However, make sure you’re not so bedazzled by their high-tech algorithms that you fail to realistically assess whether or not you’re actually a suitable candidate to trade them.

What is a Bitcoin Trading Bot

Simply stated, these bots are computer programs that generate Bitcoin buy and sell signals. Also known as trading algorithms, these programs connect via API to your trading exchange account. The big idea is to automate your crypto trading to the maximum degree possible, eliminate subjective trading decisions and exploit trading ops that occur when you’re not able to monitor the markets.

Typically, the bot software runs in the following environments:

• The cloud
• A web-based application
• A VPS (Virtual Personal Server)

Bots R Us

As of writing, there are dozens of comprable bitcoin trading bots, and you’ll need to examine the potential advantages and disadvantages of their respective offerings. Here are a few tips to help ferret out the best possible set of bots for you:

• Make sure the bot runs on the cloud, not on your computer. If you have an internet or electrical outage, computer crash or another mishap that renders your Mac or PC useless, you’ll be very happy to know your bot will keep performing without interruption.
• Verify that your trading bot provider (TBP) offers an extensive array of technical indicators from which to build your trading strategy.
• Further, make certain that your TBP also offers a good strategy back testing utility. Never trade a bitcoin (crypto) bot strategy until you’ve extensively back tested and forward tested it.
• Your TBP should also offer a simulated trading feature. This is a must-have, especially if you are new to the world of trading system development. You can verify the strengths and weakness of your new bot strategy on real-time crypto data but without the risk of losing any money.

Scalability, Client Support, and User Groups

Your TBP should also excel in these critical areas, too –

• Your bitcoin bot firm needs to offer API connectivity to as many reputable crypto exchanges as possible. This is especially true if you’re going to be trading arbitrage strategies that exploit coin mispricing across various exchanges.
• Ascertain that reliable, useful client support is available. If you bot has a three AM identity crisis and forgets what to do -and when – you (and your trading account equity) could be in big trouble. Being able to ring up a friendly, knowledgeable support agent at such times is invaluable.
• If your TBP offers a dedicated users group, you can greatly shorten your trading system learning curve. Even better, if they offer a trading bot marketplace, you may be able to buy or lease a winning bot strategy, rather than having to build one yourself.

Other Critical Bot Whatnot

Measure the cost-effectiveness of your trading bot. Make sure that the bot can typically make more in profits than the inevitable costs of commissions, slippage, bot subscription fees, and capital gains taxes will eat up. If you can’t program a consistently winning bot, there’s no reason to use one. 

A Look at One Bitcoin Bot Firm

Gimmer.net is a TBP that offers its own VPS to clients. However, it comes at a price:

“With the VPS you will not have to worry about losing connection to the internet, power outages in your home or if your computer crashes. Simply subscribe to the VPS service and all necessary data is sent to a cloud computer that is unique and private.”

Gimmer’s VPS will set you back $25 in purchases of its GMR token per month. Additionally, to use any of Gimmer’s trading bots, you’ll need to buy and hold between 200 and 500 of the same tokens. The bots are programmed to handle many niche trading styles, such as:

• Non-leveraged trading (garden-variety, directional strategies).
• Margin trading, with high leverage multiples available.
• Lending (you can make loans in various cryptos)
• Scalper (coded to grab quick gains with small losses)
• Portfolio-based strategies (may lessen drawdowns, assists with diversification)
• Arbitrage (exploiting inter-exchange price differentials)
• Triangular arbitrage (similar to arbitrage, but uses three or more coins)
• Spreads (go long one coin even as you short another (a popular mean-reversion strategy).

Additionally, all Gimmer clients receive a free trading bot:

“A standard automated crypto trading bot is offered for free. This includes the use of one indicator, one safety and one pair, without leverage.”

Like most other TBPs, Gimmer offers API connectivity to many major exchanges, including Binance, Bitfinex, BitMEX, Bittrex, Cobinhood, Hubii, Kraken, KuKoin, Poloniex, and XTRADE.IO.

Is a Bitcoin Trading Bot Right for You?

Maybe. Maybe not. It all depends on your trading style, account equity size, trading experience, and personal goals. If you have a sound trading system development education, you’ll probably be able to easily build or find a trading bot that will suit you. If you know how to deal with software issues quickly or have instant access to those who can help you diagnose and repair bot-related issues, then you may also be a good trading bot candidate.

However, if you naively believe that making money in Bitcoin or any other crypto is a simple, effortless process that simply requires the push of a button, then you may be sorely disappointed. Successful trading is hard work. If any novice trader could buy a retail bitcoin bot, trade it with $100,000 and make $50,000 per annum, year after year, the crypto markets would progressively render such a strategy ineffective.

Say 5,000 Bitcoin traders use the same winning bot this year. It makes 40 or 50 percent gains. As word of its success spreads, next year maybe 50,000 traders will start using it. Over time, professional and institutional traders will be able to trade against the bot with great effectiveness, thus neutralizing it. Too many traders will be chasing its trade signals on one side of the market, and that’s when the pros come in for the retail trader kill.

This is one reason why you never market a trading system that you personally want to continue making money with. Think about that the next time some trading system developer attempts to con you out of $5,000 for a trading system.

Bitcoin Bot Plusses and Minuses

Advantages

• Your trading bot can act on trade signals faster than you can.
• Exploit opportunities 24/7.  Some big market moves begin in the evening session and then gain even more traction as the herd piles in the next morning.
• Lack of system building training isn’t a problem. You can buy or lease potentially effective Bitcoin bots from other developers.
• Artificial Intelligence (AI) will become very prominent in the bitcoin bot world within a few years. It’s conceivable that future bots will be able to auto-optimize your trading signals in real-time. AI may also help you select an ideal mix of bot trading strategies for your portfolio.
• As more crypto traders trade shorter-term, bot-based strategies, crypto market volatility may actually decrease. This may occur due to a massive increase in coin market caps and liquidity.

