Trading Strategies For Short Term Holders Of Bitcoin

Feb 25, 2022

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On a day-to-day basis, Bitcoin can be a volatile asset. As such, it is recommended that investors only purchase Bitcoin with an investment horizon of one week or less because you could potentially lose all your principal value. Investors have understood this risk in the past, which is why some of them have taken the extra precaution of using long-term investment strategies that provide dollar-cost averaging (DCA) benefits. However, there are ways to turn in an excellent profit on Bitcoin without these strategies. These practical tips for short-term holders to improve their earnings are detailed here.

  1. Hedging

In the cryptocurrency markets, investors need to understand that Bitcoin traders – and Bitcoin price is as volatile as other forms of financial assets in the same way governments, regular stocks and bonds, and gold. Therefore, one must know when to sell your Bitcoin since letting it sit at a loss is not a good strategy for maximizing returns. That’s why investors have utilized methods such as hedging to protect their investments from falling in value. In these cases, traders will buy the cryptocurrency at a lower rate on the market to lock in profits when the Bitcoin price goes up due to a series of clear trading signals. These signals may include positive news on the market or significant trading volumes. 

  1. Dollar-Cost Averaging

Dollar-cost averaging is another prevalent strategy for Bitcoin traders who wish to take advantage of the dips in prices but don’t have the time to wait for the crypto currency’s price to rebound. In simple words, this strategy involves investors buying a fixed number of tokens over time. In this way, the investor will pay different prices for the same dollar amount of Bitcoin, which would reduce their risk by spreading it across a specific period.

  1. Short Positions

Short positions can also be used to generate a positive return on all your investments in Bitcoin. When you’re short selling, you are selling an instrument that you don’t own or have access to at that time. This strategy aims to sell high and buy low, just like a traditional investor. It is important to note that you are borrowing the asset and repaying it at a future date with interest (a more extended position does just the opposite).

  1. Margin Trading

Margin trading is another popular strategy for Bitcoin traders looking to earn on Bitcoin price dips and recoveries. This technique involves borrowing money from an exchange to make even more money on the investment in Bitcoin. It achieves this by allowing users to purchase significant assets, which is not usually possible due to the lack of funds or bank restrictions.

  1. Speculation

Speculating is another investment strategy that allows investors to profit from the price changes in Bitcoin. In a nutshell, this approach involves buying and selling Bitcoin to earn an immediate profit. However, it is essential to note that when you speculate on a price increase, you are still taking on the risk of selling it at a lower price than what you bought it for.

  1. Arbitrage

Bitcoin arbitrage is, in reality, the act of taking advantage of the pricing differences between different trading platforms for cryptocurrencies. The strategy works by purchasing Bitcoin when its prices are floating at the lower value on one exchange and then selling them at higher rates on any other exchange. In this way, you can make up to the difference – or more – in the price differences between these exchanges.

  1. Scalping

Another popular strategy for short-term holders is scalping. The concept of scalping revolves around making small profits by taking advantage of the minor price fluctuations in cryptocurrencies. The basic idea behind this technique is to buy low and immediately sell high, but within minutes (hence the name scalping). The reason why this method works well for some traders is because of its low transaction costs, as well as its speed.

In a nutshell, there are certainly many different ways to make money with Bitcoin with software like However, as an investor, you should choose a strategy that fits your investment needs and risk profile. For example, if you are looking to make quick profits using short-term strategies, you may want to buy and hold for the foreseeable future.


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