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How to increase profit with Ethereum CFD?

Ethereum CFD allows you to leverage profits based on the Ethereum price by a factor of 30, for example. This means that a “normal” price

Der Beitrag How to increase profit with Ethereum CFD? erschien zuerst auf ETHBLOG.

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Ethereum CFD allows you to leverage profits based on the Ethereum price by a factor of 30, for example. This means that a “normal” price gain of, for example, 1,000 EUR can be leveraged to a profit of 30,000 EUR without additional capital investment. You don’t think that’s possible? Then read on and find out how it works.

Anyone who has looked at Ethereum has seen the astonishing rate growth of this cryptocurrency over the past few months. At the beginning of the year 2017, the value of an ETH (it is the Ethereum unit called Ether) was still 6 EUR. By the end of 2017 it was around 580 EUR. A growth rate of 9700% (!). Whether this growth can be achieved again in such a short time remains to be seen. Ethereum will probably continue to grow in the long term, but such a growth in such a short time is rather unique and will probably not happen as soon.

Increased profits with Ethereum CFD

In our search for opportunities to achieve this growth in other ways, we looked at CFD (Contract for Difference) as well as at ICOs (Initial Coin Offerings). For some time now, Ethereum CFD have been able to be traded without a margin requirement, which allows for high leverage of profits at calculable risk. For example, from the mid of June 2017 until year end, the Ethereum share price has risen by 80%. Those who invested EUR 1,000 directly in ETH at the mid of June received a bonus of EUR 800. If you had instead opted for an Ethereum CFD, the additional CFD lever of 30 would have made it possible to earn an incredible 24,000 EUR (in both cases, for simplicity’s sake, it would have cost nothing).

A league similar to the ETH growth rate at the beginning of 2017 and competitive to many of the current ICOs. Reason enough that we will take a closer look at Ethereum CFD in the following, and look at their functionality, advantages and disadvantages.

Everything you need to know about CFD at a glance

For those in a hurry, below is a summary of all the key points on CFDs discussed in more detail in this article:

  • CFD is an agreement on the price development of an asset
  • This asset is referred to as an underlying
  • Such an underlying can be e.g. a stock, oil or Ethereum
  • CFDs can be traded, even if crypto exchanges are not available
  • No wallet required for CFDs
  • CFDs have a lever that can significantly increase the profit margin
  • A CFD lever can also increase the loss in the same way.
  • Trading in CFDs is regulated
  • Since the beginning of 2017, the BaFin in Germany has limited the possible loss to a maximum of your deposit amount
  • One of the best-known providers for trading Ethereum CFD is Plus500². There is no obligation to make additional funding and a 30-times leverage is offered.
²Affiliate link. 80.5 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Plus500UK Ltd authorized & regulated by the FCA (#509909). CFDs are complex instruments and are associated with the high risk of losing money quickly due to the leverage effect. Between 74 % and 89 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

At the beginning, another important hint: Just as with the cryptocurrencies themselves, CFDs are subject to high price fluctuations (volatility). In other words, you should only invest the money that you are prepared to lose in the worst case. Furthermore, this contribution does not constitute investment advice. It is only intended to show the mechanisms that are possible to increase a potential Ethereum price gain by a multiple (also called “leverage”). Ideally, you can become rich even faster than with the already high growth in value at Ethereum, but it is also possible to lose all invested money just as quickly. Therefore, wise and well-informed action is very important for both Ethereum and Ethereum CFD.

What is CFD?

CFD stands for Contract of Difference, i. e. an agreement between two parties on the performance of an asset. This means that a contract is concluded between two parties, a CFD provider and a CFD customer. It stipulates what happens if the market value of a certain asset either increases or decreases. The asset is often referred to as an underlying or basis asset. For example, shares or commodities such as gold or oil can be used as underlying. More and more often, cryptocurrencies such as Ethereum and Bitcoins are being offered as underlying assets.

Assuming that you want to use CFDs to profit from an increase in the price of Ethereum: You would select those CFDs that have Ethereum as their underlying (other words: tied to the Ethereum price). If Ethereum’s share price actually rises from the set point in time, then – to put it simply – the Ethereum CFD customer receives the value by which Ethereum has risen since the purchase of the CFD and additionally receives a substantial markup, the so-called lever on top.

Profit vs. loss

The following graphic illustrates this. Similar to stocks or cryptocurrencies, CFDs are bought at a certain point in time. If you then decide to sell the CFDs in the future within a profit phase, the difference between the purchase price and the selling price is the profit of the underlying asset. This is similar to selling stocks or cryptocurrencies that have risen in value since they were bought.

