Tags: Bitcoin prices usd, Bitcoin news, How does bitcoin work, Gold Stocks, Deflation, Inflation

September 2nd 2020

Understanding how Bitcoin works is essential to good investments. The Bitcoin price (USD) has gone through several trials and tribulations since its inception. As a cryptocurrency, it pioneered banking decentralization and online currency trading. Its behavior during inflation and deflation is often compared with commodities such as gold stocks. Let's dive in with Bitcoin news and it's improvements through the years.

This groundbreaking money shook the forex market and started the age of the crypto, with Bitcoin as its focus.

BTC, as Bitcoin is also known, started as a cheap currency that could be bought or mined without much effort. No real commercial entities were willing to accept the cryptocurrency. Nor were there legal ways to trade this digital currency.

Nowadays, however, BTCs can be found on different platforms and is accepted as a payment method in many countries. For a comprehensive analysis about How Bitcoin works and the Technical Aspects of Transactions click here

A volatile but rising price

Words are pretty, but numbers speak louder. Thus, it matters to show the steady growth of BTC over time because there is a misconception about how Bitcoin works. Many believe that BTC and other cryptocurrencies are highly volatile and untrustworthy. 

That may be the case in the short run. The following graph shows how the Bitcoin price (USD) moved for the past week.

Bitcoin price (USD) dropped to nearly $10,000 by August 13 before hitting a peak of over $12,000, and then dip again to the $11,000 range

For anyone who lacks the knowledge about how Bitcoin works, experience and financial tools and products, this constant moving may look like a daunting endeavour. The future is always a bit cloudy, you never know when inflation or deflation will occur, which is why some people fear to take a risk.

Here is a word for advice to all starting traders, forget about day-trading. Unless someone has found the ability to look one day into the future, it would be wiser to forget about taking this high risk and instead look at the big picture. 

Here is how Bitcoin has performed since its inception.

Much better, isn't it? It's easier to see Bitcoin's appeal once you see the big picture. 

Miners and buyers during the early stages saw prices that range between the $0.0001 to $0.1 per BTC. It took until 2011 to have the crypto reach the $1 per BTC. From there, as the graph shows, it has been a bull-run. 

By 2013 it broke the $500 record and 2016 saw it reach the $1000 and staying there. Then came the $5,000 BTC per USD a year later, while closing at a record-breaking $19,000 per BTC that same year. 

There have been price corrections, and dips in the value of Bitcoin. But, as the graph shows, it has been mainly positive growth since its inception.

The case for gold

Traditional traders will make the case that there is no need to buy into crypto when commodities exist. Gold is a safe haven for traitors in distress when the market turns negative. Get the gold stocks to buy now and diversify your stock portfolio.

It's always preached than when stocks go sour (deflation), invest in gold. There is some truth to it. Gold is safe, many countries have a gold reserve in case of emergency, and many of these nations thus guarantee gold payments if they must default.

The data shows that investors believe in the promise that gold stocks will save the day if need be. Data from the past 15 years shows a steady increase in gold value during the 2008 crisis. 

The wave lasted until the recovery measures were introduced, and traders started to go back to stocks and other trading options. 

Another thing the graph shows is how dependable gold becomes in a moment of crisis. The 2008 financial crisis saw gold jumping in value likewise, the current pandemic is making traders jump back to gold, that means that there is a direct correlation between GDP and gold stocks price. 

Every time there is a deflationary period, gold stocks price will rise. The opposite (Inflation) is also true, which is demonstrated by the graph. Achieve More with the Gold Stock & Silver Stock Market Portfolio!

Expanding portfolios

After looking at these graphs and numbers, it is easy to assume that traditional traders are correct. There is no need to invest in cryptocurrencies during deflation. 

They further say that the only place worth placing your money is gold. It's safe and proven. It rarely goes down in price. It has been used since the dawn of time as a method to acquire goods and services.

However, one of the biggest cardinal sins any trader can do is not hedging their risk. Gold may be safe now, but that may not always be true.

That's something that traders know. Go back to the Bitcoin price (USD) chart and look at it closer. Then go back to the gold price chart and look at it as well.

At first glance, they look like two independent charts, that is true up to 2017, which coincides with talks about inverted bond yields by the United States Federal Reserve. 

It was also around this time that conflicts between China and the United States over trade arose and lastly, a year later will start a price war between Russia and Saudi Arabia that will collapse the oil market for months.

Bitcoin and gold saw a jump in prices once the situation got tough. That means traditional traders are starting to diversify their portfolios with crypto.  They aren't trusting the regular safe havens to hedge 100% of their risk. And neither should any starting trader in this day and age.

Diversification and knowledge are the best tools for any trader, be it a beginner or a seasoned trader. Achieve More with the Gold Stock & Silver Stock Market Portfolio!

Where to, now?

Well, this is where things get a tad trickier. As shown, there is a direct correlation between gold, GDP, and cryptocurrency.

Traders head for the safety of gold and Bitcoin whenever there is deflation but, knowing when it's time to invest is sometimes tricky. 

There are multiple sources out there to claim they have a magic ball. In reality, most of those sites are scammers. It's impossible to know what will happen tomorrow. But it is possible to have an educated guess.

The registered investment advisors at Investing Profits Pros are the experts that understand cryptocurrency and stock market trading with our team of highly seasoned investors; and this is much more advantageous than investing with no strategy. It may sound cliche but knowledge is power.

People interested in increasing their portfolio returns, learning how Bitcoin works and having accurate data should subscribe to our portfolios. Check out our leading Cryptocurrency and Bitcoin news feed from Boracchia Wiviott Wealth Partners as well.

We are here to guide you in the diversification of your portfolio as expert financial advisers and we will help you make an informed decision about your investments according to the current economic situation (inflation, deflation, currency depreciation, hyperinflation, recession).

Be sure to visit our Stock Market and Cryptocurrency Investing Blog for more amazing articles at a different angle than you're used to; and don't miss more Bitcoin news, stocks information and tips. Bookmark our News Feed today here!