Bitcoin is trading at slightly more stable levels the last few days, after being close to testing the resistance at $ 20,000, before investors took home gains from the huge rise in price. Bitcoin gained about 170% his year. With several trading sites (crypto exchanges) and of course also crypto trading sites (see top list), it has never been easier to both buy or go short in Bitcoin from home, without an intermediary.

“Bitcoin's volatility will continue to be high and at the moment it looks like the $ 20,000 level will remain a major obstacle,” says Edward Moya at Oanda.

Do you love volatility and opportunities?

It is the volatility of Bitcoin that drives many new people to go in and buy, while many that don't believe in Bitcoin will go short instead.

Both buying and modern short selling can be done through Scandinavian Skilling (review), which gives a competitive spread and fast trades or by international Capital.com (review) that's famous for having a huge range of crypto to buy or sell. Give Skilling a try here, or try Capital here! Alternatively, for US citizens, Bitcoin can be traded (both long and short) with help of eToro USA.

Whether Bitcoin is overvalued or undervalued is often discussed here at Short Selling. Obviously, we do not take a direct position and let it be up to you if going long or short is the best option. After all, every broker recommended will give you both options.

To give you some inspiration for trading, below are a number of reasons why people either buy Bitcoin or why they are shorting Bitcoin with CFDs. Some of the many factors that control the price of Bitcoin are mentioned below.

What determine the price of Bitcoin and other cryptocurrencies?

+ The limited supply of bitcoin as well as other cryptocurrencies and the market demand for them, is important when it comes to price setting mechanism.
+ Usage: How and where can crypto be used today and in the future? Here you also look at the use in the specific blockchain network that the cryptocurrency is related to.
+ The cost of producing a Bitcoin through mining. How difficult and costly is it to mine bitcoins? By the end of 2020, it has become considerably more complicated to mine bitcoin than in previous years, since there are not so many left.
+ The rewards awarded to bitcoin miners for verifying transactions to the blockchain.
+ The number of competing cryptocurrencies, commodities and traditional currencies.
+ The exchanges and marketplaces on which cryptocurrencies are traded.
+ Regulation: Further licensing and regulation in some countries or regions can drastically change prices and demand, usually in a negative way. If say America or the UK will ban the sale of Bitcoin, the price might take a huge hit. In fact, from 1st of January 2021, it will be impossible to buy Bitcoins in the UK through CFD's.
+ How involved is the community? Things such as user demand, scarcity or coin utility matters.

Why do people buy Bitcoin? 12 reasons

Paypal users in the US bought 70% of all new coin Bitcoin last month and Forbes calls it a $50 billion stimulus package for Bitcoin. Unfortunately, it is not possible to buy Bitcoin for European PayPal users yet. Two good alternatives for Europeans are Stormgain and Skilling.

+ BlackRock has told CNBC that Bitcoin may take the place of gold to some extent.

+ Investment banks have started buying a lot more: Thomas Fitzpatrick, a technical analyst at Citi, believes that bitcoin could reach $ 318,000 by the end of 2021. At the same time, a report from JP Morgan shows that in the 3rd quarter of 2020 there are three times more institutional traders than the 2nd quarter, 2020.

+ The number of blockchain wallets has increased sharply from just under 45 million at the beginning of the year, to over 60 million crypto wallets today. Often, however, it is the proportion of active wallets that you look for and according to Bloomberg, there are now over 30 million active wallets with Bitcoin. As recently as 2 years ago, there were only 20 million wallets with Bitcoin.

+ Bitcoin seems to be thriving around financial turmoil, when the global financial crisis was born in 2009. With historically low interest rates and increased quantitative easing, many see that Bitcoin or Ethereum may be an alternative worth investing in.

+ “People buy Bitcoin because of value and values,” says Robert Sharrat at Medium. Is that only positive, or may it be many small users that will easily be eaten by some huge whale that decided to go short?

+ Relatively low transaction costs compared to traditional bank cards such as VISA or Mastercard. But often it is the stores where you shop that take the cost.

+ Limited supply: Flexible emission ratio that changes over time.

+ Cryptocurrencies enable low-income people to access a financial system. No need to have a bank, all that is needed is a crypto exchange or trading site such as Stormgain and Skilling.

+ Excellent durability: Does not wear out like banknotes and traditional coins (eg USD or SEK). (ENG: Excellent durability: Will not be worn out as notes and traditional coins (example: USD or SEK).

+ Hard to counterfeit. Either you own real Bitcoin, or you become the first in the world to succeed in counterfeiting Bitcoin.

+ Approval to receive Bitcoin is accelerating and even many smaller companies now accept Bitcoin. Today, Bitcoin is allowed for payments on Wikipedia, Microsoft, Burger King, KFC, Subway, Twitch, Pizza Hut, Norwegian Air, Namecheap and the football club Benfica to name a few major brands.

Why do many short sell Bitcoin? 9 reasons

+ Difficulties to break the 20,000 level. Potential long downside if failing to break through.
+ Many people believe more in alt coins, such as Ethereum and choose to buy these instead.
+ Some are of the opinion that Bitcoin lacks fundamental value.
+ Bitcoin has clearly higher transaction costs than, for example, Litecoin.
+ Due to volatility, Bitcoin is far from optimal as a means of payment.
+ Although it has been criticised in newspapersthat many criminals use Bitcoin and a high percentage of all transactions are criminal, it is quite easy to track Bitcoin. For true anonymity, people prefer Monero (XMR) and Zcash (ZEC). However, it's been new seizes of Bitcoin almost every month, here about 1 billion was taken by DOJ.
+ It's a true challenge to value cryptocurrencies.
+ Lots of criminal money in circulation, such as $1 billion in cryptocurrencies from Silk Road.
+ Over time, Europol may make major strides or demand more regulation, classifying private cryptocurrencies, coins and open marketplaces as the main threats to internet crime. Major cases are often written about in Europol's newsroom.

Why do people choose to abstain?

Rick Rieder, chief investment officer for BlackRock, recently said that Bitcoin is here to stay. It is supported by the demand of millennials and its strength as a medium of barter. At some point in the future, Bitcoin may rival gold as an inflation hedge and portfolio diversifier. However, one of the biggest risks with Bitcoin holdings is its large daily fluctuations. For people looking for less volatility, gold can be an alternative, or some other less volatile commodity or traditional currency.