Understanding Financial Liquidity

Do you know how much easily accessible money you have in the form of cash and equivalents? This is a measure of your liquidity. As you'll see, this concept plays a role in your financial and investing lives and those of the companies you buy and sell.

The Best Bitcoin Exchanges

When it comes to finding the best bitcoin exchange things are not all that easy. Why is this so? Simply because many of the best sites to buy bitcoin are rather recently online. This means that they have had little to get the word out about their services and products. Most people coming to this page will be asking how to buy bitcoin online through a secure means. Well, here is a good starting point. Let's see how.

First thing to consider when looking for the top bitcoin exchange is how safe are the website and server. This boils down to asking: is it a trustworthy exchange providing transparent data of coins in cold storage (more on this later) and are customers happy? It's also good to lookout for which currency pairs are available: are you looking to trade bitcoin for USD, Euros, or other fiat currencies. The location usually gives an idea of what's on offer. However, the largest bitcoin sites usually have many options for buying bitcoin with government issued currency and altcoins.

Bitcoin's increased volatility gives you "free leverage"

Higher volatility provides greater variability to make trades around. But to achieve these kinds of profitable price swings with a classic currency pair, you would have to lever your trade up substantially, which costs you interest.

Bitcoin price is highly correlated to demand for bitcoin.

Related to our last point, we found that the price of bitcoin was related to the market demand for bitcoin. So if you expect more people to make bitcoin transactions (whether through trades or purchases), history would indicate that you would profit by buying bitcoin long term. Also, if trading volume is currently low or high versus historical averages, you may profit by taking the corresponding long or short trade. The maturing Bitcoin ecosystem has brought us a wider selection of bitcoin service providers. There are now many bitcoin exchanges you can choose from, and more flexibility in terms of payment options.

What are the risks of investing in Bitcoin?

Bitcoin is a network of sellers and consumers who interact and conduct market transactions through an online, digital "cryptocurrency." Bitcoins are not issued or backed by any banks or governments, nor are individual bitcoins valuable as a commodity. Indeed, one of the primary reasons for the growth of digital currencies is that they can act as an alternative to national fiat money and traditional commodity currencies like gold.

Insurance Risk: Some investments are insured through the Securities Investor Protection Corporation, like normal bank accounts, which are insured through the Federal Deposit Insurance Corporation up to a certain amount depending on the jurisdiction. Bitcoin exchanges and Bitcoin accounts are not insured by any type of federal or government program.

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