Home > What is Crypto Trading and How Does it Work in 2025? > What is Crypto Trading and How Does it Work in 2025?
Advertiser Disclosure
Written by Charles
Hi, I'm Charles Johns, a Finance graduate with a specialization in Financial Management from the University of Chicago. My journey through financial markets has fueled a passion for both traditional and digital assets, where I continuously explore evolving investment opportunities. As an active trader and cryptocurrency enthusiast, I strive to bridge the gap between complex financial concepts and practical, real-world applications. My goal is to empower everyone, whether seasoned investors or newcomers, with valuable insights and knowledge to confidently navigate the world of finance and crypto investing.
Expert Reviewed
This article has been reviewed by crypto market experts at SCM to ensure all the content, sources, and claims adhere to the highest standards of accuracy and reliability.
Last Updated on February 2, 2025
Cryptocurrency spread betting is a dynamic way to engage with the volatile world of digital currencies. It allows you to speculate on price movements without owning the asset itself.
Spread betting involves predicting whether the price will rise or fall, with profits or losses based on how accurately you anticipate these movements. This method focuses purely on price fluctuations, offering a chance to capitalize on market volatility without needing actual ownership.
Unlike margin trading or contracts for difference (CFD), spread betting is centered on wagering price movements, appealing to those seeking tax benefits and the flexibility to go long or short.
With cryptocurrencies like Bitcoin and Ethereum known for their significant price swings, spread betting leverages this volatility, letting traders profit from unpredictable markets without owning the assets.
Crypto spread betting involves speculating on the price movement of digital assets without owning them. You take a position based on the asset’s price spread, which is the difference between the buy (bid) and sell (ask) prices.
Leverage is a key feature. It allows you to gain greater exposure to the market with a small initial deposit known as a margin. This can amplify gains and losses, so careful risk management is crucial.
Imagine you believe Bitcoin’s price will rise. You place a bet at the current buy price. If the price increases as anticipated, you profit from the difference between the opening and closing prices, multiplied by your stake per movement point.
Alternatively, you can take a short position if you expect the price to fall. You profit if the price drops, again based on the stake per point of movement. Spread betting allows you to benefit from both upward and downward price trends.
The market’s movement determines potential profits in spread betting in your favor. However, be mindful of the risks; leverage means losses can exceed your initial margin. Always set stop-loss orders to mitigate potential losses.
To begin spread betting on crypto, you need to choose a reliable spread betting platform that supports cryptocurrency. Research different platforms and evaluate them based on features, fees, and security.
Once you’ve selected a platform, create an account and deposit funds. Ensure the platform offers the cryptocurrency you wish to bet on, like Bitcoin.
With your account funded, look for the spread on Bitcoin.
This spread is the difference between the buy and sell price. For instance, if it’s $10,000/$10,005, you must determine if the price will rise or fall.
Decide whether to go long (if you believe the price will increase) or short (if you think the price will decrease). Your prediction will form the basis of your bet.
Choose your stake per point.
For example, if you decide on a $2 stake per point and the price moves favorably by 10 points, you earn $20.
Keep in mind that spread betting can involve leverage.
This means a small deposit could lead to a prominent position. Understand the risks associated with leverage, as it can amplify gains and losses.
To manage risk, consider setting stop-loss orders, which automatically close your position if the price moves against you by a specified amount.
Stay updated on market trends and news, as these can significantly impact price movements. Regularly review and adjust your strategy as needed.
Spread betting on cryptocurrency offers unique benefits and challenges. Understanding these factors will help you make informed decisions when engaging in this type of speculative trading.
One of the significant advantages is the tax benefits. In regions like the UK, spread betting might be tax-free, meaning there’s no Capital Gains Tax or Stamp Duty, which can maximize your earnings.
Another appealing factor is that you don’t need to own the underlying cryptocurrencies. This eliminates the hassle of storage, security, and wallet management, making the trading process more straightforward.
Leveraged trading is a highlight of spread betting. It allows you to gain more significant market exposure with smaller initial capital. This can enhance potential profits significantly, providing an efficient way to capitalize on market movements without heavy upfront investments.
Spread betting also comes with its downsides. The use of leverage can be a double-edged sword. While it amplifies potential gains, it can equally increase losses, potentially exceeding your initial investment, especially in the inherently volatile crypto market.
Access to crypto spread betting is limited geographically. It is only available in specific regions and through certain brokers, which can restrict your participation options. This limits flexibility and may require you to navigate regulatory landscapes.
The volatility of cryptocurrency markets poses another risk. Sharp price fluctuations can lead to significant and swift financial losses. This unpredictability demands careful strategy and risk management to safeguard your investments while engaging in spread betting.
In cryptocurrency spread betting, you can speculate on price movements without owning the assets. This allows you to focus on both popular and emerging digital currencies. Here are some options you might consider.
Popular choices for spread betting include Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Litecoin (LTC). These cryptocurrencies are favored because of their high liquidity and significant market activity.
Bitcoin and Ethereum are particularly well-suited for spread betting due to their market dominance and volatility.
Bitcoin is the most prominent, offering vast price fluctuations, while Ethereum provides frequent market activities and updates. Ripple and Litecoin are also reliable, although they provide less dramatic shifts.
Focusing on these established cryptocurrencies gives you access to predictable liquidity, helping you manage your positions effectively.
In addition to established players, newer cryptocurrencies present unique opportunities. While these might involve higher risks, they also offer substantial potential rewards.
