Easing program in history. ‘Abenomics’ is a drastic set of economic policies being implemented as a means of escaping 25 years of crippling deflation in Japan. One of the “three arrows” of ‘Abenomics’ is currency devaluation. By devaluing the Yen, Japan is boosting it’s export market (cheaper products from Japan), but in the process is muscling in on the export markets of its Asian neighbors – notably that of China.
To protect its market share, China may be forced into devaluing the Yuan as a means of remaining competitive and meeting long-term economic goals. So, just because China is the world’s biggest economy and growing, does not mean its currency is simultaneously strengthening.
As a preferred store of value, the currency of choice is the US Dollar for at least the next 3 years. Bitcoin is an excellent store of value when it is rising in price, so the sensible investment strategy is to hold bitcoin during a Bitcoin price rally and to convert to dollar at the top – ready to buy bitcoin at the next BTC/USD market bottom.
xbt.social issues general Trade Recommendations advising members whenever it is an opportune moment to convert between US Dollar and bitcoin holdings.
Bitcoin price is starting the next phase of advance to a tough chart area in the $300-$400 and 1900-2400 CNY range. It is an favorable time to change the BTC currency pair you habitually trade, since the value of your account’s quote currency will be subject to global shifts in the valuation of major currencies.
What do readers think? Please comment below.
Readers can follow Bitcoin price analysis updates every day on CCN.
The writer trades Bitcoin. Trade and Investment is risky. CCN accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.
Last modified (UTC): July 12, 2015 12:46