How to Buy Bitcoin from an Exchange

The demand for crypto among investors in Australia has increased by over 28%. Bitcoin is unique because there is a finite number of them: 21 million. These crypto coins are created as a reward for a process known as mining, and investors can exchange them for other currencies, products, and services. 

The safety of your bitcoin is of the utmost importance. Bitcoins are stored in a “wallet,” essentially a digital bank account. An exchange is like a digital bank, where bitcoins can be stored and exchanged for currencies like Australian dollars.

It’s essential to learn more about safe strategies to trade bitcoins on an exchange if you plan to trade.

Strategy 1: Buy and Hold for the Long Term

This strategy is ideal if you’re looking for a long-term investment. If this is your plan, buying bitcoins with no immediate spending goal but instead holding them for the long term (for at least five years) to reap benefits when bitcoin increases in value is the way to go.

Strategy 2: Use Dollar-Cost Averaging

This technique helps minimize the risk of buying at the wrong time by spreading your investment evenly over a certain period. 

For example, if you want to buy one bitcoin, you could divide that purchase into ten increments and purchase bitcoins over ten days. This technique evens out your investment and reduces the chances of you buying at the wrong time.

Strategy 3: Use a Limit Order

A Bitcoin limit order is an instruction to buy or sell a security at a specific price or better. For example, if you want to buy one bitcoin at 10,000 Australian dollars a coin, you could place a crypto limit order for that amount. You can only execute a buy limit order at the limit price or lower. Conversely, you can execute a sell limit order at the limit price or higher.

Strategy 4: Review Your Exchanges’ Insurance Coverage

Before you buy any bitcoin, learn more about the insurance coverage of the exchange. The best way to review the exchange is to look for an insurance policy on their website or contact them directly and ask whether your bitcoins are covered. 

If you don’t receive an answer, search consumer forums to see if anyone else has asked this question. The most common type of insurance for exchanges is cyber insurance, which covers the theft or loss of digital assets. 

However, not all exchanges have this type of insurance. If the exchange you’re considering doesn’t have cyber insurance, you may want to consider a different exchange.

Strategy 5: Make the Most of BTC Markets’ Low Fees

High liquidity and buying/selling spreads mean that you can always get your order executed quickly. If there is insufficient liquidity, placing limit orders will keep you in the order book, which means that if the price increases enough to cross your order, you fill the limit relatively quickly.

Account funding fees are relatively low, sitting at 0.50% for BTC deposits and withdrawals. However, you may need to pay an additional 1% to deposit your Australian dollars with the exchange.

Ask the Exchange about the Fee to Withdraw BTC

Only a handful of Australia’s cryptocurrency exchanges allow users to fund their accounts with Australian dollars. The remainder will only allow you to buy bitcoins, and then you need to transfer those coins out of the exchange before converting them back into AUD. 

In these cases, withdrawing BTC will come with a fee because the exchange needs to pay the blockchain fee for sending your BTC out of their wallets and into your wallet.

With these strategies and processes, you can make the most of your cryptocurrency investments and buy Bitcoins without any concerns.