Revenue potential

However, if you wanted to profit from rising prices when buying the CFD and the price of the underlying asset falls, you as the CFD customer remain seated on the difference since the CFD was purchased. Similar to stocks or crypto currencies that are sold at a loss. See graphic below.

Loss potential

Unlike stocks or crypto currencies, the profit or loss margin can be many times higher. The reason for this is the so-called leverage. It will be explained in more detail in the further course of this article and which is actually an important instrument for trading CFDs.

Short vs. long

The case in the previous example of profiting from a rising price trend is called “going long” for CFDs. If the price has risen since the CFD was bought, you are in the profit zone. But if it falls below the purchase value, you are in the loss zone.

Long Position

Unlike stocks or crypto currencies, CFDs have the possibility of profiting from falling prices and earning a lot from them. This means that you earn money if the underlying asset has lost value since the CFDs were purchased. If you want to profit from a falling price performance of the underlying asset for CFDs, this is called “going short”.

Short Position

Unless otherwise stated, for the sake of simplicity we will always assume “long” in the rest of this article. So we want to profit from rising prices in order to make it easier for the beginning.

Leverage and margin

Up to now, this ominous lever of CFDs has been mentioned frequently, increasing the profit of CFDs many times. But how does it actually work? To explain the mechanism of the lever, I have to extend a bit further and start with the so-called margin.

What’s the margin?

Imagine, the value for 1 ETH is currently 250 EUR at a crypto exchange. If you want to buy 1 ETH, you would have to pay 250 EUR for it. Sure thing. Now it becomes interesting: If you buy an Ethereum CFD instead, you don’t have to pay 250 EUR to get the equivalent of 1 ETH. Instead, only a fraction of this is required. For example, only 3.33% of the underlying is needed at Plus500² in order to be able to trade 1 ETH as a CFD. That means, you only have to deposit 8,33 EUR to trade the value of 1 ETH (250 EUR). That fraction, which you have to pay for an unit of an underlying asset is usually given in percent and is called margin.

What’s the leverage?

Assuming that you would have 1,000 EUR to invest in ETH. At a rate of 250 EUR per ETH you would receive exactly 4 Ethers. If you would instead invest this 1,000 EUR in Ethereum CFDs instead, you would receive CFDs worth 120 Ethers (1,000 EUR / 8.33 EUR per CFD). This would be equivalent to 30,000 EUR! In other words, you would receive the equivalent of Ethers worth 30,000 EUR for 1,000 EUR. You would have a 30x leverage, because for 250 EUR you don’t get the equivalent of 1 ETH but of 30 ETH (250 EUR / 8,33 EUR). Leverage and margin therefore belong together and are always dependent on the price of the underlying asset and the CFD provider.

Effect of leverage

Further assuming that the exchange rate of 1 ETH will now rise by 50 EUR to 300 EUR. Then you would have made a profit of 200 EUR (4 ETH x 50 EUR) on the classic purchase. But if you had bought Ethereum CFDs instead, this would have been a profit of 6,000 EUR (120 ETH x 50 EUR), thanks to the lever.

Unfortunately, there is always shadow where there is light. In the case of the CFD lever in long mode, the shadow is that the lever also makes itself noticeable when there are price losses. In this case in the opposite direction, namely into the loss zone.

Let’s assume again that the price of 1 ETH falls by 50 EUR to 200 EUR. Then you would have made a loss of 200 EUR (4 ETH x 50 EUR) on the classic purchase of 4 ETH. But if you had bought an Ethereum CFD instead, this would be a loss of 6,000 EUR (120 ETH x 50 EUR). This is significantly higher than your original deposit of 1,000 EUR.

Check conditions of CFD provider to clarify limitation of loss

Until recently, it was quite possible to lose more than you had originally deposited. Until the beginning of 2017, there was a so-called obligation to make additional payments. This means that after you have only deposited 1,000 EUR into the CFD, another 5,000 EUR would have been charged. That’s because the total loss would have been 6,000 EUR. The CFD provider was allowed to claim the 5,000 EUR from you as an additional payment.

However, this practice was banned by the BaFin at least in Germany at the beginning of 2017. Additionally, many CFD providers from abroad also do not charge you more than your initial deposit. Take a look into their conditions before you start. That is, you are just standing straight up to the maximum amount of money you started with. In our example, this is only up to a maximum of 1,000 EUR. This limitation is likely to make CFDs significantly more attractive in the future, as the risk is much more predictable. With CFD providers from abroad, however, it is important to ensure that they explicitly waive the obligation to make additional contributions.

