What is Bitcoin FX? A thorough explanation of which exchanges can do it, fees, minimum purchase amounts, and future prospects.
Bitcoin FX, in simple terms, is the cryptocurrency version of traditional FX.
And with the excitement around cryptocurrencies, interest in Bitcoin FX has also been rising.
You’re someone who’s interested in Bitcoin FX, right?
In this article, we’ll introduce five points about Bitcoin FX.
- What Bitcoin FX is/its features
- Points to avoid losses in Bitcoin FX
- What is the minimum purchase amount for Bitcoin FX?
- Which cryptocurrency exchanges offer Bitcoin FX?
- The future of Bitcoin FX
We will explain each point in detail one by one, so please read carefully and understand.
The article contains many specialized investment terms that beginners in FX may not be familiar with.
For investment terminology, we have summarized details in the following article, so if you have time, please take a look.
Now, let’s take a look at Bitcoin FX right away!
What Bitcoin FX is/Its Features
Bitcoin FX is investing in the rising and falling information of Bitcoin.
In simple terms, usual FX involves investing with cash, but Bitcoin FX is easy to understand as investing with Bitcoin.
Therefore, even if you purchase Bitcoin for 100,000 yen in Bitcoin FX, you will not receive cash in return.
In other words,you are investing only in whether the Bitcoin price will go up or down.
Now, let’s look at two features of Bitcoin FX.
Bitcoin FX can profit in a bear market
Bitcoin FX can generate profits even when Bitcoin’s price is falling.
Usually, in cryptocurrency exchanges, you can only enter by buying, right?
To make the explanation clearer, cryptocurrency exchange Bitcoin trading can be described as follows.
you buy when Bitcoin is 100,000 yen.
If Bitcoin later rises to 150,000 yen, you gain 50,000 yen; conversely, if Bitcoin falls to 50,000 yen, you incur a 50,000 yen loss.
This is how Bitcoin trading works.
In simple terms, it is a way to obtain ordinary cryptocurrency.
So what happens when Bitcoin’s price is on a decline?
Because losses are more likely, many people refrain from Bitcoin trading, right?
However, with Bitcoin FX, you are not purchasing Bitcoin itself; you invest in whether the price will go up or down.
Therefore, Bitcoin FX allows you to invest from a selling position.
To make Bitcoin FX easier to understand, the mechanism is as follows.
In other words, Bitcoin FX lets you take positions in both rising and falling markets, increasing trading opportunities.
Therefore, Bitcoin FX can be said to be a method of investment suited for those who want to make profits in a shorter period in cryptocurrency investing.
Bitcoin FX can also be leveraged trading
Leverage trading is a system that aims for large profits with a small investment.
>>>Please see here for leverage.
If you are using a cryptocurrency exchange and you only have 100,000 yen, you can only buy 100,000 yen worth of Bitcoin, right?
However, with Bitcoin FX trading, you do not purchase Bitcoin itself.
Therefore, you can buy and sell at prices higher than your actual funds.
In other words, by using leverage trading, you can trade worth 1,000,000 yen or more even if you only have 100,000 yen.
The multiplier you apply to aim for large profits with this smaller investment is called leverage ○○ times.
even with only 100,000 yen on hand, you can buy 1,000,000 yen using leverage.
If Bitcoin then rises from 100,000 to 150,000 yen, the profit is the difference of 50,000 yen × leverage rate of 10x = 500,000 yen.
This is the mechanism of leverage ○○ times.
Therefore, even with a small investment, you can achieve large profits, which is another hallmark of Bitcoin FX.
Next, let’s look at the cautions of Bitcoin FX.
Points to avoid losses in Bitcoin FX
A major risk in Bitcoin FX is the system called mandatory liquidation (margin call), which can lead to severe losses.
To explain using the above leverage example:
the loss is 50,000 yen × 10 = 500,000 yen.
With only 100,000 yen on hand, you are short by 400,000 yen.
Therefore, when your funds run out, you can no longer trade.
Mandatory liquidation cannot be manually controlled; the system automatically executes a sell order and forcibly ends the trade.
In the earlier example, if Bitcoin falls to 90,000 yen, losses exceed your 100,000 yen, and the trade is forcibly closed.
As a result, your available funds (margin) become 0 yen.
In other words, with leverage trading in Bitcoin FX, depending on the leverage, you can lose assets deposited with the cryptocurrency exchange in an instant.
To avoid losing assets in an instant, set a low leverage and ensure your margin does not drop to zero even during large price swings.
How to prevent margin calls in Bitcoin FX
When the Bitcoin FX margin is close to zero, .......Continue reading below ⇩
>>>View on the official Cryptocurrency Trivia site
