Bitcoin Binary Options
- Bitcoin Binary Options Brokers
- How Bitcoin Binary Options Work
- Contract Types
- How to Trade Bitcoin Binary Options
- 1. Brokers
- 2. Strategy
- 3. Strike Price & Expiry
- 4. Monitor & Close
- 5. Practice
- Final Thoughts on Trading Bitcoin Binary Options
- Bitcoin Basics
- Bitcoin Wallet
- How Bitcoin Trading Works
- Bitcoin as a Medium of Exchange
- Bitcoin Trading
- Bitcoin as an Underlying Asset
- Deposit And Trade Using Cryptocurrency
- Can You Stop A Bitcoin Binary Options Before The Expiry?
- Do Bitcoin Binary Options Have Fees?
- How High Are The Fees When Trading Bitcoin Binary Options?
- Can You Mine Bitcoin Binary Options?
- What Are The Pros Of Trading Bitcoin Binary Options?
Bitcoin binary options trading has quickly become one of the most popular and potentially profitable investing methods. The value of bitcoin in relation to other currencies (typically USD) varies wildly almost from minute to minute, making it very interesting from a binary options point-of-view. Buying actual currency or using CFDs on longer time spans should also be considered highly interesting options.
Bitcoin Binary Options Brokers
There are now also brokers that accept bitcoin, and other cryptocurrencies, as deposit methods. So traders can fund their account, and be paid out, in Bitcoin or Ethereum etc. Find Out More
How Bitcoin Binary Options Work
Bitcoin binary options are essentially straightforward financial contracts that allow you to speculate on the price of the world’s largest digital currency.
There are just two possible outcomes at the contract’s expiry date: win or lose.
If your prediction is wrong, the trading platform keeps your deposit.
However, if your prediction is correct, you get back your initial payment plus a pre-determined pay-out.
The volatility and unpredictability of Bitcoin make it a particularly interesting investment proposition for aspiring traders, with generous winnings available if you can accurately predict the market.
BTC binary options traders will typically find several contract options available at the top brokers and exchanges. Importantly, which product is most suitable for you will depend on your investment approach and strategy:
- Up/Down – Also known as High/Low, this is the most straightforward contract. Investors simply speculate whether the price of Bitcoin will be higher or lower than the current market price at the expiry
- Touch/No Touch – Traders predict whether BTC will ‘touch’ one of the pre-determined price levels, set higher and lower than the current price. The option pays out as soon as the ‘touch’ takes place
- In/Out – Otherwise known as Range or Boundary options, a high and low value is set. Traders then decide whether the price of Bitcoin will finish inside or outside of these ranges when the contract expires
- Ladder – Not too dissimilar from Up/Down contracts, but instead of using the current market price, pre-determined levels that are staggered up or down are set by the broker. The further your zone is from the closing price, the more you stand to make. This is a particularly interesting product for Bitcoin traders as it suits assets that display significant price action with returns often exceeding 100%
How to Trade Bitcoin Binary Options
Not all brokers and exchanges that offer Bitcoin binary options are created equal. With that in mind, there are several factors to consider…
Firstly, which platform offers the best pay-outs and potential winnings on BTC contracts? Also, what is the minimum deposit requirement? Beginners may prefer a brand that offers accounts with just a $10 starting payment.
It’s also worth checking the platform offers a good range of deposit and withdrawal options. Some even accept Bitcoin payments.
Other elements to consider are whether the online broker is regulated. There are multiple scams operating in the binary options and crypto space.
With that in mind, a firm that holds a license with a trusted financial agency, such as the CySEC, can provide peace of mind.
Technical traders may also want to check how intuitive and user-friendly the mobile and desktop trading platform is.
Finally, some brands offer enticing sign-up bonuses. These welcome deals can include free trading capital and cash rebates. Just check withdrawal terms and conditions before signing up for an account.
To trade Bitcoin binary options successfully, you need a strategy.
For fundamental investors, this will mean keeping abreast of market developments, such as new regulatory restrictions on the use of cryptos, or announcements that a company plans to offer Bitcoin payments.
This will help you take out the right contract to capitalize on the expected rise or fall in the value of BTC.
Technical traders may prefer to rely on charts and indicators. The best Bitcoin binary options brokers offer interactive charting with a host of drawing and analysis tools. This can help you identify patterns and trends, allowing you to choose a suitable binary options contract.
Tip: trial a trading strategy on a free demo account first. This can help you validate your approach and make any refinements before investing real cash.
3. Strike Price & Expiry
One of the key advantages of Bitcoin binary options contracts is that you know expected winnings and losses before taking a position.
However, for newbies, selecting the right strike price and expiration can prove challenging. Select targets that maximize your chances of profit while minimizing your risk exposure. This evaluation should be based on the plan you define in step two.
Tip for beginners: start with a straightforward Up/Down Bitcoin binary options contract. Then once you are familiar with how binary options and pay-outs work, you can try more advanced contract options.
4. Monitor & Close
While some contracts you can leave until expiry to see whether you win or lose, others may allow you to close your trade early if the market moves against you.
Similarly, if the market is trending in your favor, you may want to consider closing your position early to protect your winnings.
Importantly, check contract terms and conditions first because options may have rules and stipulations about early exits.
Trading Bitcoin binary options successfully takes practice. So look for ways to sharpen your skills and learn from your past mistakes. Seek the knowledge of experienced investors by joining forums or look for a provider that offers social trading capabilities.
Free paper trading accounts are another opportunity to improve your skills in a risk-free environment before investing money.
Final Thoughts on Trading Bitcoin Binary Options
BTC binary options are some of the most straightforward crypto trading assets. For beginners, they offer a straightforward proposition with risk and reward known upfront.
