Some people think that Bitcoin has a chance to become the world’s currency one day. But for now, it’s mainly treated as a speculative asset.
Those who trade Bitcoin (BTC) are excited by how this digital currency can quickly increase in value. Case in point, Bitcoin increased almost 2,000% throughout 2017.
As exciting as this potential seems, you also can’t ignore that BTC can also crash just as quickly. When this cryptocurrency reached its all-time high (ATH) in December 2017, it lost over half its value within a matter of weeks.
Situations like these cause people to label trading Bitcoin and cryptocurrencies as gambling. Unlike when trading companies on the stock market, you can’t thoroughly vet crypto and define its profit output yet.
The market is still based on extreme speculation, which causes rapid price spikes and falls. Therefore, the gambling billing holds some weight here.
But the question is what exact type of gambling BTC trading relates most closely to. Is it more luck-based, like slot machines? Or does it contain a greater deal of skill, such as poker?
I’m going to examine how Bitcoin relates to both slot machines and poker in order to answer these questions. I’ll also discuss tips on how you can improve your overall cryptocurrency trading skills.
Why Is Trading Bitcoin Like Playing Slot Machines?
Slot machines are among the least-skilled games in the casino. They mostly revolve around pushing the spin button and waiting for your results.
The only true skill involved with slots is looking for games with high return to player (RTP). High RTP gives you a stronger chance of winning over the long run.
Other than this, though, you don’t have much influence over slots results. Bitcoin has some similarities in this regard, considering that it’s hard to define where the market is going. Below, you can see multiple reasons why BTC has a close correlation with slot machines.
Bitcoin Is Extremely Volatile
In addition to being almost entirely based on luck, slot machines are also extremely volatile. The results you get from one session to the next are rarely similar to each other. Furthermore, the outcomes are much different than what the payout percentages suggest.
Bitcoin also features lots of volatility. It regularly experiences price increases and decreases of 5-10% in a single day. Contrast this to top stocks, which rarely move more than 2% in a day.
BTC’s volatility is one of its most attractive qualities because a small investment can turn into a large gain rather quickly. But you also have to be willing to deal with the lows when Bitcoin and the rest of the market drop.
Crypto Moves Seem Very Random
The cryptocurrency market is full of immature investors who entered the fray during the 2017 bull run.
In contrast to experienced stock investors, crypto enthusiasts largely lack fundamental trading skills.
This factor contributes a great deal to the randomness of the crypto market. Many projects will announce a major partnership, only to see little-to-no price increase.
Meanwhile, some coins see huge price pumps that seemingly come from nowhere. Many cry market manipulation, especially when dealing with small-market-cap crypto.
It’s true that the crypto market features a number of P&D schemes, where insiders inflate prices and sell off to unsuspecting investors. But the overall immaturity of investors has also contributed to Bitcoin and other cryptocurrencies moving rather randomly.
You can draw a correlation between these random moves and slot machines. Slots results can be extremely random, ranging from payouts worth 1,000x your bet to losing streaks that seem to last forever.
Bitcoin Can Offer Huge Gains
One of the most exciting things about playing slot machines is the jackpots. A single lucky spin could lead to thousands or even millions of dollars, depending upon the game.
Bitcoin also has somewhat of a jackpot element to it. Looking at 2017, the BTC price went from $1,000 to start the year up to almost $20,000.
If you held 10 coins during this blissful period, for example, then your $10,000 in holdings would’ve went to nearly $200,000 by December.
Other crypto projects offer even more potential for moonshots. For example, Verge was worth $0.000019 to start 2017. It rose to $0.300588 by the end of the year — an increase of 1,582,000%.
You can see the jackpot potential in “altcoins.” But even an investment in Bitcoin, which has risen from its $0.01 opening price in 2009 to nearly $10,000 at the time of writing, can offer huge returns.
Most Crypto Traders Don’t Have a Real Strategy
Earlier, I discussed how slot machines don’t involve much strategy. You simply try to pick a game with high RTP and let faith do the rest.
