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What Are The Benefits of Bitcoin Cash Trading?

9 Min Read
Last Updated March 25th 2021

Bitcoin Cash trading enables traders to speculate on whether the price of BCH will rise or fall in value, without the need of taking ownership of Bitcoin Cash.

Bitcoin Cash (BCH) is a digital currency forked from the Bitcoin network around the end of 2017 with the purpose of being the true application and realization of the original white paper of Satoshi. As defined by Satoshi Nakamoto, it is intended to be the true “peer to peer electronic cash.” Driven by discontent with the scalability problems of Bitcoin, Bitcoin Cash is intended to be a more realistic crypto coin on the blockchain for regular transactions.

bitcoin cash price chart

Image source: https://www.investingcube.com/ 

Why Trade Bitcoin Cash?

Trading in Bitcoin Cash has many advantages. Any of the following points are due to the benefits already provided by BCH as one of today’s strongest cryptocurrencies. Trading BCH encourages seasoned people to bet on the crypto market, regardless of whether or not they already own any of the cryptocurrency. Bitcoin Cash Trading is all about trying to decide if the price of BCH will rise or fall, and when to hop on the bandwagon.

The benefits of Bitcoin Cash trading include:

  1. Low transaction fees
  2. Liquidity
  3. Choosing whether to go long or short
  4. Bitcoin Cash volatility
  5. Bitcoin Cash market access
  6. Efficient tax benefits
  7. Safety whilst trading

 

1. Low Transaction Fees

BCH provides processing rates that are almost essentially zero. It implies that without thinking about exorbitant service costs, people can trade any amount of BCH they’d like.

At the moment of writing, BCH’s average transaction fee is $0.0035. In January of 2018, the price had reached its high when it reached $0.904. The total processing fee hasn’t staggered too much since and has remained relatively stable since. Since last year, the transaction fees have hovered around the $0.0040 and $0.0060 range, which is negligible.

Despite Bitcoin Cash’s current tepid condition, the transaction fee is not likely to escalate dramatically because the blockchain has not been pushed to its limits.

2. Liquidity

Liquidity is a measure of how quickly and effectively Bitcoin Cash can be converted into cash, ensuring no changes in the market value of BCH. The importance behind liquidity lays in the fact that it largely affects how easily you can open and close positions. A trader can easily find a buyer in a liquid market without having to slash the asset’s price to make it more appealing.

Due to the fact that Bitcoin Cash offers more scalability, this, in turn, means that it has a greater trading volume. The greater trading volume then turns to more trading activity and finally concludes to a more liquid market. Liquidity can also be measured by analyzing the bid-ask spread for BCH. The bid-ask spread measures the difference between the price a buyer is willing to pay for a coin and the price at which the seller is willing to accept a coin. The lower the bid-ask spread, the more liquid the coin.

Generally speaking, the Bitcoin Cash market is namely illiquid since trades are spread across many exchanges, which means that comparatively small deals may have an enormous impact on market prices, creating volatile demands on BCH.

Read Also: What Will Drive The Bitcoin Cash Price In 2021?

3. Choosing Whether To Go Long Or Short

Much like the price of a stock, Bitcoin Cash always has a value for which it will be sold. In this sense, you can profit off of your BCH by selling your coins after the market value has increased. When you purchase BCH coins and expect the price to rise, you call this going long. When you negotiate with Bitcoin Cash’s price, though, and you take advantage of values that are both declining and rising in price, this is what is known as going low. 

Because of BCH’s rise in popularity, there is a multitude of exchange platforms where you can go long or short with your BCH coins. With these platforms, you’ll have the option to do either, where a rising or declining trend can be predicted at the same time. In most platforms, where you do margin trading, you will always be able to long or short.

4. Bitcoin Cash Volatility

Bitcoin Cash volatility is part of what makes this coin and trading it so thrilling. Rapid intraday price swings will provide traders with a variety of options to go long and short, but with added risk as well. So, if you plan to explore the Bitcoin Cash market, make sure you’ve done your homework and built a policy for risk management. BCH has a relatively high level of volatility, standing around 15.27% on the 7-day mark.

