Ever since what is bitcoin trading at markets began to get digitized, there was a rapid growth in trading bots, and they have existed for decades. However, it was less than a decade ago when digital currency markets came into existence and they have obviously not had enough time to incorporate algorithmic trading.
Time, even seconds, are literally money and matter a lot when it comes to using high-frequency trading for stocks. However, such extremely small increments of time do not really matter as much when it comes to cryptocurrencies. If bitcoin trading bots are utilized, a huge variety of trading strategies can become available to investors. For instance, since trades in high-frequency trading take place very rapidly, using a software program becomes necessary. Arbitrage is another strategy that can become accessible to bitcoin traders by using a bot. For bitcoin traders, this would mean buying bitcoins in another crypto market and earning profit by selling those bitcoins at a higher price in another crypto market.
With intuitive arbitrage, bitcoin bot trading can prove to be profitable in the long run as well. Market making is another strategy that investors can avail through trading bots. In market making, investors provide constant buy and sell prices on a wide range of spot digital currencies like bitcoin. This way, the spread between the buy price and sell price can be captured. Furthermore, limit orders have to be placed near the present market price, on both buy and sell orders. Due to the gradual fluctuation of prices and with the bot placing automated, constant orders, the resulting spread ends up being profitable for the investor. However, it must be kept in mind that market making is surrounded by heavy competition, which means that earning profit is not that easy.
The liquidity of the environment should be high enough. The great thing is that just about any investor can capitalize on and take advantage of bitcoin bot trading. There are plenty of off-the-shelf solutions available, but it is actually not recommended that they rely on these pre-made algorithmic trading programs. Before any profits can even be earned, these programs are quickly purchased by a large number of investors. It is definitely a plus point if an investor knows how to program a software, but if not, open source bots are also available that can be configured based on an investor’s view of the market.
Even after they start proving to be profitable, bitcoin trading bots also need to be constantly revised and tinkered with. Square launched bitcoin trading on its Cash App in January. 200,000 of profit without the help of any fees. Square merchants are willing to take bitcoin as payment. Watch Square trade in real-time here.
Square jumped on the bitcoin bandwagon back in January when it started letting Cash App customers buy and sell bitcoin. 200,000 profit for Square in the quarter. The Cash App facilitated trading of the cryptocurrency without charging any fees. Square founder and CEO Jack Dorsey has been an endorser of the cryptocurrency, saying it provides an “opportunity to get more people access to the financial system. If they actually charged a fee as some of their competitors do, that number would be much higher,” Nomura Instinet analyst Dan Dolev said. They’re just basically testing out, allowing people who don’t normally trade bitcoin to trade bitcoin. The company isn’t depending on bitcoin for a large chunk of revenue but its popularity indicated potential, he said.
Square merchants are willing to accept bitcoin as payment, so it’s possible the company can monetize bitcoin use by enacting a fee once cryptocurrency is more widely used in day-to-day transactions. The launch of bitcoin on the Cash App may have spurred downloads and increased adoption of Square by new customers according to Dolev. In the first-quarter, the Cash App hosted 7 million monthly active users and continued to be a top 25 app in Apple’s App store. While bitcoin comes with risks, specifically the digital currency’s continued volatility in pricing, Dolev isn’t worried about Square. He said even if bitcoin went to zero, Square will still be a successful company.
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