The volatility of the largest digital currency by market cap also means there is ample opportunity to generate returns. Just make sure you sign up with a reliable broker before you start trading.
Bitcoins are a worldwide phenomena and a growing interest in binary options. The digital currency has a wickedly volatile exchange rate making it perfect for binary trading of all expiries. The popularity, and notoriety, of the currency also makes it a prime target of potential scams and the like, so be aware and only trade with trusted brokers such as the ones we list here on binaryoptions.net.
To begin trading Bitcoin binary options you should have at least a marginal understanding of what they are. Basically, Bitcoins are digitally created currency units that can be spent anywhere Bitcoins are accepted. They are meant to be a free and easy system for international trade that is not reliant on central banks or charges outrageous fees. The coins are based on a very complex cryptographic algorithm that produces value in a process referred to as “mining”. Miners, usually tech savvy computer operators, create the coins by running the program, which strictly limits the number and pace of coins that are “mined” ensuring they are not devalued. As coins are mined they become available for sale, trade or exchange. Bitcoins are now used to exchange currencies around the world and for international trade but have yet to be embraced by the world powers.
A few years ago, the number of brokers offering Bitcoin as an asset to trade was very low. Now, the opposite is true. Several brokers now offer trading on Bitcoin and also some of the lesser-known crypto currencies such as Ethereum or LiteCoin. So traders now have a range of choices when it comes to finding a broker that offers cryptocurrency trading. If your current broker does not offer it, consider moving.
To buy and sell bitcoin (rather than simply speculate on the price), you need a cryptocurrency ‘wallet’. This is where security and transparency are crucial – these wallets hold your virtual currency, so you are absolutely reliant on them.
We recommend a service called Bitmex.
How Bitcoin Trading Works
Sensing a new opportunity with Bitcoin and binary options, some innovative brokers have come up with ways to trade binary options and Bitcoin together. There are essentially 2 ways to trade Bitcoin binary options. The first method is by using Bitcoin as a medium of Exchange. The second method is by using Bitcoin as an underlying asset.
Bitcoin as a Medium of Exchange
When it comes to using Bitcoin as a medium of exchange, traders will be trading the various underlying assets in financial markets with Bitcoin. For example, they may be trading the EUR/USD currency pair and call upon a rise or fall upon the expiry of the binary option. So if their trade is successful, they will be paid in Bitcoin instead of fiat currencies like the U.S dollar or Euro.
You might be wondering why anyone would just want to accept Bitcoin when getting paid in U.S dollar as always been fine before. The first benefit of transacting in Bitcoin is the fact that the cost of transaction is the lowest among all forms of online payment. This is the very reason why Bitcoin was created in the first place, to lower the cost of online transaction. Since there is no central authority managing Bitcoin, no service fee is paid when receiving or transmitting payment.
Another key reason for traders to use Bitcoin in Binary options trading is to earn extra Bitcoin. Bitcoin by itself is traded and its value to the U.S dollar varies according to the demand for it. By having all the trading transactions denoted in Bitcoin, a trader is able to shield himself from the fluctuation of this crypto currency while at the same time earn more of it through profits earned in trading.
Nevertheless, it should be noted that this form of trading is however confined to binary brokers who will accept Bitcoin as a medium of exchange. In other words, there are only a limited number of binary options brokers which fall into this category.
Bitcoin as an Underlying Asset
Another method of trading Bitcoin with binary options is to regard Bitcoin as an underlying asset. As mentioned earlier, Bitcoin itself is traded on specialized Bitcoin Exchanges. Its exchange rate in relation to the U.S dollar rises and falls in accordance to the demand for it.
For example, during the Cyprus banking crisis in 2013, loss of confidence in Euro led to investors switching their safe haven of wealth from the Euro to Bitcoin. This sudden surge in demand for Bitcoin helped to push its value up to almost on par with the value of gold prices. Because of this volatility, some binary brokers began introducing binary options contracts which tied to the value of Bitcoin. In other words, Bitcoin is traded just like any underlying assets that we find listed on most binary brokers’ platforms.
Deposit And Trade Using Cryptocurrency
Some brokers will now accept bitcoin as an account funding method. This allows traders to deposit, trade with, and be paid out in Bitcoin. The leading broker offering such a service is BinaryCent. They will accept 15 different cryptocurrencies as deposit methods, including Bitcoin, Ethereum and DASH.
Can You Stop A Bitcoin Binary Options Before The Expiry?
Yes – you can close out positions early on some trading platforms. However in doing so, you may lose out on potential returns. Brokers typically calculate your loss or compensation based on how much the price has moved in your favor.
Do Bitcoin Binary Options Have Fees?
Most brokers make their money through traders’ losing positions or via a fixed commission charge. Some platforms also charge additional fees, such as deposit and withdrawal costs, account inactivity fees and more.
How High Are The Fees When Trading Bitcoin Binary Options?
Fees vary between providers. We recommend signing up with a broker that has a transparent fee structure with no hidden charges. See our list of recommended BTC binary options brokers for low-cost and reliable options.
Can You Mine Bitcoin Binary Options?
Cryptocurrencies like Bitcoin are bought and sold on exchanges. But whilst some platforms offer mining and staking services, these are different from binary options contracts. Binary options are straightforward financial contracts where you can speculate on the future price of BTC.
What Are The Pros Of Trading Bitcoin Binary Options?
BTC binary options contracts are easy to understand. You essentially need to decide whether the price will rise or fall and by how much. And whilst there are some contract variations, most are still simple enough for most beginners. Some brokers also offer generous welcome bonuses and sign-up deals with live trading accounts. Finally, the significant price volatility associated with Bitcoin means high rewards for those with a generous risk appetite.