Many cryptocurrency traders are essentially playing slot machines with their investments.
They don’t bother to do anything except look at entertaining crypto articles and Reddit gossip.
On one hand, being a strategic investor in cryptocurrencies is hard due to the market’s irrationality. But understanding fundamental concepts like Dollar Cost Averaging (DCS) escapes the average crypto buyer.
I’m not saying that one has to become a day trading genius just to have success in crypto. In fact, those who hold (a.k.a. hodl) for years have historically experienced great gains from this market.
But it wouldn’t hurt the average investor to learn a few basic investing terms and strategies.
Crypto Trading Can Be an Emotional Roller Coaster
You’re likely to go through plenty of emotions if you play slot machines for any considerable amount of time. You never know what kind of results you’re going to get from one minute to the next, which keeps you on your toes.
Bitcoin is much the same way in that it sends you on emotional highs quite frequently. You’ll especially be subject to this emotional rollercoaster if you check prices multiple times per day.
Nothing is more exciting than seeing your holdings increase by 20% in a few hours. However, this market can also quickly deflate your enthusiasm with its fast drops.
Why Is Trading Bitcoin and Other Crypto Like Poker?
Bitcoin and cryptocurrencies in general may have a lot of random luck elements, but just like any other form of trading, this market does involve some skill.
Speaking of which, poker is the ultimate skill-based form of gambling. It features a high degree of strategy that you must understand to experience long-term success.
Could Bitcoin be considered more skill-based like poker? Check out the following points to see what you think.
Bitcoin Trading Does Include Some Measure of Skill
At times, trading Bitcoin can seem like it’s entirely about luck. You can study technical analysis (TA) all day and make an investment, only to watch the price rapidly drop.
However, the cryptocurrency market isn’t purely based on random chance. Your skill level and experience will help you to some degree.
Maybe BTC trading isn’t quite like poker, where you can learn advanced concepts like identifying your opponent’s four-betting range. But as I’ll cover towards the end of this post, you can learn certain concepts to boost your chances of successful trading.
You Can Study Strategy to Improve Your Crypto Trading Efforts
Poker does involve luck in the form of the cards you’re dealt and those that land on the board. However, you can largely control your long-term results by learning strategy.
Many successful players got to where they are by studying strategy for at least 1-2 hours a day on the side of their sessions. Contrast this to the average amateur, who’d rather play the game and avoid looking over dry strategy materials.
For the most part, strategy doesn’t play as big of a role in cryptocurrency trading success as it does in poker. But you can’t go wrong with dissecting a few concepts with regard to crypto investing.
Investopedia is a great source of beginner’s knowledge.
From here, you can graduate to learning more advanced concepts like TA and trading bots.
You Can Gain an Edge in Bitcoin Trading
The goal of buying cryptocurrencies is to eventually sell your holdings to somebody at a higher price. Given that everybody has the same goal, you won’t always have an easy time making profits.
But you can gain an edge over other cryptocurrency buyers, much like you can over poker opponents. The more you know with regard to investing concepts and cryptocurrency in general, the better your prospects of success stand.
Everything relates back to learning about investing fundamentals. You also want to look at specific elements of altcoins if you’re investing in these. Learning the team and roadmaps behind these projects can give you a good indication on if the coins are worth buying.
Bankroll Management Plays a Key Role
Almost every poker pro has a good idea on how successful bankroll management works. They only put small amounts of their bankroll into each cash game or tournament so as to reduce their risk.
But bankroll management is perhaps the most overlooked concept among cryptocurrency traders. In fact, most investors simply buy coins based on emotions.
Ideally, you’ll have a disciplined plan in place for how you purchase coins. DCA is one of the easiest strategies you can use to manage your bankroll.
