Bitcoin’s impressive run has piqued nearly everyone’s interest–even the not-so-crypto-inclined. It went from $7,150 per bitcoin in January 2020 to an all-time high (at the time) of $23,000 by the end of the year. Bitcoin then started 2021 at just under $40,000 and recently topped $60,000. That’s roughly an 800% increase.
This spike has even the biggest Bitcoin skeptics wondering why they haven’t purchased–and then quickly sold–Bitcoin to turn a quick and very profitable buck. So, can you flip Bitcoin like day traders working the stock market? Here’s some food for thought.
What Is Day Trading?
If you’re a day trader for a living, that means you make money buying and selling stocks for a profit within the same day. For the purpose of this article, we’ll expand the definition to include quick sales in general, whether or not they’re completed in a single day.
Can You Day Trade in Bitcoin?
Yes, technically, you can day trade in Bitcoin. However, Bitcoin isn’t traded on the stock market but bought and sold on crypto exchanges, like Coinbase or Binance. So you’ll need to choose your exchange first thing.
What Are the Pros of Quickly Selling Bitcoin?
The biggest pro: making money. Bitcoin’s volatility is often discussed as a knock against the currency, but if you play your cards right, it can work in your favor.
What Are the Cons of Quickly Selling Bitcoin?
Alas, the cons of flipping Bitcoin are many. After all, if it were easy to make a quick profit from Bitcoin, everyone would do it. Some cons include:
- Exchanges aren’t instantaneous. They facilitate connecting a seller with a buyer. So to quickly sell, you’ll need someone to quickly buy.
- Slippage is a common issue on crypto exchanges. For example, you attempt to sell your Bitcoin when one coin is at $60,000, but by the time someone agrees to buy, the price has slipped to $59,500. That means you’ll get that latter rate instead of the $60,000 you expected.
- Exchanges charge fees, which eat into your profits. Factor in these fees, so you’re clear on what you truly stand to gain.
- Timing the market correctly is extremely difficult to do. Most traders end up selling at the wrong time, only to buy back in at a higher price.
So Should I Hold Bitcoin Instead?
Not gonna lie, we’re fans of the holding strategy–and even recently published a piece on cryptocurrency “hodlers.” It’s been shown across the years that time in the market tends to outperform timing the market.
That being said, you definitely can flip Bitcoin successfully. Far be it for us to deter you from your Bitcoin day-trading destiny. Our top advice for flipping Bitcoin: Educate yourself first. An informed trader will always be in a better position than a naive one.