Bitcoin CFDs: Speculate on the Bitcoin price with leverage

Bitcoin CFDs are currently the talk of the town. But what is this exciting financial product all about?

On this page, we dedicate ourselves to the so-called Contracts of Difference, explain what they are exactly and how they work in trading.

In retrospect, readers should be richer by what is probably the most important Bitcoin CFD experience, namely that it provides the basis for BTC trading.


What are Bitcoin CFDs?


Indirect trading on the Bitcoin price

For many investors, Bitcoin CFDs offer probably the only possibility to participate regularly in BTC trading. After all, trading the real tokens requires a separate crypto wallet, which must first be set up.

If you are able to buy a Bitcoin CFD through your broker, you can bypass such additional products. Although you will not acquire the cryptocurrency yourself, you can bet on the price trend.

CFDs are, after all, independent financial products that only use certain underlying assets as price benchmarks. Theoretically, with these contracts for difference, you acquire a right to buy or sell the asset.

As a result, the resulting gap between the purchase price and the selling price is taken as a profit or loss. Thus, a Bitcoin CFD is also an all-or-nothing transaction.

Bitcoin price

So what makes such financial products so attractive for BTC? One only has to look at the Bitcoin CFD price to answer this question.

It is generally known in the market that BTC has a highly volatile price trend. This can result in enormously fast and high fluctuations, from which day traders in particular can profit.

Thanks to this price characteristic, extraordinary returns can be achieved with a comparatively small investment. However, one must of course also mention the existing risks at this point, which logically go hand in hand with higher profit opportunities.

Buy real Bitcoin or CFDs?

So we have clarified what Bitcoin CFDs are all about. Nevertheless, some people will probably ask themselves whether contracts for difference are better or worse than real cryptocurrencies.

As so often, it depends on the characteristics of the trader himself. Nevertheless, we would like to briefly explain what special features are involved in this type of trading.

01

Buying real bitcoin: in order to buy real cryptocurrencies, one must first always create the basic prerequisite. First and foremost, this includes having your own BTC address, which usually has to be set up with a corresponding wallet.
Long-term portfolios in particular are likely to opt for this option, as you can largely do without ongoing costs. In addition, Bitcoin could also develop real benefits that could be poorly realised with BTC CFDs.

02

Buy Bitcoin CFDs: the financial products are something for real traders. They allow the trader to profit from fast and strong changes in the Bitcoin CFD price.
The capital spent is relatively small compared to the volume moved, which can be enhanced by Bitcoin CFD leverage. In addition, one gets the opportunity to take short positions.
Nevertheless, the Contracts of Difference generally also have a higher probability of loss.

Where to buy Bitcoin CFDs? Best brokers for Bitcoin CFDs in comparison:

etoro

Trade real cryptos and crypto CFDs
Licensed broker with deposit protection
Integrated wallet

skilling logo

Low fees
Algo trading available
Very friendly user interface

libretex

Broker fully regulated
Numerous awards
Libertex experience for more than twenty years

capital
User-friendly platform
0% commissions
Deposit from 20€

Buy Bitcoin CFDs on eToro: Our guide

The test winner among the CFD brokers is called eToro. The really exciting thing about the offer of the EU-regulated broker is the possibility to bet on the presented contracts for difference on the one hand, but on the other hand you can also buy real cryptocurrencies.

In the following, we will explain how to buy Bitcoin CFDs using eToro.

Step 1: Create an account

The account at eToro is opened quite quickly. As usual, you enter your login details, which include your name, address, email address and password.

All data is protected by appropriate security mechanisms. Even without verifying the information, you can get started with the demo account.

However, in order to participate in real trading and make use of Bitcoin CFD levers or similar instruments, the account must be verified. This is done by means of online identification and an official photo ID.

Step 2: Deposit

Now we load funds into our account. We will need this to bet on either a rise or a fall in the Bitcoin CFD price.

The deposit methods are versatile. In most cases, we can recommend the popular provider PayPal, which can be accessed through eToro. However, there is also the very ordinary bank transfer, Sofortüberweisung, Skrill, Neteller, credit cards from Mastercard or Visa and many other transaction methods.

