BTCUSD is the ticker symbol for Bitcoin and the United States dollar exchange rate. BTC USD is a cryptocurrency CFD because of the presence of Bitcoin as the base currency. Cryptocurrencies are known for their immense volatility, while the US dollar is by far the most traded fiat currency globally. As a result, BTC USD trading is the most popular crypto-to-fiat pair, and it serves as the de facto gold standard for the cryptocurrency market; providing the price direction cue for virtually the entire crypto market. In the BTCUSD pair, Bitcoin is the base currency, while the US dollar is the quote currency. When, for instance, the price of the BTC-USD trading pair is 3,100, it means that one would require 3,100 US dollars to acquire 1 Bitcoin. At AvaTrade, you can trade the most popular Bitcoin pair in a safe environment with low margin requirements, competitive spreads, and zero fees, all on an intuitive and robust trading platform.
Launched in 2008, Bitcoin was the first and remains the most popular cryptocurrency. Unlike traditional fiat currencies, which are backed by trusted third parties such as banks and governments, cryptocurrencies are decentralised and backed by peer-to-peer technology. At the core of cryptocurrencies is the blockchain technology that serves a secure and accurate public ledger of all transactions. By design, there will only ever be 21 million bitcoins, and as of the beginning of 2019, more than 80% of this amount had already been mined. This scarcity has always fuelled the demand for Bitcoin, and it is one of the key reasons why its value started at a measly $0.003 in its early days and peaked at almost the $20,000 mark in December 2017.
United States Dollar (USD)
Also known as the ‘greenback’, the US dollar is the most reserve held currency in the world. The USD is also the denominator for major commodities such as gold, silver, natural gas and crude oil in the global markets. As the official currency of the United States, also the world’s biggest economy, the USD is the most stable and liquid currency in the world that has rightly earned the title ‘king of currencies’.
Major Bodies influencing the BTC USD trading
The genesis of Bitcoin came during the 2008 global financial crisis, and initially, the crypto was touted as the future of money, essentially as an alternative to fiat. Based on this, the major influential body that can impact the BTC USD trading pair is the US Federal Reserve, which has the mandate over the most powerful fiat currency, the USD. The Fed releases rate decisions 8 times a year, and these are important events for the BTC -USD price. A rate hike would pressure the BTCUSD price lower, while any rate cut would provide tailwinds for the crypto pair. To put this into perspective, in November 2018, the BTC USD pair (Bitcoin Index) traded at $3,778. Mainstream adoption of Bitcoin caused the December 2017 peak of just below $20,000. But as major regulatory bodies sought to impose strict rules governing the space, the crypto party has faced challenging times. Regulation will continue to be a mixed pill for Bitcoin and other cryptocurrencies. Good headlines will push the BTC / USD price higher, while bad headlines will pressure it lower. The major regulatory bodies for BTC USD traders to watch out for are: US’s SEC (U.S. Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission); China’s CSRC (China Securities Regulatory Commission); EU’s ESMA (European Securities and Markets Authority); UK’s FCA (Financial Conduct Authority); and South Korea’s FSS (Financial Supervisory Service).
BTCUSD in 2021
The year 2021 has been a whirlwind for the flagship cryptocurrency, Bitcoin. The pairing, BTCUSD started the year with strong momentum, having already broken above the 2017 highs. The bullish pressure sustained for the entire first quarter of 2021, and Bitcoin managed to print its all-time high of around $65,000. Various analysts and experts started making Bitcoin price predictions of $100,000, $200,000, and even $500,000, but the coin faced massive headwinds and lost over 50% of its value to settle just above $30,000 in May 2021.
After accelerating the bull run in early 2021, institutional money is expected to continue being a major price driver in 2021. Major companies, such as Tesla and MicroStrategy Incorporated, invested big money in Bitcoin, paving the way for other corporations to rethink their cryptocurrency strategy. With the price at ‘favourable’ levels, BTCUSD is due for another round of heavy backers – something that would be a major tailwind for the digital currency’s price.
While institutional money is a major positive for cryptocurrencies, the launch of a Bitcoin ETF would go a long way in rubberstamping its legitimacy. Investors were confident that 2021 would be the year that a Bitcoin ETF would finally start trading, but the SEC has routinely frustrated several proposals to launch one. The SEC has cited the unregulated nature of the coin as the major reason for not approving any Bitcoin ETF. A Bitcoin ETF would allow investors to conveniently buy and sell the digital currency and integrate the coin easily into their portfolios. Nonetheless, there already exists an ETF for crypto mining and mining infrastructure companies trading on the NYSE; investors can only be hopeful a true Bitcoin ETF is on the way.