Disadvantages

• Short-term trading has high commission and slippage costs.
• Lack of crypto market liquidity at certain hours of the day. A big new event in the wee hours might trigger a needless losing trade.
• Risk of flash crashes. Ironically, these are usually caused by institutional trading bots.
• Outages on an exchange, technical problems with the bot, communication or computer issues.
• The cost of the bot subscription itself.
• The need to continually monitor your bot’s performance and reliability.
• You must know how to effectively re-optimize your trading bot.
• If your bot provider isn’t 100 percent cloud-based, you’ll have ongoing VPS costs.

Hard Work, Education, Self-Discipline, and Overrides

System trading education, money management skills, sound trader psychology, and an extensive TA education is a must for profitable automated crypto trading results. You can’t simply build a quickie system with canned indicators, hit the ‘run’ button and expect to generate a living from your bitcoin trading bot. However, you might become a consistently profitable bitcoin bot trader if you work hard at developing the above-mentioned trading disciplines.

A final word of wisdom to consider when running a fully-automated Bitcoin trading bot, make of this what you will:

Never take your eyes off off your trading screen. Ever. Do not place 100 percent confidence in your trading bot, computer software or hardware. Crypto market conditions can change rapidly, potentially creating scenarios that your bot was never designed to deal with. You must continually supervise your bot or risk waking up to an unpleasant, money-losing surprise one morning.

Never underestimate your inherently superior reasoning abilities to that of a machine or algorithm. Be ready, able and willing to step in and override your bot any time it encounters hyper-volatile crypto market conditions.

The post Bitcoin Trading Bots: Machines Taking the Lead appeared first on CoinCentral.

These contracts allow traders to speculate on the future price of cryptocurrencies without owning the actual asset.

For example, traders can use futures contracts to bet against the market– if they believe the price of a cryptocurrency will fall, they can sell futures contracts and buy them back at a lower price.

Investors may also use futures contracts to hedge against potential price declines in their crypto holdings– by locking in a selling price; they can mitigate losses if the market turns unfavorable.

It’s common for crypto future exchanges to provide leverage, allowing traders to control a larger position with less capital. This can amplify gains but also increase the risk of significant losses.

To trade with leverage, traders must maintain a margin, a percentage of the total trade value, as collateral. If the market moves against their position, they may need to add more funds to avoid liquidation.

Words of Caution & Disclaimer

Cryptocurrencies are notoriously volatile, which can already lead to significant losses. The combination of leverage and the added layer of risk presented by futures contracts is like jet fuel– an excellent propellant if you know what you’re doing with it or disastrous if you don’t. 

As such, futures trading requires a high understanding of margin requirements, leverage, and risk management.

The following article explores the offerings of a few top crypto futures exchanges, which vary in size, jurisdiction, and unique features. The following list is in no particular order and is not a comprehensive or definitive list of every offering on the market. 

Binance: Up to 125x Leverage

Binance is the largest futures exchange on this list in terms of daily trading volume, with over $40 billion in daily trading volume. 

Binance was launched in June 2017 and quickly became one of the largest cryptocurrency exchanges in the world. 

Binance’s services are restricted in certain locations, including the United States, Singapore, and Ontario (Canada). Other countries with restricted usage or limited features due to regulatory reasons include China, Malaysia, Japan, the UK, and Thailand.

Futures and derivatives products are also unavailable in Germany, Italy, and the Netherlands. Binance.US, a dedicated platform for US clients, was launched in September 2019.

Binance has relatively higher fees than other futures exchanges, with a 0.02% maker and 0.04% taker.

Binance offers margin trading with up to 10X leverage through Binance Margin. Users can also leverage their trades with derivatives such as Binance Futures, settled in USDT, BUSD, or other cryptocurrencies, and Binance Options.

For more information, check out our Binance review.

PrimeXBT: Up to 1000x Leverage for CFDs & 200x for Crypto Futures

PrimeXBT is a centralized cryptocurrency exchange (CEX) launched in 2018. It offers a user-friendly environment and 24/7 multilingual customer support. It uses cold storage for security. 

It has roughly $520,000,000 daily trading volume. 

Registered in Seychelles, PrimeXBT serves clients in over 150 countries. However, it restricts services in regions like the U.S., Canada, Japan, Algeria, Ecuador, Iran, Syria, North Korea, and Sudan.

It provides access to over 100 assets across various markets, including Crypto, Forex, Commodities, and Indices. It supports major cryptocurrencies like BTC, ETH, and LTC, meme coins like DOGE and SHIB, and popular coins including TON and SOL. 

The platform supports derivative trading instruments such as Crypto Futures and CFDs and offers Copy Trading to mimic the trades of successful Strategy Providers automatically. 

It offers up to 1000X leverage for CFDs and up to 200X leverage for Crypto Futures and Crypto CFDs. 

Fees: PrimeXBT charges a maker fee of 0.01% and a taker fee of 0.02% for Crypto Futures, and a 0.05% trading fee for Crypto CFDs. There are 0% commissions on CFD trading pairs for global Forex, Commodities, and Indices.

For more information, check out PrimeXBT; new users get a 20% deposit bonus in various tiers.

Bybit: Up to 125x Leverage

Bybit is a centralized cryptocurrency exchange (CEX) launched in March 2018.

Serving over 10 million users, Bybit provides access to over 100 assets and various contracts, including Spot, Futures, Options, launchpad projects, earn products, and an NFT Marketplace.

Notable partnerships include Oracle Red Bull Racing, esports teams, and football clubs like Borussia Dortmund.

The platform supports over 100 cryptocurrencies and 300 spot trading pairs, such as BTC, ETH, SOL, and DOGE. Bybit employs a tiered fee structure with spot trading fees at 0.10% for non-VIP users and lower rates for Pro 3 users. 

Perpetual and futures trading fees are 0.06% for takers and 0.01% for makers.

Bybit offers up to 125X leverage on crypto derivatives, including BTC/USD and ETH/USD perpetual contracts.

For more information, check out our Bybit review.

