Bitcoin CFDs (Contract for Difference) make it possible to invest in Bitcoin without going the usual route via a crypto exchange and creating a wallet.
In addition, contracts for difference make it possible to increase the capital employed through leverage.
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How do Bitcoin CFDs work?
With a Bitcoin CFD you don’t buy BTC directly. Rather, you trade the difference between the buying and selling prices. This makes it possible to profit from both rising prices (“long”) and falling prices (“short”).
You can add leverage to your BTC CFD. For example, if you buy a Bitcoin CFD with 10x leverage, you can theoretically increase your profit by 10x. So if you buy $1,000 worth of Bitcoin with ten times leverage and the Bitcoin price rises twice to $2,000, you would have a profit of $1,000 without leverage. However, since this was leveraged 10x, the actual profit would be $10,000.
That sounds tempting. However, if the Bitcoin price falls, it is enough for it to fall by 100 US dollars or 10 percent and you lose your capital. Because with a 10x lever you always multiply in both directions. In this case, the position is liquidated and the $1,000 staked goes to the CFD provider.
We see that you are walking on thin ice when trading CFDs. That’s why it is generally only recommended to investors with a lot of experience.
Bitcoin CFDs: Where can I trade them?
If you feel like playing with fire and are wondering where you can trade Bitcoin CFDs, the answer is simple: with a CFD broker. You simply register there, go through the know-your-customer procedure and you can start trading CFDs. The good thing about it: Brokers often offer appropriate demo accounts so that you can familiarize yourself with the matter before you trade real money.
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