The minimum transfer for the first deposit is $200.

Payment method

Possible

Buy Bitcoin with bank transfer

ok

Buy Bitcoin with a credit card 

ok

Buy Bitcoin with Neteller

ok

Buy Bitcoin with Skrill

ok

Buy Bitcoin with PayPal

ok

Buy Bitcoin with online banking

ok

Buy Bitcoin with Rapid Transfer

ok

Buy Bitcoin  with Sofort

ok

Buy Bitcoin with a debit card

ok

Step 3: Buy Bitcoin CFD

Once all the arrangements have been made, you can finally open your first Bitcoin CFD positions.

To do this, we navigate to the trading page by entering "Bitcoin" or "BTC" in the search field of the platform.

Now we are first confronted with some information and also comments on the Bitcoin CFD rate.

We can open the desired position via the "Trade" button.

It should be noted that we acquire the underlying asset without leverage and without a short position.

However, since we do not want to store any tokens in our wallet, we either set the tab to "sell" or activate the Bitcoin CFD leverage.

Buy Bitcoin CFDs with Plus500: Our guide

There are probably many of our readers who are already customers of the specialised CFD platform Plus500. For all of them, here is a guide on how to buy Bitcoin CFDs with Plus500.

Step 1: Create an account

If you do not yet have an account with the provider, then there is no way around registering. Since Plus500 is also one of the EU-regulated brokers, you also have to provide your personal information here and then verify it.

Once again, you will be asked for your name, address, email, password and knowledge of financial products. Verification is then done by uploading a copy of an ID to the platform.

Step 2: Deposit

Plus 500 is not quite as varied as eToro when it comes to deposits, but you won't have any major problems loading your CFD account.

Here, too, you will find PayPal, instant bank transfer, bank transfer or deposit with credit cards.

Normally, the minimum deposit is €100, if you use bank transfer, then at least €500 is required.

Step 3: Buy CFD

Now we can navigate back to the trading window. If you want, you can also use the demo account to trade fictitious Bitcoin CFDs.

Real returns are, of course, only available in real trading. We either search for the desired financial product in the practical search field or navigate to the crypto overview.

There, we select Bitcoin and decide whether to buy or sell. There are no real BTC tokens here.

Bitcoin CFDs: Advantages and disadvantages

Pros

  • Partly astronomical profit opportunities
  • Comparatively low stakes
  • Favourable fees

Cons

  • High risks
  • No real cryptocurrencies

Our recommendation: Buy cryptos with eToro

  • Incl. wallet
  • Buy and sell cryptocurrencies directly in the wallet
  • Paypal, credit card and instant bank transfer
  • Regulated provider
  • Real cryptos or CFD trades

Does it make sense to invest in Bitcoin CFDs?

Bitcoin LogoIn finance, a position always makes sense when it generates a profit. To illustrate when this is the case when buying Bitcoin CFDs, let's set up an example calculation.

To make life a little easier for us, we set the value at a Bitcoin CFD price of $30,000. We also set a fictitious Bitcoin CFD leverage at 2:1.

When does a BTC CFD position lead to returns?

When we take a long position, we decide to buy. We assume that prices will rise and hope that the Bitcoin CFD price will follow our assumption.

In a favourable case, the value actually rises, we assume a level of $40,000 in our example.

Bitcoin CFD

We want to bet on a bitcoin at a value of $30,000. However, due to the leverage of 2:1, we move a total amount of $60,000. At our test winner eToro, the spread fee for a Bitcoin CFD is 0.75%. This is incurred when the position is closed.

The fees are calculated as follows: 0.75% * $30,000 * 2 leverage units. This results in a fee of $450. Overnight fees are not considered at this point.

Thus, our initial investment was only $30,450. However, after the price rose, we were able to close the position at $40,000. The activated leverage allows us to pocket the profit of $80,000, which would mean a return of $49,550 ($80,000-$30,450).

This equates to 65% profit.

Real Bitcoins

An initial investment of $30,000 would have given us a profit of $10,000 if it had risen to $40,000.

