The cryptocurrency market is exciting. Sure. It’s faced-paced. Certainly. But it’s also highly volatile. Even the most hardened traders amongst us would admit that there are no guarantees when making investments. But what if there was a way to make money from the bitcoin phenomenon without investing? It’s possible and it could happen if you look into spread betting.
The Launch of Bitcoin Futures
In December 2017, CME Group, the world’s biggest cryptocurrency exchange operator, launched a market which allows traders to bet on the future value of bitcoin. This competes with Cboe Global Markets, which launched its own bitcoin futures market earlier that same month. And what this means is that the doors are now open for futures trading.
What Are Futures?
Futures trading involves the exchange of a contract obliging a buyer to purchase an asset or a seller to sell an asset at a predetermined date in the future, at a predetermined price. The first futures contracts were issued as long ago as the 17th century, but now with the launch of bitcoin futures markets this form of trading has been given an exhilarating new lease of life.
Why Choose Spread Betting?
The advantages of choosing spread betting, using a reliable trading company, are many, and these include:
- Risk management, meaning that you can benefit from bitcoin trading without actually trading bitcoin.
- Benefiting from falling prices, which is possible because you are not buying any bitcoin but rather betting whether they will rise or fall in value.
- Saving on stamp duty, as you are not buying or selling any physical assets.
- Saving on commission, because you are not buying any bitcoin from a broker.
Saving on Tax
Currently in the UK, spread betting also brings with it the advantage of not requiring tax to be paid on profits. However, tax laws are likely to be changed soon, making this something that could possibly be factored out of deciding whether to choose bitcoin spread betting.
Spread betting involves trading on the margin, which means that just a small deposit may be required to make a huge profit. However, the converse is also true, and a large loss could result from that same small bet. So, spread betting leverage should be seen as a double-edged sword when it comes to the world of bitcoin futures.
The Future of Bitcoin Futures
The existing bitcoin futures markets are likely to grow to include other cryptocurrencies. There is also the possibility that new markets might arise in competition to these already established giants. But only time will tell which, if any of them, becomes the authority when it comes trading.
As mentioned above, taxation laws concerning spread betting in general are likely to change, which will almost certainly have a dampening effect on futures markets. Authorities are also looking to heavily regulate the bitcoin futures market specifically, which might make it even less enticing to trade in this way.
One thing is for certain, though, and it’s that spread betting on bitcoin is currently possible and might just be in what investors of the future will consider a golden age. If you understand the risks, and want to benefit from bitcoin without buying bitcoin, then spread betting might be right for you.