Why Trade Bitcoin Futures?

Spread Betting is for those who understand the risks associated with trading.

Bitcoin Futures trading is slightly different to buying Bitcoin directly. For example:

  • The deposit you need to put down to place your spread bet is far lower
  • As it’s a leveraged product, your capital outlay, or margin, is only a percentage of the full trade value
  • Options such as Stop Loss and Limit Orders can help you manage how much risk you take

Naturally, both buying Bitcoin and trading Bitcoin Futures are much riskier than keeping your money in a savings account.
As with buying Bitcoin directly, there’s no guarantee that you’ll make a profit.
You should always remember that your potential loss can be significantly more than the margin.

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Bitcoin Futures & Bitcoin Physical Price Differential

There is a pricing disparity between the trading price of physical Bitcoins and Bitcoin Futures. The primary reasons for this are due to financing costs, market fragmentation and liquidity.

Physical Bitcoins are cash settled instantaneously whereas Bitcoin Futures are settled on the forward settlement date and are cash settled on expiry of the contract. The financing cost of the notional amount to the expiry is added to the price of the Bitcoin Futures contract.

Price disparity also arises from market fragmentation due to the reference price being drawn from a few marginal exchanges then all the Bitcoin exchanges and lastly pricing difference due to liquidity will be a great factor given that Bitcoin Futures trading is only on regulated exchanges with the added flexibility of going long or short in the Futures market.

Bitcoin Futures vs Buying Bitcoin

Spread betting on Bitcoin Futures has a number of advantages over buying it:

  • Quicker & Easier – It can days to open an account with a Bitcoin exchange, buy and receive your first Bitcoin, but you can trade Bitcoin Futures in minutes with Spread Co
  • Simpler & Safer process – Don’t store Bitcoins in potentially unsecure wallets. Avoid dealing through unregulated Crypto Exchanges
  • No need to open an account with a Bitcoin exchange or a Bitcoin wallet – Spread Betting enables you to speculate on the movement of Bitcoin without having to physically own it
  • Low stake size – Trade from the equivalent of 10p a point
  • Profit – Benefit from the option of going long or short
  • No Capital Gains Tax – on any profit you make*
  • Low Margin Requirement – Only 20%**
  • Earn – 2% interest on your balance***

Spread Betting vs Buying Assets

Most experts will tell you that buying stocks and other assets is for longer term investing. If you invest in a fund that buys shares, such as an OEIC, the fund manager will usually recommend an investment term of five years or more. Spread betting is all about taking advantage of short-term investment opportunities. Instead of holding onto an asset for years, spread betting lets you make gains (or losses) in days, hours or even minutes when markets are volatile.

Spread Betting vs Buying Assets

Spread Bet on Bitcoin Futures with Spread Co

When you Spread Bet Bitcoin Futures with Spread Co you’ll also enjoy:

  • Earn 2% on your Balance***
  • No overnight financing – when you go short on currencies, equities and indices
  • Wide range of markets – including forex, indices, shares and commodities

* Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
**Margin rate of 20% applies between Monday 8am and Friday 5pm. Margin rate outside of these hours is 30%.
***Terms and conditions apply for refer a friend and 2% interest on balances, these can be found on the Spread Co website