How to trade Bitcoin in Rwanda

How to Trade Bitcoin in Rwanda- Overview

Learn about the factors that influence the price of Bitcoin

The typical factors influencing currencies, such as monetary policy instruments, inflation rates, and economic growth, do not apply to Bitcoin.

Central banks do not issue or control Bitcoin, nor is Bitcoin backed by a government. Therefore, such factors do not affect Bitcoin.

However, the following variables affect the price of Bitcoin since it functions more like a commodity being used to hold value:

• Bitcoin’s availability and the market’s demand
• The price of creating a Bitcoin via the mining method
• The number of cryptocurrencies in competition
• Regulations restricting its usage and sale
• News and media

Price and Demand of Bitcoin

The availability of an asset is a crucial factor in deciding its price. A rare item is more likely to command a high price, while a productive asset will command a low price.

Bitcoin’s supply is usually well-known, as a maximum of 21 million coins will be issued, and a fixed quantity made yearly. However, its system restricts the creation of new Bitcoin to a predetermined pace, which is supposed to decrease with time.

Consequently, Bitcoin’s future supply is diminishing, which increases demand. Bitcoin’s supply is comparable to a drop in corn supply if harvests were lowered every four years until there was no more corn to harvest. It was officially announced that this would occur, and corn prices would soar.

Bitcoin has drawn the interest of individual and institutional investors, with a spike in demand spurred by media coverage and “experts” and company owners praising Bitcoin’s current and future worth.

Bitcoin has also gained popularity in Venezuela and other nations with high inflation and depreciated currencies. Furthermore, it is popular among individuals who use it to move substantial quantities of money for illegitimate and unlawful purposes.

This popularity indicates that a combination of a decrease in future supply and an increase in demand has fuelled a price increase in Bitcoin.

However, its price continues to vary between times of boom and collapse. For instance, the 2017 Bitcoin price gain was followed by a protracted slump, then two rapid spiRWF and decreases until 2021.

The Production Costs

Like other commodities, production costs play a crucial role in determining the price of Bitcoin. Research suggests that the price of Bitcoin in cryptocurrency marketplaces strongly correlates with its marginal production cost.

The production cost of Bitcoin is equal to the total of two components: the direct fixed expenses for the infrastructure and power needed to mine the cryptocurrency and an indirect cost linked to the difficulty level of its algorithm.

Bitcoin mining consists of a group of computers (called “miners”) that compete to be the first to crack a secret number. The winner receives a portion of the newly created Bitcoin and the transaction fees accrued since the previous block was discovered.

Competing Crypto Assets

While Bitcoin is the most well-known cryptocurrency, hundreds of others compete for investment cash. As of 2024, Bitcoin leads cryptocurrency market transactions. However, its hegemony has diminished over time.

In 2017, Bitcoin accounted for over 80% of the market capitalization of all digital currency marketplaces. However, by 2024, this percentage had dropped below 50%. This drop was mostly due to greater knowledge and capabilities of alternative currencies.

As an illustration, Ethereum has emerged as a formidable rival to Bitcoin due to the proliferation of decentralized finance (DeFi).

Popularity has exploded for the many other cryptocurrencies that are constantly being launched. Tether, BNB, USD Coin, and Solana are a few more currencies that compete with Bitcoin for market share.

Regulations

Bitcoin was introduced in the wake of a monetary crisis prompted by the relaxation of derivatives market restrictions. Subsequently, Bitcoin is unregulated, and its borderless and regulation-free environment has earned a reputation.

The absence of regulatory status for Bitcoin has both advantages and disadvantages. Due to the lack of oversight, it is unrestricted for usage across borders. In addition, it is not subject to the same rules as other currencies.

Despite this, governments and other interested parties continue to advocate for cryptocurrency regulation.

Media and News

The media and news coverage influence the price of Bitcoin positively and negatively, keeping investors and interested parties informed. Furthermore, any modifications to the elements we have mentioned are promptly reported and communicated to the populace.

Consequently, positive news for cryptocurrency investors tends to increase Bitcoin’s price, while negative news tends to decrease it.

