Trading The Bitcoin GBP Volatility

Bitcoin has taken the world by storm since its creation in 2009. The digital currency has grown enormously, boasting over £600 billion market capitalization as of January 2024. 

As adoption continues rising, more British investors are interested in trading and valuing Bitcoin against the nation's currency, the Great British Pound. 

This guide will walk through everything you need to know about the Bitcoin GBP relationship.

Introduction to Bitcoin

For those new to cryptocurrency, Bitcoin is a decentralized digital form of money that runs on a technology called "Blockchain." It enables peer-to-peer transactions without the need for banks or government oversight. 

Here are some key features:

• Scarcity - Only 21 million Bitcoins will ever exist. The fixed supply resists inflation.
• Anonymity - Users interact through Bitcoin wallet addresses rather than real names.
• Security - The Bitcoin network is highly secure and has never been hacked.
• Fast Transactions - Payments settle within 10-60 minutes faster than bank transfers.
• Low Fees - Sending Bitcoin costs just pennies with no hidden charges.
• Accessibility - Anyone can download a Bitcoin wallet and buy BTC from an exchange.

Created by the pseudonymous Satoshi Nakamoto, Bitcoin has rapidly gained mainstream adoption as a store of value and payment method. Major companies now accept BTC transactions as well.

Bitcoin Price History vs the British Pound

As a volatile asset, the price of Bitcoin against the Pound fluctuates heavily, creating opportunities for traders. Here are some notable milestones in Bitcoin GBP price history:

• July 2010 - The first Bitcoin price quoted against GBP was £0.05 per coin.
• November 2013 - 1 BTC surpasses £800 (around $1,000 that time) for the first time.
• March 2020 - Crashes under £3,000 during the global pandemic selloff.
• November 2021 - Hits all-time high above £51,032.02 as institutional investors buy in.
• January 2024 - Trades around £34,000 in the early days of this month

Experts predict Bitcoin will continue appreciating as long as adoption rises, making it an attractive asset to trade against the Pound.

You might also like to read: What Is The BTC To GBP Exchange Rate in 2023?

Benefits of Trading BTC Against GBP

Bitcoin serves various roles in an investment portfolio due to its unique characteristics. One fundamental aspect is diversification, as Bitcoin exhibits a low correlation with traditional asset classes, making it an effective means to enhance portfolio diversification. 

The cryptocurrency's inherent volatility also allows experienced traders to capitalize on short-term price swings in both upward and downward directions. 

Furthermore, Bitcoin is often viewed as an inflation hedge, offering a long-term store of value that can resist the erosive effects of inflation. Its liquidity is another appealing feature, with billions of Pounds' worth of Bitcoin traded daily, facilitating easy entry and exit for investors.

Finally, merchants' increasing acceptance of Bitcoin allows for direct transactions without converting to GBP, highlighting its growing utility in everyday commerce.

How to Trade Bitcoin GBP

Trading Bitcoin against the Pound is straightforward with a UK crypto exchange account. Follow these steps:

Step 1 - Open Exchange Account

First, you'll need to open a Bitcoin exchange account supporting GBP trading pairs. 

You may want to consider using Markets.com as your preferred trading platform. Our platform offers tools, educational resources, and fundamental news to help guide your trading decisions.

Markets.com is a well-known trading platform that utilizes contracts for difference trading. This type of trading lets you speculate on assets without owning them physically.

Step 2 - Deposit British Pounds

Once your account opens, you can deposit GBP funds via bank transfer or debit card. Bank transfers are free but can take 1-3 days to process.

Debit/credit cards enable instant purchases but typically carry higher 2-4% fees.

Step 3 - Trade Bitcoin

Now you're ready to start trading! Markets.com provides accessible online dashboards for placing orders.

To buy BTC, input the number of British pounds you wish to spend. The trading platform will automatically calculate the Bitcoin amount you'll receive.

Selling Bitcoin works the same way in reverse - input the amount of BTC you want to trade for GBP. Be sure to pay close attention to exchange trading fees.

Step 4 - Withdraw Assets

Once you've traded, you can withdraw assets from your trading account. Withdrawing GBP sends British Pounds back to your bank account. 

Withdrawing BTC lets you transfer the coins into an external crypto wallet you control for security.

Step 5 - Pay Applicable Taxes

Don't forget to pay capital gains taxes on profitable Bitcoin trades. Taxes can get complicated, so consider hiring an accountant if needed.

What Influences the Bitcoin GBP Price?

Many interconnected factors impact the live Bitcoin price against the British Pound. Traders analyze these dynamics when deciding trade timing and direction.

• Bitcoin Adoption Metrics: More usage and investment inflows drive up demand for limited supply.
• Bitcoin Regulation: Tighter restrictions tend to depress BTC prices, while increased legitimacy has a positive impact.
• GBP Inflation/Interest Rates: High inflation boosts Bitcoin's appeal as an alternative store of value.
• GBP Forex Movements: If the Pound declines against other currencies, Bitcoin benefits.
• Economic Stability: Bitcoin often rises when traditional markets plunge due to its "safe haven" status.
• Technology: Upgrades like Taproot and Lightning that improve Bitcoin also support higher valuations.

This article may pique your interest: Investing in Bitcoin vs Altcoins - What's the Difference?

Best Practices for Profitable Bitcoin GBP Trading

First and foremost, implementing a dollar-cost averaging strategy by consistently making purchases of Bitcoin helps mitigate the impact of volatility over time. 

You can also maintain a trading journal, which is crucial for identifying and learning from past mistakes and improving overall decision-making. Set up stop losses to limit potential losses during unfavorable market movements. 

Be patient and disciplined trading for consistent gains is recommended, steering clear of risky bets for a more sustainable approach.

For enhanced security, it's advisable to use hardware wallets, store Bitcoin offline to guard against theft, and avoid leaving coins on exchanges for added protection. By incorporating these best practices, traders can optimize their strategies for profitable Bitcoin GBP trading.

Summary

Bitcoin has emerged as a disruptive financial innovation that could transform global finance. Its adoption continues to rise worldwide, leading British investors to increase interest in trading BTC against the pound sterling. 

This cryptocurrency provides portfolio diversification, inflation resistance, and utility for payment transactions. While volatile, savvy traders can capitalize on Bitcoin price swings by opening accounts with UK crypto exchanges like Markets.com. 

As adoption expands, Bitcoin will likely play a growing role as an investment asset and monetary system in the United Kingdom.

Become a member of markets.com and access a cutting-edge trading platform!

“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”