OKX: Up to 125x Leverage

OKX operates globally with offices in Hong Kong, Singapore, the UAE, Silicon Valley, and the Bahamas. Launched in 2017, OKX offers a range of services through its entities in Seychelles and the Bahamas. In the U.S., it focuses on Web3 services but doesn’t provide exchange services.

In 2022, OKEx rebranded as OKX, updating its branding and strategic direction. The platform supports users in over 200 countries, though it excludes U.S. residents.

OKX lists over 350 cryptocurrencies and more than 500 trading pairs, including BTC, ETH, OKB, AAVE, SOL, MATIC, XRP, DOGE, SHIB, and DOT. Its fee structure starts at 0.10% and decreases with higher trading volumes. Regular users’ fees depend on the amount of OKB they hold, while advanced users’ fees depend on their 30-day trading volumes.

The platform offers margin trading with up to 10X leverage. OKX provides futures trading and perpetual swaps with up to 125X leverage for derivatives. Users can also trade options, including BTC and ETH.

For a detailed look, check out our OKX review.

MEXC: Up to 200x Leverage

MEXC, founded in 2018, serves over 10 million users in more than 170 countries.

The platform offers localized language support, aiding investors globally. MEXC’s trading engine, developed by banking industry experts, completes 1.4 million transactions per second, ensuring efficiency. User security is prioritized with servers hosted independently across multiple countries.

MEXC handles about $4 billion daily trading volume, with 0% maker fees and 0.01% taker fees.

Final Thoughts: Picking the Right Crypto Futures Exchange

Crypto futures trading is perhaps the highest-stakes version of trading, and the risks, especially if you are unfamiliar with or have no experience with it, cannot be understated. 

While it offers opportunities to profit from market volatility, the use of leverage means you can lose more than your initial investment. 

Top crypto futures exchanges like Binance, Bybit, PrimeXBT, OKX, and MEXC provide a range of tools and options to help traders navigate this fast-paced trading environment. They each offer high leverage, low fees, and advanced trading features.

Ultimately, it comes down to user preference and convenience– which UI do you feel most comfortable with? What features stand out the most to you? Which exchange do you trust the most? 

Stay informed, trade wisely, and always be prepared for the risks that come the pursuit of the rewards.

The post Crypto Futures 101: The Top Crypto Futures Exchanges for High Leverage Trading appeared first on CoinCentral.

It stands out as a dynamic trading platform, combining low trading fees with a wide range of tradable markets, with maker fees as low as 0.01% and taker fees at 0.02% for crypto futures. 

PrimeXBT’s user-friendly interface, designed for beginners and experienced traders, features over 50 technical indicators and a customizable workspace powered by TradingView.

It also offers high leverage options, up to 1:1000 for forex and 1:200 for cryptocurrencies, which can help traders amplify their returns or downside.

Disclaimer: Trading cryptocurrencies and other assets with leverage involve a very high loss risk. Ensure you fully know the risks and only trade with funds you can afford to lose.

This PrimeXBT guide and review breaks down the platform’s primary features and provides insights into the PrimeXBT user experience. 

Understanding the PrimeXBT’s Offerings: Bitcoin Futures & CFDs

If you’re a relative beginner in financial derivatives, PrimeXBT’s value proposition introduces a few concepts that are worthy of a quick explanation.

PrimeXBT offers margin trading, meaning traders can use borrowed funds (leverage) to increase the size of a trading position beyond what would be possible with the trader’s own capital.

CFDs, or Contracts for Difference, are financial derivatives that allow traders to speculate on the price movements of various assets without actually owning the underlying asset; it’s more of a contract with a broker to exchange the difference in the value of an asset from the time the contract is opened to when it is closed.

Bitcoin futures are contracts that obligate the buyer to purchase and the seller to sell Bitcoin at a predetermined price at a specified future date. These contracts can be settled either by physical delivery of Bitcoin or through cash settlement but are typically traded on open markets before their expiration multiple times over.

These offerings are highly speculative, risky, and unavailable on highly regulated exchanges like Coinbase or Gemini. This has led traders who want leverage or derivatives to seek out platforms like PrimeXBT. 

Platforms that offer leverage, especially ones that offer up to 200x leverage, are incredibly risky and should be used by professionals who comprehend the risks. If traditional exchanges like Coinbase and Gemini are ordinary sedans, exchanges like PrimeXBT are F-1 racecars—the driver can go far fast, but if they don’t know how to drive them or the roads have unexpected turns, the results could be catastrophic.

About PrimeXBT: About the Company and Business

PrimeXBT was founded in 2018 and became a leading cryptocurrency exchange for derivative products and margin trading. 

The company is registered in Seychelles under the holding company name PrimeXBT Trading Services, but it also has offices in St. Vincent and the Grenadines, and Switzerland.

Despite its extensive services and growing user base, there is no publicly available information on specific individuals tied to PrimeXBT. The company maintains a relatively low profile regarding its founders and key personnel, which is not uncommon for some trading platforms. 

Given that the platform has operated without controversy since its launch in 2018, it may come as a surprise that the company or exchange isn’t regulated or licensed, operating out of the relatively lax Seychelles. 

PrimeXBT Review: Is PrimeXBT Legit?

PrimeXBT has earned a solid reputation in the trading community over the past six years. Its mix of low fees, diverse assets, high-leverage options, and user-friendly features makes it an attractive platform for experienced traders. 

Reviews on platforms G2, Trustpilot, ProductHunt, and Reddit generally indicate user satisfaction despite some negative feedback, averaging around 4 to 4.5 stars.

PrimeXBT’s competitive trading fees stand out, particularly in cryptocurrency futures, where the maker fee is 0.01% and the taker fee is 0.02%.

The platform supports various tradable assets, including cryptocurrencies, forex, commodities, and indices. The customizable trading interface has advanced trading tools and over 50 technical indicators. PrimeXBT execution speeds average 7.12 milliseconds.

Traders can amplify their positions with high-leverage options of up to 1:1000 for forex and 1:200 for cryptocurrencies, though this comes with increased risk. 

PrimeXBT stores funds in cold storage, provides real-time risk monitoring, and conducts regular security audits. As of writing, the platform has never been hacked or experienced a user loss of funds. 