The mix of supply, demand, manufacturing costs, competition, regulatory changes, and subsequent media coverage impacts investor sentiment, one of the most significant elements influencing the price of cryptocurrencies.

Choose your strategy to trade Bitcoin

HODLing Bitcoin

The “HODL” Bitcoin strategy involves getting and keeping Bitcoin. Unfortunately, its name was a misspelling that appeared on a well-known Bitcoin website, and it has now come to symbolize “hold on for dear life.”

But do not take that phrase at its value; only acquire and maintain Bitcoin if you are positive about its long-term valuation.

Depending on your research and trading plan, you should terminate your positions to lock in a profit or reduce losses. Alternatively, you might employ stop losses to cancel your holdings automatically.

Trend Trading Bitcoin

Rwandans who trade trends must choose a position that is consistent with the current trend. When the market displays bullish patterns, it is customary to “go long,” and when negative trends are more prominent, to “go short.”

Consider selling your present position and purchasing into the new trend if the current trend abruptly reverses.

Hedging Bitcoin

By starting a position opposite their present one, Rwandans could quickly lower their Bitcoin risk. However, you would undoubtedly act this way if you believed the market would swing against you.

If you own some Bitcoin and are concerned that its value will soon decline, you could utilize CFDs to open a short position on the cryptocurrency.

Any gains from your short position may be used to offset any losses partly or entirely you suffer on your own coins if the market value of Bitcoin declines.

Day Trading Bitcoin

When trading Bitcoin day-to-day, you open a position and close it inside the same trading day, minimizing exposure to the market overnight.

Doing so might protect your position from accruing overnight financing expenses. However, if your objective is to profit from the daily swings in the price of Bitcoin, this approach could be the best choice.

Choose how you would like exposure to Bitcoin

Trade Bitcoin Derivatives

Trading Bitcoin derivatives with dependable CFD brokers like AvaTrade, Exness, HFM, and many more give Rwandans an effortless way to speculate on the price of Bitcoin without possessing any of the cryptocurrency themselves.

Subsequently, Rwandans are not trading the underlying asset. Therefore, they can “go long” if the Bitcoin price increases or “go short” if the price decreases.

Crypto Indexes

You could acquire exposure to 10 other major cryptocurrencies by trading the Crypto 10 Index, buying Bitcoin from an exchange, or exchanging it for other currencies.

This index is used to place wagers on the future value of certain digital assets.

Crypto Exchanges

People who use a Bitcoin strategy of “buy and hold” are the ones who are most likely to acquire Bitcoin via an exchange.

Rwandans do this because purchasing Bitcoin through an exchange gives the buyer legal title to the cryptocurrency, which can then be kept and traded to make a profit.

Decide on the position you want to take on Bitcoin

Rwandans can either go long or short on a position when they trade Bitcoin. Going “long” refers to buying BTC hoping its price will appreciate. In contrast, going “short” means you sell, expecting the price to decrease.

Learn how to place trades and read charts

Before you begin trading, you must confirm that trading cryptocurrencies are suitable for your present circumstances and that you have a thorough grasp of the risks involved.

In addition, you should grasp technical diagrams and comprehend how different order types function when used by Rwandans.

You might choose from various stop-loss and take-profit levels while trading cryptocurrencies on a platform or with a broker.

Open a Trade and Monitor its Progress

The basic tenets of Bitcoin trading are as follows: buy if you think the price of Bitcoin will rise and sell if you think it will fall. Of course, now that the transaction is done, you must watch the market closely to ensure it continues to perform as you expected.

Technical indicators made available on the trading interface of your exchange or broker should help you anticipate changes in Bitcoin’s price. Using indicators is an innovative idea if you want to keep an eye on things like market volatility or sentiment.

Close your position at the right time

You could close your transaction whenever you want to lock in a profit or cut a loss that has grown to an uncomfortable level.

If you incur losses, your total balance will fall directly. However, you will see your profits in your trading account immediately, so you may cash out or reinvest as you see fit for your trading style.