Regulation continues to cast a huge shadow over Bitcoin in 2021. In particular, China has been consistent in its aggression towards cryptocurrency. The country instituted a ban on financial institutions and payment services companies offering crypto-related services and even made some mass arrests on people using cryptocurrencies in controversial ways. China is a significant country for Bitcoin, with almost 50% of miners domiciled there. The recent crackdown dented Bitcoin’s infrastructure, which subsequently weighed heavily on the price of the coin. But it is not only negative regulation that is making headlines. There have been positive headlines hitting the wires too – the US levies capital gains tax on cryptocurrencies, which implies a positive step. Many crypto exchanges have already implemented KYC procedures to curb money-laundering and other illegal activities, while there are still some European countries considered to be favourable for cryptocurrencies, including Germany, where the European Central Bank is domiciled.
Beyond fundamentals, BTCUSD also has an interesting technical picture worth a look at. At just above $30,000, Bitcoin has already done a 50% retracement off its all-time highs, with that level also being a 1.618 Fibonacci extension of the previous cycle that peaked in late 2017. The price has also been consolidating in the $30,000-$40,000 price range for a while now, and it is only a bit realistic to anticipate a breakout soon. Volatility will likely come sooner rather than later in either direction.
BTCUSD Trading Correlation
As stated, earlier Bitcoin provides the price direction cue for almost all cryptocurrencies. Therefore, the BTCUSD has a positive correlation with all the major crypto pairs, such as ETHUSD, BTGUSD, LTCUSD, ETCUSD and XRPUSD. There is also an interesting correlation with gold. Gold has, for years, been considered a safe haven and a hedge against inflation and fiat- qualities that Bitcoin now portrays. Bitcoin is now effectively the digital gold. Additionally, the price of gold is measured in USD, something shared by the BTCUSD trading pair. By sharing fundamental economic qualities, gold and Bitcoin have developed a positive correlation that traders should always consider.
Trading BTC USD with AvaTrade
AvaTrade offers a wide variety of benefits when trading online the BTCUSD pair:
- With AvaTrade, you do not need to create a wallet to trade cryptocurrency online.
- With the BTC USD trading pair, you can trade cryptos against fiat currencies. Unlike exchanges, where you are restricted to trade only crypto to crypto.
- Since you are trading crypto CFD trading online and not actually purchasing the digital currency, you can profit from increasing and falling markets.
BTC/USD Trading Main FAQs
What currency pair does the ticker BTC/USD refer to?
Currency traders are familiar with the major currency pairs, and often a good number of the minor pairs. More experienced traders are also likely familiar with a number of exotic pairs as well. But the BTC/USD pair is something of a mystery to currency traders, and that’s because one of the components isn’t a traditional fiat currency. BTC/USD refers to the pairing of the leading cryptocurrency Bitcoin with the U.S. dollar. It’s a very new currency pair, and one that has generated much excitement over the past decade. If you aren’t familiar with BTC/USD you should take some time to learn about it now.
Why should I trade BTC/USD?
As the largest cryptocurrency by far Bitcoin should be of great interest to currency traders. While the size of the digital currency’s market capitalization pales in comparison with that of any major or minor fiat currency, Bitcoin acceptance has been growing. As the acceptance of Bitcoin grows it becomes more commonplace as a currency, a store of value, and as a trading asset. This will only increase in the future, so by learning to trade BTC/USD now you are future-proofing your trading career. Plus cryptocurrencies like Bitcoin are one of the few markets available for trading on the weekend.
What is the best strategy for trading BTC/USD?
Any of the excellent strategies you’re using for forex trading will also work when trading BTC/USD. One very excellent strategy uses the On-Balance Volume (OBV) indicator to trade Bitcoin. This indicator uses a combination of price action and trading volume to analyze the market. Originally developed for the stock markets it has also been used successfully in forex trading. It also uses a comparison with Ethereum, the second largest cryptocurrency. Basically it looks for divergences between price action in Bitcoin and Ethereum, such as a breakout in one, but not the other. A breakout in Ethereum first indicates the same will be coming for Bitcoin, and the OBV is used to confirm that. If the OBV is headed higher that’s the confirmation. A limit order can then be placed just above the BTC/USD resistance level.