The crude oil market has recently faced much volatility across the world. Ideally, the significant changes in oil prices are attributable to factors such as the Russian-Ukraine war and the CoronaVirus pandemic. An economic recession has also occurred in the past three years, compelling investors to hold their investments safely to avoid losses.
Bitcoin, being the leading cryptocurrency, has also exhibited volatility in terms of value and prices. In 2017, Bitcoin hit the all-high value of nearly $20,000. Although Bitcoin price has been fluctuating with time, there is a high likelihood of rising to higher values in the future. Projections provide an affirmative point of the speculated rise in Bitcoin price with time, based on the current and past trends. To effectively invest in Bitcoin, you must use a reputable trading platform such as BitQS
With the increased crude oil prices worldwide, traders can utilize Bitcoin to make returns. In this case, traders can take advantage of the elementary oil sector’s volatility to generate future income by making purchases using Bitcoin. Here are some guiding tips for trading oil using Bitcoin:
Analyze the Drivers of Crude Oil Markets
The prime drivers of the crude oil markets are supply and demand. Therefore, traders should be keen on analyzing crude oil’s overall need and supply and then determine the ideal time to buy or sell. For example, the prices of oil have been on an increasing trend since the beginning of the Russian-Ukraine war. A large volume of crude oil is unavailable to traders, prompting high demand and low supply. Given this scenario, holding crude oil in times of increased supply and selling out in times of high need is the ideal option.
Analyze the Drivers of Crypto Markets
As much as you want to trade crude oil using Bitcoin, it is essential to analyze the cryptocurrency drivers to mitigate possible risks. The rise of new coins in the crypto market has impacted demand for Bitcoin. However, Bitcoin’s value remains high as compared to other currencies. Striking a balance between demand and supply for crude oil and Bitcoin is essential in strategizing the best approach for trading.
Familiarize with the Target Market
The nature of the target market determines the returns/profits to make when trading crude oil using Bitcoin. Fortunately, Bitcoin is not subject to government regulations. Hence, people can use it in different markets in favor of the traders.
The existence of intermediaries in the market supply chain can directly affect the lucrativeness of trading oil using Bitcoin. A direct link with the target market is necessary to make a solid income from the venture.
Analyze Potential Risks
Any business investment, including crypto trading, is prone to unforeseen circumstances. A defensive way of avoiding adverse occurrences is by clearly understanding the crude oil and cryptocurrency markets. Timeliness in buying and selling crude oil using Bitcoin is pivotal in determining the overall returns.
Implementing the above tips grants you higher chances of earning more from trading crude oil using Bitcoin. The endorsement of Bitcoin as a virtual/digital currency worldwide has fostered more demand in the elementary oil sector. Ideally, oil trading using Bitcoin relies on the current markets’ supply, market demand, and nature. Therefore, it is in traders’ interest to amply understand crude oil’s market dynamics and strategize on the ideal time to trade. Ongoing research is also necessary to stay up-to-date and take the proper measures. Understanding factors influencing oil prices and Bitcoin is vital to making profits.