While PrimeXBT is unregulated, its reputation has been mostly positive over the last six years, and users report generally favorable experiences with the various features described above. 

That said, it’s wise to withdraw most of your funds you don’t plan on actively trading to private wallets you control, mitigating some security and regulatory risks, and use funds on PrimeXBT explicitly for trading purposes. 

Where is PrimeXBT Available?

PrimeXBT offers its services to users in various jurisdictions, but access is restricted in certain countries, notably the United States, Japan, and Canada. 

Other restricted regions include Cuba, Israel, Iran, New Zealand, Syria, North Korea, Sudan, various U.S. territories such as Puerto Rico, Guam, the U.S. Virgin Islands, the United States Minor Outlying Islands, American Samoa, the Northern Mariana Islands, as well as Russia, Myanmar, and Saint Lucia. 

These restrictions ensure international regulation compliance and maintain the integrity of the platform’s operations globally.

PrimeXBT Signup Bonuses

CoinCentral readers can get 20% added to their deposit amount when signing up. PrimeXBT offers several bonuses tiered by deposit amounts:

• $200 when depositing $1,000+
• $100 when depositing $500+
• $500 when depositing $2500
• $1000 when depositing $5000+

Note that PrimeXBT is not available for users in the United States.

How to Use and Sign Up for PrimeXBT

If you meet the geographic requirements, you can start by making a PrimeXBT account and depositing cryptocurrency; it supports BTC, ETH, USDT, USDC, and COV.

This can be done either through a direct crypto transfer from an external wallet or exchange, or purchasing crypto using integrated services like Changelly, Paxful, and Coinify to buy crypto with your debit/credit card or bank transfer. 

Deposits are free and usually appear in your account after one network confirmation.

You can withdraw funds to any external crypto address. 

PrimeXBT charges 0.0005 BTC for BTC withdrawals, 0.01 ETH for ETH, and minor fees for other coins. Withdrawals are processed manually once daily, which may cause delays.

PrimeXBT’s Partnership with Covesting: The COV Token

PrimeXBT has partnered with Covesting, a licensed DLT services provider, to offer features like copy trading and yield accounts. 

The COV utility token is integrated into the PrimeXBT ecosystem, offering users several incentives, such as staking, using COV as collateral for leveraged trading, reducing or eliminating entry fees, increasing profit share, copy trader benefits, and increasing APY on yield accounts by quantity of COV held. 

For crypto.com users, this is similar to how the CRO token offers users various platform perks. 

Through its partnership with Covesting, PrimeXBT’s Covesting module allows traders to automatically mirror the trades of successful strategy managers on the platform. Users can evaluate various strategies and managers based on returns and drawdowns, and followers count on a stats dashboard and automatically copy a strategy. 

By copying a strategy, every trade from the manager’s portfolio is mirrored proportionally, based on the amount allocated. Traders can diversify by following multiple strategies or managers simultaneously. 

Strategy managers must have a minimum balance of 0.5 BTC or equivalent. Based on their portfolio performance, managers earn a profit share from follower fees.

How is PrimeXBT’s Customer Service?

PrimeXBT offers customer support through email, web form, and live chat, available 24/7 to assist traders worldwide. The live chat feature stands out with prompt response times, often within minutes, with agents who can help with account issues, trading inquiries, technical problems, and platform navigation.

While direct phone support is unavailable, which could be beneficial for urgent issues, PrimeXBT compensates with other quick-help options, like their Telegram bot connected to support staff.

PrimeXBT’s online Help Center provides FAQs and educational guides.

Overall, PrimeXBT delivers a sound customer service that has met the needs of a global user base through a combination of live chat, user base, and responsive support channels. 

PrimeXBT Markets & Trading Pairs

PrimeXBT supports a wide range of asset classes, including cryptocurrencies, forex, commodities, and indices including:

• 40+ cryptocurrency markets, including popular pairs against USD or Bitcoin.
• 50+ forex pairs, covering major, minor, and exotic currencies.
• 5+ key commodities like Gold, Silver, Brent, Crude, and Natural Gas.
• 10+ indices, including GER30, SP500, NASDAQ, HK-HIS, and more.

Final Thoughts: Is PrimeXBT Legit

PrimeXBT is considered one of the top cryptocurrency futures trading platforms platform providing access to various financial derivatives in multiple markets and currencies. 

Its low trading fees and wide range of markets make it an appealing option for advanced and higher-frequency traders who can stomach the risks and reward tradeoffs of leveraged trading. 

PrimeXBT’s mobile apps, PrimeXBT and PrimeXBT Futures Pro, allow users to trade and monitor positions on the go.

PrimeXBT’s partnership with Covesting introduces features like copy trading and yield accounts, with the COV token providing various incentives. 

Its high leverage options, up to 1:1000 for forex and 1:200 for cryptocurrencies allows traders to amplify their positions significantly, but it comes with an increased risk that can lead to significant losses, so it’s crucial to understand these risks fully and only trade with funds you can afford to lose.

PrimeXBT has remained reputable despite its unregulated status, but users should consider withdrawing funds to private wallets to mitigate security risks. 

Disclaimer: The content on CoinCentral is not investment advice and should not replace advice from a certified financial planner. The creation of the above article is a sponsored post, and PrimeXBT is an affiliate partner. The article adheres to our editorial guidelines for objective review. This sponsorship does not influence our analysis or opinions.

The post What is PrimeXBT? A Guide on the Crypto Derivatives Exchange appeared first on CoinCentral.

The Internal Revenue Service (“IRS”) first announced how and why cryptocurrencies are to be taxed with a brief policy statement in 2014. Much to the agency’s dismay, however, almost nobody has paid their taxes on digital currency investments. Now, the IRS is actively pursuing cryptocurrency investors who have failed to report their Bitcoin earnings.

We all reminisce about the good old days. After all, life was so much simpler for virtual currency investors when the IRS was in the dark about the billions of dollars being earned on cryptocurrency exchanges. Many investors still believe that cryptocurrency exchanges fall under loopholes in the tax code that exempt them from taxation. However, nothing can be further from the truth.

