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Cryptocurrencies keep getting more and more popular every single month and it is really easy to understand why since there are so many ways to make a profit as you make smart investments. One of the methods preferred by many beginners and professionals alike is the possibility of using online CFDs trading.
A Bitcoin CFD is an agreement between you and the broker. You basically choose whether or not BTC price will go up in a determined timeframe. You gain profit as you make predictions that turn out to be true. Bitcoin CFDs usually correlate BTC price with fiat currencies but there are also some options that allow you to compare with other cryptocurrencies.
Just as with every single investment opportunity available for you, there are both benefits and risks associated with Bitcoin CFDs. Always weigh the pros and cons so you make an informed decision.
Bitcoin CFDs – Benefits
Some of the most important potential benefits that are associated with Bitcoin CFDs are:
- You can magnify potential gains through the use of margin.
- Bitcoin trading is possible without you actually buying BTC.
- You do not have to store Bitcoin and there is no reason why you should worry about working with the cryptocurrency exchanges.
- You can make a profit when the market rises or falls.
- You only need to have fiat currency available in order to make investments in Bitcoin CFDs.
- The platforms that you trade on are usually regulated so the security of your funds is higher.
- Customer support is usually much better with Bitcoin CFD trading platforms than with regular cryptocurrency exchanges.
- Can invest in CFDs that focus on other cryptocurrencies, not just BTC.
- Risk can be reduced with various trading tools that are offered by the platform you use.
Risks Potentially Associated With Bitcoin CFDs
Just as with every single investment opportunity that is available for you right now, when you focus on Bitcoin CFDs you need to be aware of the potential risks that exist. The most important ones to remember are:
- Margin trading can lead to higher losses than what you could afford.
- It is possible that you lose more than the money that you initially deposit.
- You cannot use Bitcoin CFDs when your goal is to hold cryptocurrency.
- The market is highly volatile so there is an increased risk even if you do great research and all signals push towards one market evolution.
- Bitcoin CFDs are speculative in nature.
Bitcoin CFDs Or Buying Bitcoin?
At the end of the day, for most investors, the main choice is this. Should you just buy Bitcoin and use it or should you rely on Bitcoin CFDs? The answer to this depends a lot on the knowledge you have and your personal risk tolerance.
Usually, buying Bitcoin should be the option chosen by those that do not understand Bitcoin CFDs and how to make correct choices. If you do manage to understand the CFDs and how they work, the profit that you could make in a shorter period of time is simply larger.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.