Even if we had bought two BTC for a total of €60,000, we would have received only $20,000 as a return. In both cases, the gain would be around 33%.

Here is another overview of possible returns and fees, with a starting price of $30,000 and a closing price of $40,000 per bitcoin, minus fees we end up with $39,965.

Investment data

Long CFD

Short CFD

Real bitcoin

Initial investment

$ 30,000

$ 30,000

$ 30,000

Purchase fees



0.0005 BTC (15 USD)

lever

2: 1

2: 1


Sales charges

0.75%

0.75%

0.0005 BTC (20 USD)

Final investment value

$ 49,550

9,550 USD

$ 39,965

Returns

+ 65%

- 65%

+ 33%

Bitcoin CFDs with banks

Bitcoin CFD Comdirect

Some banks also have BTC in the form of special investment certificates in their repertoire. The Bitcoin CFD at comdirect comes in the form of a certificate.

The Vontobel Financial Products OE Part.Z17(18/unl.) Bitcoin Index Certificate can be found under the WKN: VL3TBC and the ISIN: DE000VL3TBC7.

comdirect-logo-new
However, we only recommend this asset to a limited extent, as it is not very transparent compared to crypto trading at eToro. More information on Bitcoin CFDs at comdirect can be found here.

Bitcoin CFD Consorsbank

consorsbank-klein-2

Customers of Consorsbank also have to take a diversion to access BTC. Under the number WKN A18KCN, you can trade a so-called ETN on Bitcoin.

This is not a classic Bitcoin CFD from Consorsbank, but at least it is a BTC trading option.

Available marketplaces range from Stockholm to Tradegate, Stuttgart, London and Frankfurt. Here you can find more information about Consorsbank.

Bitcoin CFD ING Diba

During our research on the offers of the various banks, such as the Bitcoin CFD at Consorsbank or Bitcoin CFD at comdirect, we also came across many search queries revolving around a Bitcoin CFD at ING-DiBa.

ing-diba2019-04-16

However, no information is currently known about an explicit contract for difference at the banking institution. Although the provider informs its customers about cryptocurrencies in general, it does not yet allow a direct link to trading.

Conclusion

Conclusion

Bitcoin CFDs are something for trading experts. The presented brokers eToro and Plus 500 also offer beginners a demo account that allows them to take their first steps with Bitcoin CFD leverage or short positions.

Contracts for difference are always exciting. They allow significantly higher returns than ordinary crypto trades, but are also associated with an increased risk.

With our test winner eToro, investors can fall back on both investment projects and thus build up as broad a portfolio as possible. This should make for an enjoyable bitcoin CFD experience.

Our recommendation: Buy cryptos with eToro

  • Incl. wallet
  • Buy and sell cryptocurrencies directly in the wallet
  • Paypal, credit card and instant bank transfer
  • Regulated provider
  • Real cryptos or CFD trades

FAQ

What are Bitcoin CFDs?

Bitcoin CFDs are financial products that revolve entirely around the price of the cryptocurrency. You don't buy the token directly, you just bet on the value.

Where is the best place to make my first Bitcoin CFD experience?

We recommend the EU-regulated broker eToro. Here you can play with Bitcoin CFD prices and take your first steps in a demo account.

Are Bitcoin CFDs better than real cryptocurrencies?

No. You can't say that as a general rule. Investors should keep their investment goals in mind and base their personal trading decisions on a strategy.

Do ordinary banks also offer Bitcoin CFDs?

No. As a rule, there is no access to cryptocurrencies. However, exceptions confirm the rule. If you look for the Bitcoin CFD of comdirect, a certificate awaits the trader. The Bitcoin CFD of Consorsbank can be found as an ETN.

About the author

Hi there, my name is Zalman Weinberg. I'm enthusiast with over 7 years of experience in cryptocurrencies and blockchain. Professional Trader providing Blockchain solutions to Startups and Enterprises. Expert in all cryptocurrency exchange APIs (BitMEX, Bittrex, Binance, Bitfinex, Kraken, Poloniex, Gdax etc.). I have also worked with multiple Forex broker APIs.

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