Crypto Trading: How to Leverage and Short Bitcoin & Co.
Traders can also leverage and shorten the world’s most popular cryptocurrencies such as Bitcoin, Ripple and Ethereum. With crypto CFDs, investors can use leverage to speculate on both rising and falling crypto prices.
Trading the first Bitcoin is not an easy undertaking. It is just as impossible to buy directly from your house bank as it is to buy via an existing securities account. If you want to own a coin, you must first choose one of the countless crypto marketplaces or Bitcoin exchanges. The choice is a real challenge, because not every marketplace offers every coin and the often quite complicated registration on the mostly English websites is not everyone’s cup of tea.
Also read our big guide on crypto trading platforms – crypto exchanges vs CFD brokers.
Bitcoin trading also possible indirectly via CFDs
Speculators who want to trade with coins and earn money on rising or even falling crypto rates do not necessarily need their own “wallet” at a crypto marketplace. Those who do not attach importance to owning a coin physically can also take the indirect route via a Bitcoin, Litecoin or Ripple CFD.
In principle, crypto CFDs can be traded in the same way as “normal” securities. The world’s largest derivatives broker for this purpose is BitMEX BTC trading platform offering perpetual and futures trading contracts with BTC settlement. On trading platforms with fiat money settlement on the other hand, a Bitcoin Trader can thus participate one-to-one in the development of Bitcoin via a Bitcoin CFD, but does not physically own the coin. If the Bitcoin increases by five percent, the Bitcoin CFD also increases by five percent. Speculative investors can also use CFDs as leverage. Either to increase the opportunity (and at the same time the risk) or to have to bring in only a fraction of the stake otherwise required for Bitcoin trading.
Five percent can become one hundred percent – or vice versa
A Bitcoin CFD with a leverage of 20 can therefore bring the trader a price gain of 100 percent, even though the Bitcoin has only increased by five percent. But beware: a price decline of a few percent can quickly lead to a total loss. Short positions are also possible with CFD. If the Bitcoin price falls by ten percent, for example, an unleveraged short CFD also rises by around a tenth.
If you want to trade Crypto CFDs, you need a selected CFD broker, for example a cryptocurrency broker such as BitMEX, PrimeBit, ByBit or a regulated one such as IG, eToro or Plus500. The latter is also known to football fans as the main sponsor of Atletico Madrid.
Trade by CFD
By the way, cryptocurrency brokers offer a fast account opening without ID verification in addition to payment by BTC, ETH or some even by credit card. Of course, speculative natures can also use any other CFD broker that offers CFDs on crypto currencies. How exactly CFD trading works and what opportunities and risks are involved can be read in the CFD Guide.