You may hear rumors within the cryptocurrency community that lead you to believe you can take advantage of tax loopholes to avoid paying taxes on your digital currency exchanges. Unfortunately, this is little more than wishful thinking. This article addresses some of these rumors and clarifies how and why they don’t work.

Evading taxes, even accidentally, can land you in serious hot water. However, smart tax planning can minimize your liability to the IRS. 

1. Buying Cryptocurrency Through Your Retirement Account

Most of us know that retirement accounts like IRAs, 401-ks, or ROTH give tax breaks for people saving for retirement. As a result, some cryptocurrency investors believe that they can avoid paying taxes on their virtual currency exchanges by purchasing the assets through their retirement accounts. However, this is easier said than done.

If you are an American citizen or permanent resident and you want to buy cryptocurrencies through your IRA, you must first get a unique type of retirement account.  It is often referred to as a self-directed or checkbook IRA (the most common one).  You may also qualify for a self-directed 401k or SEP, depending on our business structure. These types of accounts come with a variety of restrictions as well.  There are several types of transactions that are expressly forbidden and completing any of them may invalidate your entire transaction.  This will result in it being taxed as a distribution, with additional penalties for early distribution tacked on as well.

You may even consider setting one up offshore, but this adds even more complications to the whole process and is usually avoided.

Sounds complicated? It is. You will definitely need the assistance of a professional. The process does have a significant cost to get started and requires some careful planning to get the maximum benefit from it. You may also find yourself with a very limited number of exchanges that you can operate on, as you will need to set up an institutional account rather than a personal one. 

Complexity, expense, and potential fraud are not the only problems with this scheme. Also, since this process requires you to become the manager of your own investment account, you’re not allowed to personally benefit from the investments. IRS rules prevent you from borrowing from the account or otherwise profiting from it personally, just like any other professional investment advisor. Furthermore, total annual contributions to your IRAs cannot exceed a combined $5,500 if you’re under age 50, and they’re capped at $6,500 once you’re older.  Caps on some of the other plans are much higher, but typically so is the paperwork.

They do have one place where they shine. If you are leaving a job with a 401k, you can potentially roll your 401k over into a self-directed IRA and then invest in cryptocurrency. Just make sure you practice good risk management and understand that values can crash quickly.

2. Buying Cryptocurrency Through Your Life Insurance Policy

Life insurance policies can have tax breaks similar to retirement accounts. For example, if you set up a private placement life insurance policy, hold it for a period of time, and then cash it out, you are entitled to tax deferral similar to a traditional IRA. You’ll still pay capital gains tax, but you can defer your tax liability until a later date. There’s no tax break, just a deferral. 

But what if you never cash out your policy? If you hold virtual currencies in your life insurance policy until your death, it is passed to your heirs. Like other property conveyed through life insurance, your heirs wouldn’t have to pay taxes on any increases in the value of the virtual currencies held in the policy. Sounds great, right? After all, isn’t the whole point avoiding paying capital gains on your cryptocurrency earnings? Sure, except for one big problem: you’re dead. What’s the point of avoiding taxes if you’re never able to spend the money you’re trying to hide from the IRS? You might as well just give the IRS its cut and enjoy life while you’re still living it. 

Leaving cryptocurrencies to your heirs sounds like a nice way to provide for your family after you’re gone. However, most private placement policies require an investment of at least $500 thousand before they will even begin the conversation. This minimum investment requirement excludes most of us from even attempting to jump through all the hoops necessary to participate in this scheme, so it’s better to save time and heartache and just pay your taxes.

As cryptocurrencies continue to build wealth, this area will see a lot more attention as more and more investors will hit numbers that qualify for the minimums.  Make sure you find a professional who truly understands these transactions to avoid getting hit with penalties.

3. Claiming the Like-Kind Exchange Exemption

In the 2014 IRS policy statement, the agency classified digital currencies as property. This led many investors to believe that swapping Bitcoin for other virtual currencies like Ethereum, Bitcoin Cash, or Ripple, qualifies as a like-kind exchange under Section 1031 of the tax code. A 1031-like-kind exchange involves trading one kind of business or investment asset for another. For example, if you own an art gallery and swap a painting that your customers detest for a sculpture you expect will draw a crowd, you pay no taxes on the exchange. Tax liability arises when you sell the sculpture, but so long as the two pieces of art are of the same nature of character you can defer paying taxes on the sculpture until it sells.

Investors who sold their cryptocurrency assets before 2018 often argue that they should be covered by the like-kind exchange exemption because cryptocurrencies have the same nature or character. However, this is not how the IRS treats virtual currencies. Dispensing of your Bitcoin – whether for U.S. dollars or other virtual currency – is a taxable event. This is true whether you buy a cup of coffee or the hottest new alternative coin. The transaction doesn’t qualify as a swap of property-for-property. Rather, it’s treated as a sale immediately followed by a purchase.

For investors planning to claim the like-kind exchange rule for cryptocurrency trades in the future, the 2018 federal tax reform has brought rain to the parade. Among the several changes to the federal tax code passed in the last days of 2017, Congress expressly limited Section 1031 exchanges to apply to real estate only. This closed the like-kind exchange loophole entirely, at least so far as it may have applied to cryptocurrencies in the past.

The post 3 Common Cryptocurrency Tax “Loopholes” and Why They Don’t Work appeared first on CoinCentral.

Bitcoin’s price factors are multiple, mainly: 

• Supply
• Demand
• Production cost
• Competition
• Regulation
• Media coverage

Let’s explore these factors to see how they affect Bitcoin’s price:

Supply – The Cornerstone of Bitcoin’s price

The Bitcoin supply is limited. It’s a deflationary currency —the total supply is fixed at 21 million BTC, which will be mined at a specific amount yearly through an algorithm. 

Since miners produce blocks to the Bitcoin blockchain, they receive a reward in BTC. This algorithm cuts those rewards every 210,000 blocks, which are “halving events,” which occur every four years.

