How to trade cryptocurrencies in 2021: Prices, Forecast & Guide

Private investors are increasingly interested in cryptocurrencies and how they can trade cryptocurrencies.

For beginners in crypto, the topic is usually difficult to grasp, too abstract and, of course, new: crypto and other assets are very different. Many mistakes can be made here, some of which can even lead to a total loss.

Here you can find out what you should pay attention to when you want to trade cryptocurrencies, which broker is right for you and what the difference between crypto trading and investment actually is.

The most important facts in brief

You need a broker to trade cryptos
Different brokers have different advantages and disadvantages
Not every crypto broker supports every cryptocurrency
Crypto investments can be very risky.
Crypto trading makes high profits possible
Choosing the right broker is extremely important

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How can I trade cryptocurrencies?

To trade cryptocurrencies, you first have to deposit money with your trusted broker. Then you can place trading orders, view prices and trade. We will show you exactly how this works using the example of our test winner: the broker eToro:

Step 1: Open an account with eToro

Before you can buy cryptocurrencies, you first have to create an account with eToro:
To register, simply enter your personal details on the website in the registration form on the homepage and click on the "Trade now" button.

Step 2: Deposit

Now you will receive an email from eToro with a confirmation link. After confirming your account you can proceed to buy cryptocurrencies.

In order to fund your trading account, you need to click on the "Deposit Money" button in the bottom left corner. A window will then open where you can select the desired payment method and make the payment.

Step 3: Buy cryptocurrencies

Now you can buy the desired cryptocurrency. The easiest way to do this is to search for the name in the search field and then click on it.
Now you can make the desired settings in the purchase mask. Here you can specify how many euros you want to buy a crypto asset for. If you want to buy real cryptos, you should leave the leverage set to "X1".

If you want to trade a CFD on cryptocurrencies instead, you can set the leverage to X2. But here's a hint: CFDs are rather something for experienced investors, as the risk of loss is significantly higher here.

Popular brokers for cryptocurrencies

With crypto brokers, the various cryptocurrencies can be traded very similarly to shares or commodities. However, you do not own the cryptocurrencies with online brokers, but only bet on price gains and losses.

This makes it possible to save the sometimes very high transaction fees and to react much faster to the market.

Note: Trading cryptocurrencies involves a high risk. A total loss is possible.

etoro

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

libretex

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

Plus500

Many tradable assets
Excellent trading platform
European license

xtb
Many tradable assets
No minimum deposit
Very good customer service

How does trading with cryptocurrencies work?

Trading with cryptocurrenciesTrading with cryptocurrencies works in a similar way to trading with foreign currencies. Trading is simply "trading", and means that you exchange a certain amount of one currency for another at a trading rate set by the market.

This rate is the ratio at which one currency can be exchanged for another. If, for example, interest in Bitcoin increases over time and more and more people exchange Euros or US dollars for Bitcoin, then it drives up the value of this currency and a Bitcoin is worth more later than it was at the beginning.

If you have exchanged your Euros for Bitcoin and the price has risen, you can sell them again and get more money back than you exchanged at the beginning.

Of course, it can also happen that the price of Bitcoin falls in relation to the euro, and thus after the holding period it is only worth less than when you bought it.

The term trading here refers to short-term holding and trading. In order for this to be possible effectively, you need a so-called broker. A broker is a company that executes your own trading decisions on the market: To trade, you pay money to the broker and can then bet on rising or falling prices.

How does a crypto investment work?

Long-term crypto investment is not about quick action, but about longer investment periods. With cryptocurrencies, one speaks of an investment from about 3 months.

For such a long-term investment, you don't necessarily need a broker, but can also exchange cryptos for real money on exchange platforms. Nevertheless, the comfort and security is greatly reduced compared to using a regulated broker.

In addition, the fees are usually lower when using a broker and the execution is faster, so we would also recommend using a broker for a crypto investment.

It sounds a bit ridiculous but Bitcoin will rise to $157000

What are the advantages of cryptocurrency trading?

When trading cryptocurrency, there are some advantages that other assets cannot offer. For example, it is possible to trade cryptocurrencies 24 hours a day, 7 days a week, as the market here never closes.

In addition, cryptocurrencies are usually very volatile, which on the one hand can be seen as a disadvantage in terms of investment, but for day traders or short-term trading in general, leads to an exciting price trend with great profit but also loss opportunities.