Conclusion

With a CFD lever, you have the opportunity to trade huge value for the underlying asset with only a fraction of the capital, so that you can participate in the profits as much as you can lose them.

If you have gotten a taste for Ethereum CFD and would like to try them, I can recommend the provider Plus500². Our blog receives a commission if you trade here, so you can support us this way if you want.

So if you have some money left over, you should consider investing in Ethereum CFD as well as Ethereum. It is much more transparent to leverage your Ethereum profit with CFDs than with ICOs, for example.

» Buy Ethereum now at Plus500²

²Affiliate link. 80.5 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Plus500UK Ltd authorized & regulated by the FCA (#509909). CFDs are complex instruments and are associated with the high risk of losing money quickly due to the leverage effect. Between 74 % and 89 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

At this stage, again the important hint: Just as with the cryptocurrencies themselves, CFDs are subject to high price fluctuations (volatility). In other words, you should only invest the money that you are prepared to lose in the worst case. Furthermore, this contribution does not constitute investment advice. It is only intended to show the mechanisms that are possible to increase a possible Ethereum price profit many times over (also called “leverage”). Ideally, you can thus become rich even faster than with the already high growth in value at Ethereum. However, it is also possible to lose all invested money just as quickly. Therefore, wise and well-informed action is very important for both Ethereum and CFDs.

May large profits be with you 😉

¹Affiliate link
Note: The content on ethblog.de is for information purposes only and does not constitute investment advice or any other recommendation within the meaning of the Securities Trading Act.

²Affiliate link. 80.5 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Plus500UK Ltd authorized & regulated by the FCA (#509909). CFDs are complex instruments and are associated with the high risk of losing money quickly due to the leverage effect. Between 74 % and 89 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Der Beitrag How to increase profit with Ethereum CFD? erschien zuerst auf ETHBLOG.

Source: https://ethblog.de/en/how-to-increase-profit-with-ethereum-cfd/

Blockchain

Bitcoin Price Could Triple Even After a Modest Switch From Gold, JP Morgan Says

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Despite having a complicated past, it seems that JP Morgan’s love for Bitcoin is growing every day thanks to its potential as an investment and store of value.

In a recent report, the American bank shared with its investors an analysis of Bitcoin’s current situation and possible future scenarios regarding prices and fundamental value. The bank explained that under the current conditions, Bitcoin has a good chance of increasing its price.

JP Morgan Believes Bitcoin Could be an Alternative to Gold

JP Morgan believes that investors could switch from gold to bitcoin as a way to diversify their portfolio and having another uncorrelated storage of value. This is especially important for those who don’t want to depend exclusively on gold when it comes to diversify their risk exposure:

“Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price.

The report also adds that adoption is key to increasing Bitcoin’s perceived utility, and therefore, its price. They explain that it is necessary to observe a more significant number of “economic agents” accepting cryptocurrencies as a means of payment in order to talk about a historical price appreciation scenario.

This is not far from reality. In fact, bitcoin is increasing acceptance by large economic agents (which seems to prove JP Morgan’s thesis). The recent rise in prices from $10,500 to the current $13,110 began after the payment processor Square announced a $50 million investment in Bitcoin.

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PayPal’s announcement to support the purchase and sale of cryptocurrency -BTC, ETH, BCH, and LTC for now- also further catalyzed the crypto markets’ bullish sentiment.

A Generational Thing

JP Morgan also assures that Bitcoin’s acceptance within the global financial culture goes through a cultural or generational context. As boomers leave the market and millennials take a more prominent position, Bitcoin and other digital tokens become more relevant in the investment world.

“The potential long-term upside for bitcoin is considerable as it competes more intensely with gold as an ‘alternative’ currency we believe, given that Millenials would become over time a more important component of investors’ universe.”

However, this assertion must be taken with a pinch of salt since studies reveal that Gen Z -the Millenials’ offspring- are not as enthusiastic about the use of crypto, opting for alternatives involving the digitalization of fiat money.

Jp Morgan believes Bitcoin could be largely adopted, but GenZers think otherwise
Gen Zers are not really into Bitcoin. Image: Business Insider

JP Morgan’s statements show the bank’s ability to adapt to new market trends, which is also characteristic of PayPal. Just two years ago, the bank’s CEO said Bitcoin was “worse than tulip bulbs” while PayPal’s CEO referred to Bitcoin in the same way:

“Bitcoin is the greatest scam in history. It’s a colossal pump-and-dump scheme, the likes of which the world has never seen.

Bitcoin is having a good time, with many models anticipating potential upward behavior over the next few months. The most controversial and discussed one, the stock-to-flow model, predicts that Bitcoin could reach $1 million by around 2026.

