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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 Analysis: BTC Facing The Ultimate Make Or Break Level Of $11,000

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  • Bitcoin price is pivotal between the 50-day SMA and $11,000, suggesting possibilities of consolidation taking over.
  • The impact of an ascending wedge is kept at by the 50-day support, breakdown back to $10,000 is still in the picture.

Bitcoin has spent the last three weeks trying to recover from the dip at the beginning of September. There was a break above $11,000 last week, but BTC hit a wall at $11,200, allowing bears to take back control. Since then, support has been established above $10,700. Unfortunately, resistance at $11,000 has stayed put.

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Meanwhile, the flagship cryptocurrency is trading at $10,960 amid attempts to overcome the resistance at $11,000. BTC/USD is also trading at the tip of an ascending wedge pattern. If the hurdle at $11,000 is pushed into the rearview, there is a likelihood of Bitcoin soaring towards $12,000. However, if the rising wedge’s impact comes into play, BTC could embark on a gains-trimming exercise towards the support at $10,000.

Read more: Bitcoin Trading Volume on Bakkt Peaks Again as September Expiration Approaches

BTC/USD daily chart

BTC/USD price chart
BTC/USD price chart by Tradingview

The 50 Simple Moving Average (SMA) in the daily range is in line to offer initial support at $10,850. As long as Bitcoin holds above this level, the potential for gains above $11,000 will remain high in this week’s trading.

The Relative Strength Index (RSI) hints that the largest cryptocurrency is ready for consolidation by leveling marginally above 50. Moreover, the low trading volume means that BTC is less volatile at the moment. The reckoning level remains at $11,000, where Bitcoin can either kick start the journey to $12,000 or embark on a reversal to $10,000. Either way, it is essential to wait for a confirmed breakout before going all-in on BTC/USD.

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Bitcoin Intraday Key Levels

Spot rate: $10,655

Relative change: 41

Percentage change: 0.39%

Trend: In consolidation (short term)

Volatility: Low

Read more: Bitcoin Price Analysis: BTC Eyes $12,000 If 50-day MA Flips Into Support


To get the daily price analysis, Follow us on TradingView

Author: John Isige




John is a talented writer with over two years of experience actively contributing to the cryptocurrency industry by providing credible, interesting and easy to read the content. His main focus is on cryptocurrency price analysis and industry news coverage. Lets follow him on Twitter at @jjisige

Source: https://coingape.com/bitcoin-price-analysis-btc-facing-the-ultimate-make-or-break-level-of-11000/

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Profit taking Bitcoin miners won’t stop the next bull run: On-chain analyst

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Historical data shows that some miners began to sell Bitcoin (BTC) at the end of July, leading to increased selling pressure in the cryptocurrency market.

Eventually, the dominant cryptocurrency fell steeply from mid-August, recording a 13% fall and since then BTC has struggled to retake the $12K mark.

Bitcoin selling by miners from 2017-2020. Source: CryptoQuant

Bitcoin selling by miners from 2017-2020. Source: CryptoQuant

According to CryptoQuant CEO Ki Young Ju, continued selling by miners might not be enough to prevent a bull run. On-chain data analysis firms closely observe the movements of miners and whales because they hold significant amounts of BTC.

Willy Woo, an on-chain analyst, explained that miners represent one of the two external sources of selling pressure for Bitcoin. He previously said:

“There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.”

When miners start selling their Bitcoin holdings, typically to cover expenses, it could trigger a correction in the cryptocurrency market.

For instance, From Aug. 17 to Sept. 5, the price of Bitcoin dropped from $12,486 to $9,813. During that time, several whales sold Bitcoin right at $12,000 and the same behaviour was observed amongst miners.

The selling pressure coming from miners and whales noticeably has been attributed to the current crypto market slump but in the longer term, Ki explained it is not enough to stop a prolonged bull run.

If miners abruptly sell a significant amount of BTC, it could cause a severe correction as a small price movement could trigger liquidations from heavily-leveraged traders. Hence, even a relatively small sell-off by miners could theoretically cause massive price swings.

Ki says the intensity of the sell-off from miners was not strong enough to halt future bull runs. He said:

“Miner Update: Some miners began selling at the end of July, but I think in the long-run, miners didn’t sell BTC large enough to stop the next bull-run.”

According to ByteTree, the net inventory of Bitcoin miners declined by 125 BTC per week in the last 12 weeks. The data indicates that miners sold approximately $1.362 million BTC per week week atop the BTC that they mined and sold.

Amount of BTC mined and sold in the last 12 weeks. Source: ByteTree​​​​​​​

Amount of BTC mined and sold in the last 12 weeks. Source: ByteTree

As Ki emphasized, the data shows that miners sold substantial amounts of BTC, but not in amounts that were irregular to normal behaviour.

Post-halving bull cycle remains a possibility

Bitcoin is still hovering above the critical $10,000 technical support level despite multiple attempts by bears to drop the price below the key level.

The resilience of Bitcoin amidst a heightened level of selling pressure suggests a cautiously bullish trend in the long term.

The Bitcoin short-term holder NUPL. Source: Glassnode

The Bitcoin short-term holder NUPL. Source: Glassnode

Several on-chain metrics also indicate that now is a healthy accumulation phase for Bitcoin. Rafael Schultze-Kraft, the CTO at Glassnode, said:

“Short-Term Holder Net Unrealized Profit/Loss (STH-NUPL) with a #bullish signal here imo. That bounce of the 0-line was important, is very characteristic for previous bull markets, and historically a good buying opportunity.”

Source: https://cointelegraph.com/news/profit-taking-bitcoin-miners-wont-stop-the-next-bull-run-on-chain-analyst

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Blockchain

Crypto exchange bitFlyer Europe links up with PayPal, enabling account deposits with euros

Crypto exchange bitFlyer Europe has announced integration with PayPal, allowing users to deposit funds using their PayPal accounts to buy cryptocurrencies.

The post Crypto exchange bitFlyer Europe links up with PayPal, enabling account deposits with euros appeared first on The Block.

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