New crypto study sees Bitcoin at $318,417 by 2025

Another advantage is that there is an extremely large selection of cryptos and new interesting and innovative coins and tokens are constantly being added. In contrast, the international currency market is very boring and relatively uninteresting. With cryptocurrencies, on the other hand, you often have the opportunity to participate in and profit from IPOs, exciting developments, mergers and forks.

What are the risks of trading cryptocurrencies?

Of course, trading cryptocurrencies also has many disadvantages: Cryptocurrencies are a very new asset class and are therefore extremely volatile. Most of the time, the coins and tokens are not backed by real values, but only by expectations of projects.

Thus, it is quite possible that the value of a relatively unknown coin can drop to 0 within hours or days, resulting in a total loss.

Another risk is the use of unregulated crypto brokers. There are many offers on the internet that are insufficiently controlled and monitored by the state and so it can happen that you become a victim of fraud. This risk can be avoided by using well-known and state-controlled brokers, such as eToro.

Bitcoin is not a threat to the dollar

Another risk of cryptos is that the high transaction fees of some currencies when investing directly without a broker can eat up a large proportion of the profit.

Test winner trading platform for crypto

At eToro you will find an interesting combination of features that combines the advantages of several other platforms. With eToro you have a broker for trading forex, stocks and commodities at the same time, but you can also use the same account for trading popular cryptocurrencies.

You can even choose whether you really want to buy the respective cryptocurrency "physically" in order to transfer it to a wallet or whether you only want to bet on price increases or decreases.

This is possible because at eToro you can trade CFDs on cryptos. These CFDs make it possible to profit when the price of a cryptocurrency rises or falls, and all this at significantly lower fees than when buying directly.

Trade CFDs on cryptocurrencies at:

At eToro you can choose several payment methods. eToro offers you the deposit e.g. via PayPal, credit card, (SEPA) bank transfer.

At eToro you can trade more than 120 different cryptocurrencies, some of them are:

Bitcoin (BTC)
Bitcoin Cash (BCH)
Ethereum (ETH)
Ethereum Classic (ETC)
Ripple (XRP)
Litecoin
DASH
NEO
Stellar (XLM)
EOS
TRON

eToro

Trade real Bitcoin or Bitcoin CFDs
Trade mobile as APP or online via browser
More than 6.000.000 satisfied customers
Many learning materials
Demo account
Licensed by CySEC (EU) and FCA (UK)

Advantages of a crypto broker

Brokers for cryptocurrencies offer several advantages:

Pros:

  • Reputable and regulated providers
  • Many deposit and withdrawal options
  • Fast and easy deposits and withdrawals
  • Detailed charts and easy-to-use software
  • Learning materials on trading available
  • Investment in cryptocurrencies possible
  • Margin trading (leverage) possible
  • No expensive hardware wallet necessary

Cons:

  • But be careful: cryptocurrencies are not regulated and their prices can fluctuate greatly. Therefore, cryptocurrencies are not suitable for all investors. Trading cryptocurrencies is not subject to any supervision by EU regulators. Your capital is exposed to risks.

What should you look out for in Bitcoin brokers?

First of all, you should examine the crypto broker and check whether all the formalities are correct. This means: Can the broker provide basic things such as an imprint, a contact option and a head office? You should also check whether the broker is regulated or has a licence for trading and how the provider handles customer funds.

Basically, you should always stick to a larger broker that has many years of experience and good customer reviews. You should avoid new brokers or crypto brokers without a licence.

You should also check what the broker offers and whether it meets your requirements. Find out about the following things, for example:
Are learning materials offered?
How many cryptocurrencies can be traded?
Are detailed and historical charts offered?
Is the broker user- and beginner-friendly?
What deposit options does the broker offer?

Which cryptocurrencies can be traded with crypto brokers?

Bitcoin is the first cryptocurrency and has also been the most popular digital currency since 2009. For some time now, however, many other digital currencies have been competing for the crypto throne.

Ethereum(ETH) and the Binance Coin(BNB) are popular altcoins. Both have been in the top10 cryptocurrencies for quite some time. But these are not the only alternatives to Bitcoin. Currently popular and widely supported cryptos are additionally:
XRP (XRP), Tether (USDT), Cardano (ADA), Polkadot (DOT), Uniswap (UNI), Litecoin (LTC), Stellar (XLM), Chainlink (LINK) THETA(THETA) and the Filecoin (FIL).
However, there are countless cryptocurrencies in total. Over 4500 cryptocurrencies are currently listed on Coinmarketcap. So it is only understandable that online brokers cannot list all cryptocurrencies. Investors show no interest in most coins. Therefore, only the most popular cryptocurrencies can be traded with the brokers.
Note: Cryptocurrencies are not regulated and their prices can fluctuate greatly. Therefore, cryptocurrencies are not suitable for all investors. Trading cryptocurrencies is not subject to any supervision by EU regulators. Your capital is exposed to risks.