Smaller coins like Chainlink (LINK) or Polkadot (DOT) often display sharp price movements. This volatility can appeal if you’re ready to take on more risk. These emerging cryptos can provide a fresh angle on the market but require careful attention to news and trends to ensure you’re making informed bets.
Understanding that these coins are less predictable is crucial in developing a strategy that balances potential gains and risks.
When choosing platforms for cryptocurrency spread betting, consider factors like platform reputation, user-friendly interfaces, and regulatory compliance. These points are crucial for ensuring a secure and responsive trading experience.
IG and CMC Markets are among the top platforms for crypto spread betting. Both offer robust trading interfaces and provide access to various cryptocurrency markets, enhancing your ability to build a diverse portfolio.
IG features a particularly intuitive user interface and offers competitive leverage options, enabling you to maximize potential gains while managing risk. CMC Markets complements its offerings with detailed market analysis tools, helping you stay informed and make strategic decisions.
Ensuring that the platform you choose is regulated adds safety and transparency to your trading activities. Regulated platforms are required to adhere to specific financial standards, reducing the risk of fraudulent activity.
Verifying a platform’s regulatory status through reputable financial authorities such as the Financial Conduct Authority (FCA) in the UK or the Commodity Futures Trading Commission (CFTC) in the US would be best. This verification reassures you of fair trading practices, protecting your investments.
You can choose between short-term and long-term betting when engaging in crypto spread betting.
Incorporate technical analysis by studying chart patterns and indicators to predict future price movements.
Utilize fundamental analysis to understand the underlying factors influencing market direction, such as regulatory changes and technological developments.
Adopting these strategies and consistent monitoring and adjustment can help you navigate the cryptocurrency spread betting landscape effectively and responsibly.
When you engage in spread betting, you speculate on price movements without owning the cryptocurrency.
This contrasts with Crypto CFDs (Contracts for Difference), where you also don’t take ownership, but the structures differ in taxation and fees. Spread betting can be tax-free in some regions, unlike CFDs, which typically aren’t.
Traditional Crypto Trading involves buying and holding digital currencies to increase value. Here, you own the cryptocurrency directly, allowing you to use it for transactions outside trading.
Spread betting, in contrast, focuses purely on price speculation, eliminating the need to manage digital wallets or secure your holdings.
Regarding liquidity and trading hours, spread betting offers constant market access similar to CFDs, while traditional crypto markets can be subject to exchange-specific hours.
Spread betting typically incurs lower fees and spreads, as execution is between you and the broker.
Another advantage of spread betting is the potential for leverage, enabling you to amplify gains and losses.
Traditional trading requires total exposure to market moves. With spread betting, you can also short-sell more quickly, allowing you to profit from price declines efficiently.
Consider the cost structure when comparing. Traditional trading often involves transaction fees and spreads, while spread betting consolidates costs within the spread itself. This can simplify your calculation of potential profit or loss.
Each method has benefits and risks that align with different trading preferences and objectives. Understanding these can help you choose the right strategy for your needs.
Crypto spread betting involves speculating on the price movements of cryptocurrencies like Bitcoin and Ethereum. This section addresses your concerns about the regulations, strategies, and tools associated with crypto spread betting.
Yes, cryptocurrency spread betting is legal in the UK. Numerous brokers offer spread betting for digital currencies such as Bitcoin and Ethereum. The Financial Conduct Authority regulates this.
Crypto-spread betting is not permitted in the United States. Due to stricter financial guidelines, US regulations do not allow this form of trading.
Bitcoin spread betting involves placing a bet on Bitcoin’s price movement without actually purchasing the cryptocurrency. You decide to go long (buy) or short (sell) based on market predictions while leveraging your stake.
Your strategy can amplify potential profits due to leverage and increase potential losses. Having a sound strategy and risk management plan is crucial to mitigate significant financial risk.
Some popular apps include Markets.com and InterTrader, which provide platforms specifically designed for crypto spread betting. These apps offer user-friendly interfaces and various tools to enhance your trading experience.
A good spread is typically narrow, which means the difference between the buy and sell price is negligible. This minimizes trading costs and can be influenced by market volatility and liquidity.
Due to increased volatility and lower liquidity, crypto spreads can be more comprehensive than those in traditional markets. Given their maturity and stability, conventional financial markets, like forex, usually have tighter spreads.
In conclusion, crypto spread betting offers a flexible and innovative way to speculate on cryptocurrency price movements without owning the assets. It allows for potential profits in both rising and falling markets, and its tax efficiency and leverage options make it attractive to many traders.
However, the volatility of crypto markets and leverage can lead to significant risks, making risk management essential. Choosing a reputable broker and fully understanding the trading mechanisms involved is crucial.
Before engaging in crypto spread betting, thorough research and careful consideration of the risks and rewards are vital.
Starting with small positions can help you better understand market dynamics. Success in this trading method will ultimately depend on your ability to effectively manage risks and navigate the challenges of the crypto market.
Hi, I'm Charles Johns, a Finance graduate with a specialization in Financial Management from the University of Chicago. My journey through financial markets has fueled a passion for both traditional and digital assets, where I continuously explore evolving investment opportunities. As an active trader and cryptocurrency enthusiast, I strive to bridge the gap between complex financial concepts and practical, real-world applications. My goal is to empower everyone, whether seasoned investors or newcomers, with valuable insights and knowledge to confidently navigate the world of finance and crypto investing.
Advertiser Disclosure