A scarce asset is likely to have a higher price. And since Bitcoin’s supply is reduced as we move forward, it helps to potentially increase BTC’s price over time.

How Demand Affects Bitcoin’s Price

Supply and demand go hand in hand. As with any asset, if there’s demand and limited supply, the price is high.

Centralized and regulated systems have high entry barriers and require an intermediary that adds to the expenses of a particular transaction. Bitcoin’s accessibility and transparency have made it an appealing investment asset, not only to retail traders and financial institutions but also to the average citizen and the bankless.

How Production Affects Bitcoin’s Price

One of the most critical factors determining Bitcoin’s price is the production cost, which is divided into two factors: 

1. Cost of equipment and energy consumption: to produce Bitcoins, miners need 1) mining software, which most are free to download, and 2) mining hardware, which can be expensive depending on the mining rig, but the more expensive, the more profitable.
2. The algorithm’s difficulty level: Miners must solve a mathematical puzzle to find an encrypted number. The miner who solves the puzzle wins the newly minted Bitcoins and transaction fees as a reward. Solving the puzzle is challenging since it requires tremendous processing power and energy consumption.

Competitors – Can Alternative Cryptos Affect Bitcoin’s Price?

Bitcoin dominates the mindshare of the crypto industry, but its dominance has been waning over time —38% dominance, as per data from CoinGecko.

This is mainly attributed to the advent of Decentralized Finance, which has reimagined the way people do finance with a more inclusive and lucrative financial ecosystem. We now have thousands of alternatives to Bitcoin, either to compensate for certain limitations with Bitcoin (such as transaction throughput) or to bring something new to the industry. Ethereum, Bitcoin’s main alternative, is the pioneer of the DeFi movement.

Ethereum is a blockchain protocol that allows developers to create decentralized applications (DApps) of all sorts and shapes on its network: GameFi, NFTs, Art, Metaverse, yield-generating protocols, and more. This paved the road for new financial incentives and effectively elevated the blockchain infrastructure to a new level regarding use cases.

Likewise, we have dozens of blockchains that have carved a niche out for themselves, like Solana, Fantom, or Avalanche. New coins and tokens are created daily, yet they don’t offer anything new to the space. Hence, the ones that can potentially take ground from Bitcoin are the top ten currencies by market cap, which can be found on data aggregators such as CoinGecko or Coinmarketcap.

Regulation Plays For and Against Bitcoin’s Price

Bitcoin was born a year after the 2008 crisis, which caused a global recession and exposed banks’ and significant financial institutions’ lack of regulation and transparency. Bitcoin has remained unregulated and will remain that way. However, government regulation plays a crucial role in Bitcoin’s price.

For example, Bitcoin —and the overall crypto market— can benefit from countries allowing crypto companies to operate legally and promoting cryptocurrencies as another investment asset. Or maybe approve a Bitcoin-based exchange-traded fund. Countries like Australia and Canada have already approved BTC and ETH ETFs, allowing keen investors to gain exposure to crypto assets.

However, negative regulation can be, for example, a country like China cracking down on cryptocurrencies and prohibiting citizens from using them. Good or bad, regulation will affect Bitcoin’s price.

Effect of Media Coverage on Bitcoin’s Price

The cryptocurrency market has one of the most significant capitalizations in the world, which is why we must have proper and instant media coverage of the latest movements from the crypto and DeFi worlds. When good news spreads through social media, chances are more investors are more likely to buy BTC, pushing its price up. But, naturally, its price will likely drop if the information is terrible.

The media covers everything related to Bitcoin and other cryptocurrencies and the elements that affect the decentralized market in an unbiased manner. This is important since it will broadly impact investors’ outlook, which is a fundamental pillar affecting cryptocurrency prices. Are prices up, down, or sideways? Is the Bitcoin difficulty rate increasing, or is Cardano finally introducing smart contracts? Whatever it is, investors want and need to know.

Final Thoughts 

As you see, Bitcoin’s price factors are multiple and have their level of complexity. Bitcoin remains a volatile asset, and regulation still doesn’t favor the cryptocurrency industry. Until then, the factors we mentioned will keep affecting Bitcoin’s price.

The post What Factors Decide The Price Of Bitcoin? Demand, Production, & Media appeared first on CoinCentral.

Specifically, it refers to the highest limit of the number of coins for a particular cryptocurrency. For instance, Bitcoin’s supply is “capped” at 21 million. 

So does the same apply to Dogecoin?

In trying to understand or predict Dogecoin price USD, it is essential to know whether it comes with a supply limit. Because that is what impact the long-term value of the coin; however, all cryptocurrencies differ in the ways they function.

Here, let us find out whether Dogecoin is also available in limited supply.

About Dogecoin 

Dogecoin (DOGE) is a peer-to-peer and open-source cryptocurrency created as a joke meme in 2013 by its developers, Jackson Palmer and Billy Markus. Despite its humble beginnings, DOGE has grown very popular and has even been used to support charitable organizations and pay for goods and services. It is a decentralized, highly secure method of storing data as an exchange managed by a network of computers known as nodes.

Dogecoin uses Scrypt, a slimmed-down version of the cryptographic algorithm. Additionally, it is a POW network, which means it can take a load off another Scrypt network. Dogecoin uses less power in its mining than the SHA-256 algorithm in Bitcoin.

Whether Dogecoin has a cap or supply restriction is one question many people have. Every cryptocurrency is different and innovative and is also based on encryption to track transfers and payments, which is why it is known as the “cryptocurrency.” 

How many Dogecoins are in circulation? 

As of March 2023, the total number of Dogecoins in circulation is a whopping 132.7 billion. 

Many investors favor Dogecoin because they think they can use it for micropayments, and availability is abundant.

Does Dogecoin come with a supply limit?

A common question that comes to mind is whether Dogecoins have a limited supply like Bitcoins. 

Well, Dogecoins have no upper cap in terms of their availability, that is.

