Best Cryptocurrencies to bet with: Spreads, Pros, Cons & More
Cryptocurrency spread betting is a unique approach to speculating on the price fluctuations of several different financial products by making use of financial derivatives. It’s not an option that is wildly popular, but there is a niche for crypto gambling. Check the Best Cryptocurrencies to bet with here in Insiders Betting Digest.
A trader who engages in crypto spread betting will decide whether they believe the price of a particular digital asset (or crypto) will rise or fall in the near future and will then earn a profit or incur a loss depending on whether or not their forecast is accurate.
How Crypto Spread Betting Works
In 2009, Bitcoin arrived, the first kind of money that is decentralized, has cheap costs associated with transactions and provides a high degree of anonymity to its users. Since then, a number of other versions of digital currency have launched.
There is no such thing as a physical Bitcoin. All balances are kept track of digitally and are updated using a public ledger that is stored on a blockchain.
Spread betting on crypto is something that may be done entirely online. Bettors will decide whether they believe the price of a crypto will rise or fall in the near future and will then earn a profit or incur a loss depending on whether or not their forecast is accurate. When a deal is concluded, the amount of profit or loss a trader might realize is directly proportional to the amount of price movement that occurred during the trade.
Understanding the Concept of Spread Betting in Crypto Trading
It is essential to keep in mind that actual cryptos are never bought or sold in a direct transaction. A derivative contract is used in the process of making the spread bet. If an individual is of the opinion that the price of crypto will go up in the near future, then they need to initiate a long position (purchase) in the spread bet. If, on the other hand, an individual believes that the price will go down, then they should initiate a short position (sell) in the spread bet.
The “stake” of a spread bet refers to the amount of money that a person risks for a change in price. This stake might vary depending on the kind of spread bet. The trader makes numerous profits or losses of this amount for every point that the digital asset moves, and their gain or loss are proportional to the number of points that the crypto moves.
A spread bet with crypto, like any other kind of spread bet, is a kind of leveraged transaction. To participate in the trade, you need to make a deposit, although it may be as little as a tiny proportion of the overall value of the asset. Both gains and losses are amplified in this scenario. The trader’s account might sustain losses that are greater than its current balance, necessitating more deposits to cover those losses. The potential gains could be substantial, but so could the prospective losses.
Pros & Cons Crypto Betting
The ability to trade utilizing margin is one of the most significant benefits of betting on the best cryptocurrencies to bet with in crypto betting in comparison to other types of investing. Because of this, when you bet crypto, you are able to improve your position in relation to the quantity of money you have available to invest, which may result in an increase in the potential for returns, which you can use for your crypto sports betting interests.
Spread betting is advantageous for a number of reasons, including the fact that it provides many ways to minimize risk, such as the stop-losses. Spread betting or crypto gambling is often exempt from commissions, and traders have access to longer trading hours—sometimes around the clock, depending on the broker—when engaging in the activity.
Risks and Training Involved in Spread Betting on Cryptocurrencies
Spread betting on the best cryptocurrencies to bet requires a significant amount of training on top of the fact that it is often offered on the same platforms as other kinds of spread betting. For some individuals, the presence of elements such as leverage and margins, for example, might be seen as a detriment due to the fact that the prospect of a greater reward also comes with the risk of a more significant loss.
As a result of the absence of commissions, several brokers charge extensive spreads. You may, of course, reduce the impact of all of these variables by working with the best broker possible and using techniques that mitigate risk.
How to Bet with Crypto: Best Cryptocurrencies to bet with
The first thing you do while engaging in spread betting is to choose the digital currency that will serve as the basis for your stake. Chances are, Bitcoin is your best bet.
At this point, you need to choose whether you want to buy long or short, depending on whether you think the price of the asset will go up or down.
The stake, also known as the amount of money that you want to invest in each point of movement on the market, is then decided, which brings us to the third step. Spread betting gives you access to a variety of additional risk management options, including take-profit and stop-loss levels, which might be of use to you.
The last step is actually to make the transaction. You are often able to terminate crypto spread betting transactions whenever you choose, regardless of the take-profit and stop-loss settings that you select.
Spread bets on cryptocurrencies, much like spread bets on stocks, futures, or currencies, have a defined time limit, at the end of which they will automatically expire unless you cancel the wager earlier on your own. There are some that won’t be there for more than a few days, while others could be around for a few months. To calculate your profit or loss, first, take the difference between the settlement price and the starting price, then multiply that number by the amount at risk.
