Bitcoin & Cryptocurrency Trading

There is much money to be made trading Bitcoin and other cryptocurrencies, and Forex brokers have adapted their trading platforms and customer support hours for providing a genuine crypto CFD trading experience.

Crypto CFD trading burst onto the scene in 2016 with the explosive growth in Bitcoin value that generated a widespread trend.  This increase in popularity led most brokers to develop some form of crypto CFD trading to offer clients.

While brokers like eToroAvaTrade and Plus500 took the lead on offering an extensive variety of cryptocurrency pairs, it is advisable to consider the traditional metrics of trust, platform choice and trading conditions when evaluating the best of the cryptocurrency brokers.

Best Bitcoin & Cryptocurrency Brokers

What is cryptocurrency trading?

Cryptocurrency trading is Forex trading, but a cryptocurrency as one of the two currencies in the pair.  The best example of a cryptocurrency is Bitcoin that is seeing explosive growth and adoption by different financial institutions around the world.

How to start Bitcoin trading?

You can trade bitcoin with any Forex broker allowing the trade of BTC with another currency.   The brokers above will let you trade BTC and a handful of other cryptocurrencies within their real account or demo account.  You can get started just as with trading regular currencies, where selecting a broker is the first step.

How to learn Bitcoin trading?

With the high volatility in the Bitcoin marketplace, the little fundamental analysis required to trade cryptocurrencies, and the limited leverage offered by brokers for this asset class, makes learning to trade Bitcoin is unique.  To learn to trade Bitcoin, you must learn to understand chart data and analyse trends (technical analysis).  This is the primary tool that you will use to decide how to enter and exit your trade.

How are Cryptocurrencies different from regular currencies?

Over the last decade, the supply of money has grown exponentially which has been the most considerable growth in the supply of money in history. Our money system is controlled by the Central Banks, which in fact is a fiat currency system that has the power to create money. All currencies around the world are government fiat currencies. The real issue with the fiat currencies is that the more of a currency that is in a system, the more the prices rise. Subsequently, this will cause inflation to increase and the value of the currency to drop.

Both Bitcoin and gold are similar in that there is a finite supply, which is a huge difference from fiat currencies.  There is a limit to how much Bitcoin can be mined as well as there is a finite supply of gold in the world. There is also a certain predictable rate at which Bitcoin is being mined, similar to the somewhat predictable rate at which gold is being added to the market. Bitcoin mining is the process of creating new Bitcoins through the use of special software.

Cryptocurrencies are a great alternative to traditional cash and are already referred to as the new Gold standard. The most popular cryptocurrency is Bitcoin with the largest market capitalisation of more than $42 billion, which represents 40% of all crypto-currency market capitalisation.

How many Cryptocurrencies are there?

By July 3, 2017, there were 34 active cryptocurrencies.  The table below shows the top 10 crypto-currencies, by market capitalisation (as of July 3, 2017). There is a growing number of alternative cryptocurrencies to Bitcoin that can be traded the same as Bitcoin.

Source: coinmarketcap.com

Benefits of Cryptocurrency Trading Versus Forex Currency Trading

The main advantage of owning a cryptocurrency is using it as a store of wealth because the fiat money suppliers can use their purchasing power quite dramatically. What cryptocurrencies like Bitcoin, Ethereum, Ripple and other coins give us is a secondary choice, which solves the problem of inflation at the same time.

Unlike traditional currency trading, there is no central bank to manipulate the Bitcoin prices the same way central banks manage the exchange rates. Also, Bitcoin trading is free from taxes and broker fees.

In essence, Bitcoin is a digital currency or a virtual currency created, stored and exchanged on the Bitcoin network, unlike currency trading which is traded over the counter. Bitcoins can’t be debased or devalued by more money printed through quantitative easing programs because the total number of Bitcoins is limited to 21 million.

Why Trade Bitcoin & Other Cryptocurrency?

Cryptocurrency has high volatility creating more trading opportunities.  Forex volatility has fallen to near record lows in the past ten years to less than 1%, while Bitcoin has had extreme volatility readings of 30% with an average volatility reading of 10%. More volatility means more trading opportunities and bigger profits, but at the same time, it also increases the sizes of the losses.  Because of this volatility, you will find that cryptocurrency brokers offer much lower maximum leverage for these trades.

Analyzing Bitcoin is easier because you don’t have fundamental data like GDP, CPI Inflation, unemployment rate or the business cycle. All cryptocurrencies are not influenced by these fundamental macro data which in essence will make the price action much easier to be read.

Jeffrey Cammack Administrator
Editorial Director at TradeForexSA
Jeff Cammack is the Editorial Director, a Forex trader since 2008, and educator. Always in search of new trading opportunities, Jeff can always be found doing research in the charts or combing through the financial news. When not trading, he is always researching his next article.
follow me
Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
+ +