Check Out: What Is Bitcoin Cash And Is It Worth Investing In BCH In 2021?

5. Bitcoin Cash Market Access

The Bitcoin Cash Market is usually available for trading whenever you’d like. On virtually all of the top cryptocurrency exchanges, Bitcoin Cash is listed and this means a high degree of safety and efficiency in purchasing and selling this token. In exchange, this also drives acceptance and raises the investment potential of your BCH and increases your chances of greater reselling in the future and higher profit gains by trading.

This is attributed, unlike normal stock markets, to no centralized market administration taking over regulation of market hours. BCH trades can take place at any time of day, wherever you’d like, whenever you’d like. They only however occur between a buyer and seller on various crypto exchanges globally.

6. Efficient Tax Benefits

The opportunity to spread betting and CFD trading on Bitcoin Cash would have substantial tax benefits over investments in virtual, real currencies. It’s an efficient way of practising price watching and getting a good idea of what price fluctuations look like, without the incremental tax costs. 

For instance, you are subject to capital gains tax (CGT) when you sell your crypto for a profit gain, for if you purchase something with it for a value higher than what you had initially acquired it for. With spread betting though, you can exclude the liability of owing tax from the calculation as you don’t actually own the assets. On the other hand, a contract for difference, otherwise known as a CFD, is also accountable toward this tax, yet still more efficient and bears less risk. However, you can compensate your risks against your profits from CGT liability, which makes CFDs useful for hedging. Note that dealing with spread bets and CFDs in cryptocurrencies such as Bitcoin Cash is only open to skilled traders, and therefore should be used with caution.

7. Safety Whilst Trading

A powerful blockchain platform is used by Bitcoin Cash and is nearly impossible to hack into. As blockchain needs unanimous approval from all nodes, the transfers and fund transfer history can not be altered by a single user.

Cryptographic encryption provides the entire payment system with another layer of authentication and provides a means to perform safe and protected transactions.

If you want further safekeeping of your BCH coins, you can still make great use of physical (hardware) or software wallets to store your tokens. Dedicated wallets provide an increased security standard relative to trading site accounts and exchange storage.

Don't Miss: Bitcoin Cash Price Analysis for 2021

Should I Buy or Trade Bitcoin Cash?

Before you make a definitive choice, it’s crucial to understand the differences between buying and trading Bitcoin Cash. The use of CFDs would make it easier to determine the viability of investment in BCH with lower risk thresholds involved. Any considerations, such as transaction fees, tax obligations, and security must all be taken into account. If you want to know more about Bitcoin Cash, check out this detailed guide.

You might be interested in buying Bitcoin Cash if…

  • You want to take full ownership of the Bitcoin Cash amount you buy
  • You’re happy to pay the entire value of the asset upfront
  • You don’t mind paying capital gains tax on any profits
  • You don’t mind waiting for an exchange account before you can buy or sell
  • You don’t mind introductory limits or maximum deposits
  • It is fine for you to pay additional fees for deposits or withdrawals

You might be interested in trading Bitcoin Cash if…

  • You want to speculate on the price of Bitcoin Cash without owning it
  • You want to leverage your position so that you only place a portion of the cost upfront
  • You want to take advantage of the tax benefits of spread betting or CFD trading with Bitcoin Cash
  • You want to start trading straight away
  • You don’t like maximum deposit limits
  • You don’t like paying deposits or withdrawal fees

 

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Virtual currencies are highly volatile. Your capital is at risk.

Key Points:

  • Bitcoin Cash (BCH)  is a digital currency forked from the Bitcoin network.
  • BCH provides processing rates that are almost essentially zero.
  • Bitcoin Cash offers more scalability, this, in turn, means that it has a greater trading volume, therefore higher liquidity.
  • BCH has a relatively high level of volatility, standing around 15.27% on the 7-day mark.
  • Bitcoin Cash is listed on virtually all of the top cryptocurrency exchanges.
  • Spread betting and CFD trading on Bitcoin Cash provide substantial tax benefits over real investments.
  • You are subject to capital gains tax (CGT) when you sell your crypto for a profit gain.
  • Cryptographic encryption ensures authentication and provides a means to perform safe and protected transactions when trading.
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