Cryptocurrency Spread Betting Option
When making a spread bet, you have the option of putting your wager on a single cryptocurrency, such as Bitcoin, or on a currency pair. The value of the wager is determined by the current price of the cryptocurrency on which it is placed. Options for spread betting, such as BTC/GBP, BTC/EUR, BTC/USD, BTC/CNH, and BTC/JPY, are probably going to be accessible.
It is also important to note that leverage is used in the vast majority of spread betting transactions. This gives you the ability to broaden your exposure to the market while also raising the risk you face. You are essentially required to make an initial payment equal to a small percentage of the entire value of the transaction.
Because leverage magnifies both wins and losses, the majority of crypto spread betting brokers require their clients to have a significant sum of capital in their accounts. To put it another way, you’ll need a sufficient amount of cash in your account to protect you against adverse market conditions. Because the crypto market is more unpredictable than the stock market, you should anticipate larger margins for crypto spread betting than you would for stock spread betting.
Do Plenty of Research for Best Cryptocurrencies to bet with
Although it is possible to make a spread bet by simply tossing a coin each time and betting on whether to go short or long depending on how you are feeling at the moment, this is not the best method to go about it since you run the risk of going on a significant losing streak. Researching what you are going to wager on is the most critical factor in determining your level of success.
For illustration’s sake, let’s say you’re interested in making a spread bet with a cryptocurrency that’s held by a company like Blizzard Entertainment. If you had been keeping up with what was happening at this organization in 2021, you would probably be able to predict the outcome of this case.
Presuming Value Increase in Cryptocurrency
Your presumption, without any investigation, would be to wager that the value of their cryptocurrency is going to climb since Blizzard has a history of having a lot of success when it comes to developing video games; thus, you would not need to do any study.
On the other hand, believing such would be incorrect due to the fact that, if you did a little bit of investigation, you might quickly learn that there were some controversies lately and that their stocks are most surely going to collapse, and together with that, their cryptocurrency.
This is just one example of performing research for spread betting, but there are many more sorts of data that you might take into consideration when making judgments about spread betting. You may get an edge in the market by making use of a variety of different types of information, including the following: expert analysis, trading alerts, trading signals, technical indicators, the economic calendar, the market screener and market statistics.
Strategies for Managing Risks
Spread betting, in particular when contrasted to other forms of conventional trading, is fraught with danger. In point of fact, every single cryptocurrency betting broker will include a risk warning on their website. This warning will inform you that these investments have an extremely high level of risk and will advise you to proceed with care.
Importance of Stop-Loss Orders in Crypto Spread Betting
When it comes to crypto spread betting, stop-loss orders are one of the most significant risk-management instruments that a trader may use. Your transaction will be automatically closed if it is losing money and the market moves over or under the price threshold that you set for it using a stop-loss order.
When a standard stop-loss order hits a specific value, it will automatically close the deal while doing so at the best price currently available. When there is a lot of volatility in the market, there is a chance that your transaction may close at a level that is lower than your stop trigger.
On the other hand, guaranteed stop-loss orders provide you with the assurance that your transaction will be closed at the particular value that you specify, irrespective of the underlying market circumstances at the time. For guaranteed stop-loss orders, most brokers charge an additional premium to compensate for the more significant decrease in risk that these orders provide.
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Best Cryptocurrencies to bet with FAQs
A City of London investment banker by the name of Stuart Wheeler was the one responsible for establishing the notion of spread betting as a viable investment. In 1974, he found a company that later became known as IG Index and provided a service related to gold. Spread traders have expanded their operations to include more assets, with cryptocurrency quickly becoming one of the most prominent markets after Bitcoin’s first surge in value almost ten years ago.
Bitcoin, Bitcoin Cash, Ether, Ripple and Litecoin are some of the most popular cryptocurrencies that may be found on sites where users bet against the value of the cryptocurrency. This is due to the fact that these coins are among the most robust cryptocurrencies and have a significant trading volume.
Spread bets are bound to a certain amount of time. Some remain open for a single day, while others may remain so for many weeks at a time. You also have the option to shut out your spread bet before the time frame is completed.
In general, the price spread will get narrower as the popularity of the item that is being traded increases. There is no reason why you should be limited in the assets that you may choose from. Find a platform that has the lowest possible spreads and use it.
Bettors have the option of placing a guaranteed stop-loss order, which will ensure that the price at which the position is closed will correspond exactly to the price at which the bettors put the order. They will be required to pay a premium in order to put a guaranteed stop-loss order into action, which is one of the drawbacks.