There is no limit to how much Dogecoin is available as every minute, about 10,000 are mined, which adds up to about 14.4 million DOGE every day, and every year, about 5 billion DOGE is added to the supply. 

It is difficult to predict whether a Dogecoin cap will ever exist. The DOGE team may decide to impose a limit on the production of new coins, but there has not been much talk on this to date.

The crypto community will occasionally opt to change a currency’s protocol. For a cryptocurrency to continue to operate, be relevant, and be secure, its software must be updated regularly. Moreover, since there is no limited estimation of Dogecoin availability, the creators of Dogecoin did not take their creation seriously. After that, considering how inexpensive transactions are, some have considered it a feasible payment option.

Three reasons Dogecoins have no cap

Knowing crypto properly would be challenging, as so many things affect its value. Not just that it is also complex to understand because some currencies have caps and some do not, and if there is no cap on Dogecoin, then the reason behind that are:

• Cheap Transaction

The main purpose of Dogecoin is to make it inflationary, which means the availability of this coin will grow over time. A larger supply of Dogecoin will keep transactions affordable. The inventors’ original goal is matched by these inexpensive transactions, which decrease the cryptocurrency’s entrance barrier and make it more accessible.

You’re less inclined to utilize Bitcoin for immediate purchases if you believe it will be worth twice as much in a year. However, a currency like DOGE with an unlimited supply is more likely to be used. Since they are aware that its value will decrease with time, people are more likely to use it now while it still has some value rather than keeping it for the long term.

• Easily allow new users in the market

If you are a Dogecoin investor, it will always be available for you because this currency is created and circulated continuously. It means if someone loses millions of DOGE, then its effect will be negligible in the long term.

Furthermore, since there is no resource limit, missing coins have little impact on the cryptocurrency’s value. On the other hand, anytime BTC gets misplaced due to it becoming unrecoverable in a wallet, its circulating resource decreases even more.

• Longevity 

Bitcoin has a limit, which means there is nothing more to mine, and that is why the transaction fees paid to miners are in blocks, which is the monetary incentive that ensures the security network. Dogecoin miners will continue to receive DOGE in exchange for discovering new blocks and supporting network security.

How many Dogecoins can you mine in a day?

Each time a new block of transactions is added to the Dogecoin network, about 10,000 DOGE coins are created. That equates to a daily addition of 14.4 million DOGE, or 5.26 billion annually. There is no limit or cap to the availability of Dogecoin, which is why there is no upward limit on Dogecoin creation.

What are the primary uses of Dogecoin?

The Dogecoin cryptocurrency was created for cash transactions and was not intended for storage. It may have something to do with the unending supply, but it is only accepted in a few places, so it is a bit hard to determine. 

Some investors may put their money into Dogecoin for a short period, but its future remains uncertain. The coin has grown in popularity in the past couple of years, thanks to crypto moves. You should still know that investing in it is speculative, so you should only trade it briefly.

Final Words

The fact that Dogecoins will always be available due to no upper limit is often considered a drawback; it can lead to lesser demand. However, developers may change the protocols of this coin, possibly bringing in significant changes in the future.

The post Is Dogecoin Available In Limited Supply? appeared first on CoinCentral.

Copy trading, a technique that relies on the knowledge of experienced traders, has become a popular feature among both novice investors and the more experience traders who prefer to “set and forget” their trading strategy. 

But, copy trading comes with tradeoffs– mainly control, liquidity, and entrusting your holdings to a third-party custodial solution. 

What’s the upside? Is it worth the risk? Is copy trading likely to make you a larger profit than if you were to stick it out on your own?

The following copy trading guide will explore all of these questions.

Let’s start by discussing what cryptocurrency copy trading is. Just remember that the following information is not investment advice and that ultimately, most copy traders only tend to perform as well as the market does. 

What Is Cryptocurrency Copy Trading?

Cryptocurrency copy trading is the simple concept of copying another trader’s buys and sells. By monitoring the activity of a certain trader (or traders), a copy trader will then make similar transactions. 

While this system is much cheaper than hiring the services of a professional who can recommend and advise on what trades to make, you’re also essentially entrusting an unregistered individual’s trading decisions. It may be a suitable option for anyone new to the market who does not have the time to conduct thorough project research and analysis, but again, there are tradeoffs. 

Even some experienced traders may opt for the copy trading system when they are short on time. For some, this trading style can be very lucrative without having to study the market constantly. 

How Does Cryptocurrency Copy Trading Work?

As copy trading essentially duplicates another trader’s trades, the concept of how it works is relatively straightforward. However, the mechanics can vary depending on the platforms and individual strategies employed.

We can break down the copy trading system into 3 main steps:

Find a Suitable Platform

Many cryptocurrency exchange platforms offer automated trading functionality, which may be ideal for new traders who lack the relevant experience and confidence to make manual trades. There may also be the option to use a semi-automated approach, giving you the best of both features.

For fully automated trading, crypto trading bots can be an essential tool if you are to be successful.

If you decide to take a more hands-on approach, you may consider a specialized copy trading platform. These platforms will provide trading signals and supply an array of data to help you make informed decisions. For a fee, you will also have access to information provided by expert traders, sharing their decision-making and trade strategies. 

What Are Crypto Trading Bots?

A crypto trading bot is an automated tool within a trading platform that can make trades on an investor’s behalf. A trading bot will make a trade when certain conditions defined by the investor are met. By using smart algorithms, a trading bot will also consider current prices, volatility, and market conditions to protect the investment. 

Choose Traders To Copy

The second step is choosing what traders you plan on copying. Therefore, it is important to establish your key objectives to help decide which traders meet your criteria. You may even wish to select several traders with different trading strategies for diversification‌.

We will discuss choosing a trader in more detail later in the article. 

Set a Budget

Finally, you should decide how much money you are willing to invest in cryptocurrencies. 

As previously mentioned, copying numerous traders and then splitting your investment across each of them is a sensible strategy. As in any form of trading, diversification can help protect your initial investment. This way, you can also determine which traders deliver higher profits and which pose more risk. You can then adjust your budgets accordingly.