DCA involves buying crypto at set intervals with set amounts of money. Here’s an example of how it works:
You have $5,000 to invest in cryptocurrencies
You plan on spending $250 per week, for 20 weeks
Your investment is always made on Sunday
You invest $100 per week into Bitcoin
You spread the remaining $150 per week on altcoins
Different Types of Trading Styles Can Be Used
The most popular way to invest in Bitcoin involves hodling, a term that comes from a drunken 2013 post about BTC. Hodling has proven to work in cryptocurrency so far, with most projects increasing far beyond their original starting value.
Hodling isn’t the only strategy you can use to experience crypto investing success. Day trading and swing trading are also viable options for those who have the right skills.
Day trading is exactly how it sounds in that you buy and sell crypto within a single day. Swing trading, on the other hand, involves purchasing crypto and waiting days, weeks, or even months for the perfect time to sell.
If you’re interested in crypto yet don’t want to learn much strategy, then hodling is by far your best option. But if you’re also interested in the trading aspect, then day and swing trading are worth looking into.
Poker Pros Have Jumped Into Bitcoin
Perhaps the ultimate correlation between poker and Bitcoin is the fact that many pro players have gotten involved with crypto. Doug Polk, Ryan Riess, and Dan Bilzerian are just some of those who’ve become serious investors.
Poker and Bitcoin actually have an interesting connection. Black Friday (April 15, 2011), when the US Department of Justice indicted founders of the biggest online poker rooms, left many sites without a viable way to accept American deposits.
SealsWithClubs (SwC) blazed a trail in 2012, though, by accepting Bitcoin. Given that BTC is a decentralized currency, it’s not subject to the same anti-poker banking laws as credit cards and e-wallets.
Many poker players lucked into Bitcoin because they had to use it to play the game from America. However, they also benefited from bull runs in 2013 and 2017 as a result.
Which Casino Game Is Bitcoin More Like?
Whether Bitcoin is more like poker or slot machines is a subjective matter. You can easily make arguments on why it’s like either game.
I personally believe that it’s a little more similar to poker than slots. For starters, trading Bitcoin has some degree of strategy.
Again, it’s not as loaded with strategy as poker, but you can learn certain skills that’ll help you improve your crypto trading profits.
Another point is that Bitcoin investing also requires a good deal of patience just like poker. The latter involves waiting on the right cards and/or situation to make optimal plays.
Cryptocurrency trading, likewise, also requires plenty of patience. If you sell every time BTC takes a dip, then you’re going to be bleeding lots of money out when it increases and you buy back in.
The bankroll management between Bitcoin and poker is yet another similarity. You need to properly manage your funds in both disciplines to experience long-term success.
Of course, BTC also includes many of the same luck aspects of slot machines. Nobody can predict where the market is going with a great degree of accuracy, which falls in line with the randomness of slots.
But I just see more similarities between Bitcoin investing and poker. Both have varying degrees of skill and can see you make long-term profits with the right plan.
How to Improve Your Cryptocurrency Trading Skills
I discussed a fair amount on how developing the right skills can help you make more money with cryptocurrencies. Therefore, I’d like to quickly go over a few things you can concentrate on to boost your crypto profits.
Learn Bankroll Management
I can’t emphasize enough how important managing your bankroll/funds is in crypto. This is a very volatile market that can quickly eat up your money if you’re buying at the wrong points.
Many investors did exactly this throughout 2018, which has been referred to as crypto winter. BTC and altcoins fell dramatically from their all-time highs, which caused those who held and/or bought more to keep losing money as well.
Anybody using a proper bankroll management strategy could have at least reduced their losses. Furthermore, they’d have more funds to buy in mid-2019, when the prices are currently much lower than they were in late 2017/early 2018.
Again, DCA is an easy and effective strategy to properly manage your funds and make responsible buys. You can also look into other strategies to see which one suits you best.
Set Stop Win and Stop Loss Limits
Many gamblers use stop-win and stop-loss limits to help them figure out when to quit a session. Crypto traders can also use the same limits to help them make buying and selling decisions.
