Trading with CFDs on Bitcoin and cryptocurrencies

✔️ Information reviewed and updated in December 2023 by Eduardo López

Today, one of the investment instruments that are gaining the most popularity are cryptocurrencies. This is because its value is growing exponentially, as well as its weaknesses every day become less, gaining stability and security.

Based on Blockchain, cryptocurrencies are becoming a good way to generate additional income and profits from your investment. That is why every time we find new trends such as Trading with CFDS in the cryptocurrency sector, especially the most famous of all, Bitcoin.

✨ What is it?

Before talking about CFDS and Bitcoin, it is important to consider what a CFD is. According to financial experts, a CFD is a contract for difference between a buyer and a seller. Here it is agreed that the seller has to pay the buyer the difference between the current value and the value during the time of the contract of an asset.

This type of contract is generally used to trade different financial assets such as fiduciary currencies and even physical assets such as gold or oil.


✨Using CFDS on Bitcoin?

The first thing you should know is that the use of CFDs in Bitcoin is very different from trading Bitcoin, since they are different operations. The CFD covers trading virtual currencies in a very different way than the classic way of trading.

With the growing trend of using Bitcoin as a form of investment, both Forex and CFD brokers or intermediaries have decided to ride the wave. For it, They have launched the use of CFDs focused on trading in Bitcoin as they do with their other assets. This causes the operation between CFD brokers and trading platforms to change.

✨Downsides of using CFDs to trade Bitcoin

It is always good to analyze both sides of the coin, since many times, something that might seem very good, actually is not. That is why here we will talk about the points against using CFDs with Bitcoin.

  • Cryptocurrencies will never be yours: By trading through these contracts, you are not buying the cryptocurrency but the hedging contract between the prices. This will make you unable to transfer your virtual currencies, for example, to a private Wallet or exchange it for another currency.
  • stacking: Another disadvantage that you must take into account is the fact that this type of operation does not allow you to take advantage of the Stacking of the cryptocurrency. That is, you cannot generate profits or tokens by having them in your Wallet, since you do not have them.
  • Over / Under Rating: The intermediary is the one who is in charge of setting the prices, so the broker, unilaterally and authoritatively, could change the price without prior notice. This is a great risk when it comes to trading, as it can lead you to lose money or make it more expensive to operate.

✨Advantages of CFD on Bitcoin

  • Very easy to use: For those who are beginners, a CFD contract is undoubtedly a great benefit, since it allows easy trading. You should only buy or sell, there is no more science that will help you to use Bitcoin easily.
  • Bet: Using a CFD allows you to "bet" on the movement of Bitcoin which is a great advantage when it comes to taking advantage of trends. With the CFD you can take advantage of, for example, the downtrend or upward trend in order to obtain much more profit from your investments.
  • Less management: Thanks to the fact that the contract is very easy to launch and is done on a single platform, management becomes much easier for a large number of users. You do not have to go from one platform to another to make your purchase and sale, you can do everything in one place.
  • Leverage: Using a CFD contract allows you to trade with leverage which is a good decision, especially if you are looking to use borrowed money to trade. The risk is that misusing leverage can lead you to lose a lot of money.
  • Limited risk: Available only with some brokers, especially the most regulated ones, there are certain types of CFDs that allow you to reduce risk and make it much more limited. This will ensure that investors or traders can trade with much lower risk. which makes the possible losses smaller.
  • Liquidity: Finally, we can find that liquidity turns out to be a great point in favor because in this type of operations cryptocurrencies have more liquidity than in conventional trading. In this way, you can obtain more favorable prices which translates into more profits.


✨The main problem of CFDs

You must know that The use of CFD has a great disadvantage or weak point, the limitation of trading only with few cryptocurrencies. And it is that contracts for price difference are only available, for example, for Bitcoin and few cryptocurrencies of popular use.

Although more and more cryptocurrencies are being added, especially the less popular or alternative ones, this is not being done at the expected speed. So your main limitation will be not being able to launch a CFD contract in all cryptocurrencies, only in the few offered by the broker or intermediary.

✨What do we think?

CFDs are an option to operate, without a doubt, which can be very accessible and simple for those who do not know much about Trading. Its use has advantages and disadvantages that make it worth weighing its use as a way to trade cryptocurrencies for the first time.

For those who plan to use this system to invest in cryptocurrencies, it is important to consider that under no circumstances should you operate with leverage. This is because the high volatility of cryptocurrencies can make leverage counterproductive causing catastrophic losses.

Eduardo Lopez

Editor and Copywriter

I am Eduardo López Martínez, I was born in Madrid, Spain and I am 48 years old. I am a journalist and I am part of the team. Do you want to know a little more about me? I invite you to read my biography.

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