Trading cryptocurrencies vs. buying cryptocurrencies

With cryptocurrencies, it depends on whether you want to buy them or whether you want to trade cryptocurrencies. If you want to own a certain cryptocurrency, you have to buy it from individual providers and then transfer it to your own (hardware) wallet.

Those who only want to trade the prices of the individual cryptocurrencies do not need a wallet for storage and can save costs. In addition, when trading cryptocurrencies, you do not necessarily have to delve into the complex matter, you only need the information that is relevant for trading, such as news on individual currencies.

You should buy cryptocurrencies if you:

want to master the use of currencies
want to understand the material better ("learning by doing")
want to trade unknown cryptocurrencies want to own cryptocurrencies

You should trade cryptocurrencies if:

you want to bet on the prices of cryptocurrencies
You do not want to own the cryptocurrencies.
you do not want to set up an (expensive) wallet
you are afraid of another crypto stock market crash

Should you trade cryptocurrencies?

Cryptocurrencies are popular digital currencies built on a new type of technology. Tim Draper even predicted that FIAT currencies will die out in five years, that's how convinced he is of the technical innovation.

However, technical innovations always carry dangers. Newer technologies could outpace cryptocurrencies, governments could ban digital currencies and previously unnoticed flaws could be discovered that lead to failure. Here is a brief overview:

Advantages

High volatility makes cryptocurrencies very attractive for experienced traders. It is possible to exploit large price fluctuations and make good profits from them.

The growth in cryptocurrencies is bigger than ever before. New currencies are constantly being created and the entire industry has been booming since January 2020. Large profits are very possible if the trend remains constant.

Risks

Cryptocurrencies are extremely volatile. An investment is always very risky and the future price is difficult to predict.

With very unknown coins, it is sometimes quite possible that a total loss occurs.

Conclusion - to trade or not?

DeFi Coin (DEFC) experts forecast a price of USD 2.20 in July

However, you should only trade cryptocurrencies once you have gained experience with trading. If you don't have that yet, you should consider setting up a demo account with a crypto broker first to learn how to trade. To be able to trade successfully, you need the necessary expertise* and you need to stay up to date. And even then, profits are not guaranteed.

Trade cryptocurrencies on crypto exchanges

If, on the other hand, you want to trade the real digital currencies and not just the displayed prices, you should choose an exchange for cryptocurrencies that can show a high volume. The exchanges with the largest trading volumes are Binance and Bitfinex.

  • Binance - the largest crypto exchange

  • Bitfinex - the choice for professionals

Binance is the absolute top dog among crypto exchanges for normal consumers. Since 2018, it has been the largest crypto trading platform in the world and now even has its own Binance Coin, which currently (as of April 2021) ranks among the top 3 cryptocurrencies with the largest market capitalisation.

Binance offers support for all known platforms, including Android, iOS, PC and Mac. Many well-known cryptocurrencies are supported here: Nevertheless, you won't find unknown altcoins on the platform. Here, the focus is mainly on the top 100 coins, but the fees are very low.

As a large provider, Binance offers excellent customer service and has many followers, including in Germany.

If you are looking for an easy way to buy cryptocurrencies and trade via a simple interface, Binance is probably a good choice.

Here are just a few of the many advantages of eToro at a glance:

Real cryptocurrencies and CFDs with leverage
Free registration
Deposit with PayPal, credit card, SOFORT transfer and more
Social trading
No custody account management fee
Without verification up to 2000€

FAQ

What is cryptocurrency?

Cryptocurrency, also crypto money, is a type of digital means of payment. The term cryptography comes from the Greek and means secret writing. In other words, an encryption of information. A cryptocurrency does not exist in the form of coins or notes, but only as pure book money. Cryptocurrencies are in fact based on cryptographic tools such as blockchains and digital signatures. As a payment system, they are supposed to be independent, distributed and secure.

Which organisation controls cryptocurrencies?

There is no such organisation that has control over digital money. The trading of cryptocurrencies takes place in digital networks. Anyone who has a computer and the appropriate software can participate.

Is cryptocurrency trading legal?

Owning cryptocurrencies and buying and selling them privately is legal and does not require a permit.

Which cryptocurrencies are there?

Bitcoin, Ethereum, Bitcoin, Cash, Ripple, Dash, Litecoin, Monero, NEO

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.