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Source: https://cryptopotato.com/bitcoin-could-double-triple-price-gold-market-jp-morgan/

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Blockchain

Bitcoin Just Marked New 2020 High, But This Indicator Signals Correction Incoming (BTC Price Analysis)

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Starting by looking at the bigger picture, Bitcoin price had made a remarkable run since October began, gaining almost $3000 to its value.

Looking at the following long-term weekly chart, we can see this week’s greenish candle that will be closed later today. From a technical point of view, as long as the candle close price is above the $12,500 area (previous high) – we can safely say that BTC is on a healthy uptrend.

btc_oct25_w-min
BTC/USD weekly. Chart by TradingView

The Good and The Bad: New 2020 High but Bearish Divergence

Just a few hours ago, Bitcoin price recorded a new 2020 high close to $13,400 (on Binance Futures); however, the primary cryptocurrency could not hold there, and quickly slumped to $12,700 in a matter of one hour.

Looking at the shorter-term chart, the 4-hour, we can identify a bearish divergence on the RSI. This is a bearish pattern and might indicate that the buying power is fading away.

This happens when the price goes through a higher-high, but the RSI indicator is doing the opposite and going through a lower-high.

Another worrying sign is the trading volume. Since its peak volume on October 20-21, four days ago, the trading volume decreased even though the BTC price had actually gone up.

BTC Support and Resistance Levels To Watch

As mentioned above, if BTC were to correct, then the first major level of support lies at the current levels around $12.9 – $13K. If Bitcoin breaks here, then the first significant level lies at $12,700, followed by the previous 2020 high from August at $12,400 – $12,500.

From the bullish side, if Bitcoin holds the $13,000 – then the first levels of resistance lie at $13,200, followed by today’s high around $13,400. Bitcoin will be looking to break the 2019 high from June – at around $13,880.

Total Market Cap: $400 billion

Bitcoin Market Cap: $240 billion

BTC Dominance Index: 60%

*Data by CoinGecko

BTC/USD BitStamp 4-Hour Chart

btc_oct25_4h-min

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/bitcoin-just-marked-new-2020-high-but-this-indicator-signals-correction-incoming-btc-price-analysis/

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Bitcoin Breaks New 2020 High As Total Market Cap Topped $400 Billion (Market Watch)

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Bitcoin continues with the 2020 records and just a few hours ago marked a fresh high of above $13,350. Most alternative coins followed suit with impressive increases, but the market has calmed since then. The entire cryptocurrency market clocked at above $400 billion.

Bitcoin To Yet Another 2020 High

CryptoPotato reported a few days ago that the primary cryptocurrency exceeded the August 2020 high of about $12,500 and reached $13,200. What followed was a slight retracement to about $13,000 and stagnation yesterday.

Nevertheless, the volatility returned in the past 24 hours, and BTC headed towards new highs. This time, Bitcoin broke above $13,350. In fact, according to data from Bitstamp, BTC’s new 2020 high is at $13,362.

Another sharp rejection followed, and the asset tanked briefly below $13,000. Nevertheless, the bulls have since driven it above the coveted mark, and BTC trades at about $12,940.

A compelling chart recently revealed that Bitcoin is forming an inverse head and shoulders pattern. If it’s to play out, the cryptocurrency could soon skyrocket even further and top its all-time high of $20,000.

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If this scenario is indeed to materialize, Bitcoin would have to break above the resistance lines at $13,420, $13,500, $13,815, and $14,000 before reaching new records.

btcusd_chart
BTC/USD. Source: TradingView

Altcoins Follow Up And Calm Down

Most alternative coins experienced similarly increased volatility as Bitcoin. Ethereum surged to a new 7-week high of nearly $420. However, ETH quickly retraced and is now hovering around $409 again.

Ripple’s highest level came at about $0,26, but XRP has since decreased to below $0.253.

Thus, on a 24-hour scale, most larger-cap altcoins have remained essentially at the same positions as yesterday, despite the brief price jumps. Chainlink and Litecoin have registered the most gains of about 3.6%. LINK trades close to $12.35, and LTC is positioned at $56.3.

heatmap
Cryptocurrency Market Heatmap. Source: Quantify Crypto

The most impressive gainer since yesterday is Filecoin. After the recent controversy and continuous price slump, FIL has surged by 45% in the past 24 hours.

Ocean Protocol (18%), Quant (17.5%), THETA (10.2%), Reserve Rights (10.2%), and Ampleforth (10%) have also increased by double-digit percentages.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/bitcoin-breaks-new-2020-high-as-total-market-cap-tops-400-billion-market-watch/

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