You should also ensure you conduct enough research when selecting a crypto wallet. When choosing between crypto wallets, consider factors such as the purchase cost and whether the wallet has its own exchange.

Is Now a Good Time To Invest in Cryptocurrencies?

The crash in Bitcoin in June 2022 was well reported, with Bitcoin dropping to its lowest position since December 2020. It followed a similar price crash just one month before. 

This has left some traders contemplating major moves in an attempt to ‘buy the dip’ – the method of buying cryptocurrency after a significant drop to make a profit when the market rises again. But this is not necessarily a failsafe strategy, as crypto markets remain constantly volatile, with risk and reward available regardless of whether the market is moving up or down. The expectation is that the markets will rebound to previous levels, but this is not a foregone conclusion. 

If you’re more of a long-term trader, it’s recommended not to be swayed by significant market movements and to continue to follow your own trading strategy, ignoring major events that could result in knee-jerk decisions.

Choosing a Crypto Trader To Copy

Choosing the wrong trader or traders to copy will make your investments quickly evaporate, so it is essential to conduct thorough research and develop a strategy that suits your budget and goals. 

When choosing a trader, we recommend using the following criteria:

• Is the trader experienced? Using your chosen trading platform, you can assess a trader’s profile to check their record regarding the funds they manage, return on investment, profits, losses, and risk level. Using this information, you can identify consistently successful traders. 
• How is the trader’s portfolio structured? Is it diversified? Does the trader have a long-term strategy?
• Are they active on social media and across trading platforms? Communication is key if you are to find the right trader to copy, as it is important to understand the reasoning behind any trade you make. 
• Equally, the number of followers a trader has is a sign of their success rate. The more profitable a trader is, the more followers they are likely to have.

Is Cryptocurrency Copy Trading Risky?

Copy trading is typically be no more or no less risky than any other form of cryptocurrency trading. Even the best traders will lose money in down markets. Furthermore, it can be difficult to differentiate between a trader who is great at what he does from someone who may be going through somewhat of a lucky spell. 

It is also worth noting that copy trading is usually not free; traders require a fee if they are to allow you access to this valuable information. As such, you may end up paying for losing information if you pick the wrong trader.

Final Thoughts: Crypto Copy Trading – The Pros and Cons

We will conclude this article with a brief list of pros and cons to help summarize the benefits of copy trading and the overall risks involved.

Pros

• Copy trading is great for beginners, and by following expert traders and copying what they do, you can slowly begin to understand and analyze the market effectively. 
• A fully automated solution requires very little input, and crypto trading bots can do the work for you, helping you earn an income with little effort. 
• There is no pressure to continue copying a trader. If one doesn’t work out, you can move on to someone else. 

Cons

• Copy trading always presents an element of risk, just like any other form of cryptocurrency trading.
• The initial research in finding suitable traders to fit your strategy can be time-consuming.
• It is sometimes hard to identify a successful trader as opposed to one experiencing short-term success.

The post Is Cryptocurrency Copy Trading Worth the Risk? appeared first on CoinCentral.

Today, digital assets can comprise a substantial portion of an investor’s portfolio, and their volatility makes them ideal candidates for futures products.

The crypto futures market is a commonly traded derivative, and it also incorporates many well-established derivatives. The general public confuses futures with options, but they are completely different instruments with distinct advantages and disadvantages.

Futures are financial contracts that obligate an investor to buy or sell an asset at a predetermined price and future date; the buyer of a futures contract must buy or sell the underlying asset at the set price, regardless of what that market price is at the expiration date. 

An option is similar in that it’s a derivative product, but the buyer of the option isn’t obligated to exercise it in the future. 

The following guide explores some of the nuances of crypto futures. 

What are Crypto Futures?

Traders can access cryptocurrencies without purchasing the underlying assets by trading USDT-margined futures. A similar concept is a commodity index or derivative contract, in which an investor assumes a risk associated with the future value of a commodity. 

Consequently, a crypto futures contract represents a certain amount of bitcoin or ether. Upon a crypto futures contract expiration, the trade is settled in cash rather than the underlying digital asset. 

Crypto futures are typically very risky investment instruments, but savvy traders can use futures to hedge risk and protect themselves from adverse market conditions. The volatility of digital assets presents unique challenges.

For instance, take the idea of short selling a futures contract– essentially entering a contract where one “sells” the underlying asset and then has the option to “buy” it back, ideally at a lower price in the future, making a profit on the difference. 

In this example, one could buy the underlying asset, let’s say BTC, as well as crypto futures contract to “short” BTC. If the BTC price rises, the trader profits on the appreciation of the asset, but loses some money on the options contract

When one “short sells” a futures contract, they are buying a contract to sell at (ideally) a lower price in the future– no borrowing of money or purchasing the underlying asset is necessary. 

This mechanism enables holders of crypto futures contracts to profit regardless of whether the underlying asset’s price rises or falls.

It is also worth noting that cryptocurrency futures do not involve actual cryptocurrency ownership but rather a risk-based investment based on price movements. Investors can also lose money on the purchase price of the contract, and rather than simply taking a percentage loss on the underlying asset’s price (let’s say BTC falls 10%), they could take a 100% loss on the crypto futures contract if it doesn’t pan out as planned. Crypto futures stand out to investors because most marketplaces offer the use of leverage, which magnifies their opportunity for gain or loss. 

This is why it’s critical traders should understand the fundamentals of crypto futures before investing due to the high volatility associated with derivatives trading.

Crypto Futures: How Do They Work?

There are several exchanges and providers that offer futures and options trading; Binance Futures, for example, offers 24-hour trading of cryptocurrency futures. 

Final Thoughts: The Basics of Crypto Futures

Crypto derivatives are complicated, and novices and experts alike can lose large sums of money in a short time window. 

This article should help you understand the basics of crypto futures, but it is not meant to be a “fast-track” on how to actually use them. A deeper understanding of crypto derivatives begins with familiarizing oneself with their fundamental concepts. 

The post A Quick Guide on Crypto Futures: What You Should Know appeared first on CoinCentral.