A stop-win limit refers to when you sell crypto based on a price increase. Here’s an example:
You buy $500 worth of IOTA
You set a stop-win limit of 20%
500 x 0.2 = 100
500 + 100 = $600 stop win
A stop-loss limit, meanwhile, helps determine when you should sell based on a certain price decrease. Here’s an example:
You buy $1,000 worth of Tron
You set a stop-loss limit of 15%
1,000 x 0.15 = 150
1,000 – 150 = $850 stop loss
Many crypto investors hate to sell in both cases. They don’t want to part with their crypto when it’s increasing in price because they have dreams of buying a Lambo. They don’t want to sell when the price is dropping since this would mean they’ve officially lost money.
However, stop-loss and stop-win limits are commonly used by many experienced traders to help them cash in on gains or minimize losses. You should also have a designated amount that you’re willing to sell at for gains and losses.
Study Different Aspects of Altcoins
Bitcoin is largely a well-known asset in the cryptocurrency world. There are people working behind the scenes on the network, such as when developers released the Lightning Network update.
But it’s not like you need to read Satoshi Nakamoto’s original whitepaper or spend hours trying to figure out if BTC is a scam. It’s a legitimate digital asset that, so far, has a history of success.
Many altcoins, on the other hand, have unknowns about them. Altcoins can pop up out of nowhere with promises of becoming the next project to shake up online payments or artificial intelligence.
Some altcoins, such as Ethereum, Ripple, Stellar, VeChain, and Neo, are well known in the space and have legit projects going.
But you’ll find plenty of little-known coins that require investigating before you pour your money into the matter.
Too many people got stung by Initial Coin Offerings (ICOs) throughout 2018 as con artists used crypto’s popularity to get quick money. You don’t want to repeat their mistakes, which is why it’s worth at least doing some light research on your investments.
Here are a few aspects to cover during your research:
Who’s on the project’s team?
Does the goal make sense?
Is there a real use case?
Are the roadmap goals being hit?
Far too many Reddit users brag about how they’re 100% invested into some altcoin. While they might firmly believe that a project has great things in store for the future, they’re also taking a massive risk.
Of course, many people don’t think they need to diversify in crypto when considering that the market largely moves with Bitcoin. But the key thing to realize is that anything can happen.
NEM announced that they were quickly running out of funds in early 2019. They had to lay off half their staff, which has created serious question about their future going forward.
While NEM is still somehow ranked within the top 25 crypto projects in terms of market cap, it could easily tumble down the list if its funds totally dry up. I don’t write this to pick on NEM but rather to show that virtually any crypto outside of Bitcoin could suffer a disaster.
FOMO is an acronym that describes the fear of missing out. Crypto traders are more susceptible to FOMO than any other type of investor.
Again, this market is largely based on speculation. People often let their emotions invest for them whenever a big cryptocurrency announcement is made.
The better route, though, is to only perform calculated moves. Don’t make a hasty decision just because you’re scared that you’ll miss the next coin that moons.
Bitcoin could go either way in regard to if it’s more like slot machines or poker. It features plenty of randomness and luck, just as slot machines do. BTC and other crypto also offer jackpot potential.
But the market tends to lean towards the side of poker. Having skill can help you make wise investing decisions, much like how knowing poker strategy helps you win.
Unfortunately, far too many investors behave as if crypto trading is just like a slot machine. They don’t put much thought into the equation and chase whatever they think are the hottest coins at the moment.
These same traders also fail to adopt any sort of bankroll management plan. They simply put what they feel like into the market at any given time.
A much better approach is to learn fundamental investing strategies and bankroll management. Even something as simple as DCA can pay dividends by helping you avoid irrational investments.
Treat cryptocurrency trading like a poker pro approaches their game. Spend at least a few hours every week learning about various crypto projects and investing strategies that can help you make money.
Bitcoin trading is just like anything else in that you get from it what you put in. Considering the massive potential of crypto, I suggest that you put a fair amount of time into learning more.
Michael Stevens has been researching and writing topics involving the gambling industry for well over a decade now and is considered an expert on all things casino and sports betting. Michael has been writing for GamblingSites.org since early 2016. ...
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