A complete guide to cryptocurrency trading

Trading cryptocurrencies with CFDs is a common way to gain exposure to digital markets – such as bitcoin (BTC) and ether (ETH) – without owning the underlying asset. Read on for more about what cryptocurrencies are, why they’re important and how they can be traded.

What are cryptocurrencies?

Cryptocurrencies are digital assets, typically built on blockchain technology. They’re used for a variety of purposes, from online purchases and investment, to transferring value across borders, all without intermediaries like banks. As they’re decentralised, cryptocurrencies run on a network of computers, rather than a single authority. This means they’re available to trade 24/7 – unlike markets like shares, which follow exchange hours.

What is cryptocurrency CFD trading?

You can trade cryptocurrencies using derivatives like CFDs, which give leveraged exposure to the price movements of the underlying asset, such as bitcoin and ether. Traders use CFDs to speculate on rising and falling crypto prices, aiming to profit from the market’s price volatility.

But keep in mind that cryptocurrency CFDs reflect the price of the underlying asset, which can react suddenly and substantially to fundamental news and unforeseen events. Cryptocurrency markets are volatile – and trading CFDs involves significant risk, as leverage can amplify both profits and losses.

Why are cryptocurrencies important?

Cryptocurrencies are important for several reasons. Due to their decentralised nature, no single government or financial institution controls them – which may reduce reliance on traditional banks. This allows anyone to send or receive value across borders, regardless of location or economic status.

Many cryptocurrencies are built on blockchain technology, which helps to create security, transparency, and immutability for transactions. Transaction records are distributed across a global network, which can potentially make them more resistant to tampering or manipulation.

For CFD traders, cryptocurrencies can act as a potential hedge against inflation and a way to diversify your portfolio. That means that traders may find it suitable to hold historically volatile assets such as cryptos alongside assets regarded as more ‘safe’, lessening the effect of being exposed to single large price movements.

However, cryptocurrencies also have risks and drawbacks. Their prices can be highly volatile, driven by market sentiment and news rather than fundamentals. The lack of regulation in some jurisdictions can increase the risk of fraud or market manipulation. In addition, security issues such as hacking or lost private keys can result in permanent loss of funds.

Because of these factors, it’s important to weigh both the opportunities and the risks before trading or investing in cryptocurrencies.

How to trade cryptocurrencies with leverage

Cryptocurrency CFD trading lets you trade on margin, which lets you control a larger position with a smaller deposit, known as leverage. While this approach can magnify potential profits, it also increases the risk of greater losses. That’s why it’s crucial to use leverage carefully and have a solid risk management plan in place.

On Capital.com, cryptocurrencies require a margin of 50%, meaning you only have to put down half the total value of your trade, while being exposed to the full price movement of the position. You effectively borrow the remaining 50% from your broker.

Example

Let’s say you open a CFD position on a cryptocurrency priced at $1,000. At first, you’ll only need to deposit $500 (50%) as margin. If the price increases by 30 points to 1,030, you will gain the full $30 profit (minus potential fees). Similarly, if the price fell by 30 points to $970, you will incur the full $30 loss (plus spread and associated fees).

Because leverage amplifies both gains and losses, it’s important to plan your trades carefully. Consider your trading strategy, risk appetite, and current market conditions. Always make sure you have a comprehensive risk management plan before trading CFDs.

Why traders trade cryptocurrency CFDs

Cryptocurrency CFDs attract traders looking to speculate on fast-moving markets without owning the underlying asset. Key reasons include market volatility, 24/7 trading, and the ability to go long or short.

However, crypto markets can be highly unpredictable, and traders should fully understand the risks before getting started.

Speculation: some participate in crypto CFD markets to speculate on price direction. Historical volatility suggests that crypto price movements may be substantial, with values rising or falling in response to market sentiment, economic news, or regulatory developments. Fundamental and technical analysis can help inform trading decisions. However, volatility can equally result in significant losses, particularly when using leverage.

Diversification: cryptocurrency CFDs represent a broad range of assets, with varying levels of market capitalisation, technology, and utility – giving you exposure to different market dynamics. When the price of cryptocurrencies moves independently from other asset classes, they may help balance risk. However, correlation with other risk assets during periods of market stress can also contribute to portfolio losses.

Liquidity: major crypto CFDs like bitcoin and ether have historically been relatively liquid, with a high volume of trading activity. High liquidity generally makes it easier to enter or exit positions at expected prices, reducing the risk of slippage. Conversely, less-established cryptocurrencies may be less liquid, increasing the likelihood of wider spreads and more pronounced price fluctuations, particularly during periods of low market activity or heightened volatility.

Flexibility: trading cryptocurrency CFDs lets you speculate on both rising and falling markets, as you can take long (buy) or short (sell) positions. Leveraged trading means only a percentage of the total value is required as margin, which can make access to the market more feasible. However, leverage also increases the impact of adverse price moves, amplifying losses as well as gains.

Innovative products: cryptocurrency markets are relatively new and continue to evolve. Price movements can be influenced by developments such as network upgrades, protocol changes, or regulatory interventions. However, the rapid pace of news and technological advancements may introduce unexpected price swings.

What are the most popular cryptocurrencies to trade?

There is a wide range of cryptocurrencies available to trade, such as bitcoin, ether and tether. Each of these has different properties that affect how they are traded, so it’s worth reading up on them and how they interact with each other in certain market conditions.

Bitcoin (BTC)

Launch: created in 2009 by an anonymous entity known as Satoshi Nakamoto.
Characteristics: referred to as 'digital gold' because of its limited supply and perceived value as a store of wealth. Bitcoin uses blockchain technology and operates on a decentralised peer-to-peer network.
Price influences: market demand, institutional adoption, regulatory developments, macroeconomic events, and changes in investor sentiment can all drive bitcoin’s price up or down.
Our CFD markets: BTC/USD, BTC/EUR, BTC/GBP, XLM/BTC, BCH/BTC, LTC/BTC, GRT/BTC, CAKE/BTC, NEO/BTC, and more.

Ether (ETH)

Launch: proposed by Vitalik Buterin in 2013, with the network launched in 2015.
Characteristics: Ethereum is a blockchain platform supporting smart contracts and decentralised applications (DApps). ether (ETH), its native token, is required for executing transactions and smart contracts.
Price influences: ether’s value can be affected by network upgrades, adoption of decentralised finance (DeFi), non-fungible tokens (NFTs), competition from other blockchain platforms, scalability improvements, or security issues.
Our CFD markets: ETH/USD, ETH/EUR, ETH/GBP, ETH/BTC, and more.

Ripple (XRP)

Launch: created by Ripple Labs Inc. in 2012.
Characteristics: Ripple facilitates rapid, low-cost international payments for banks and financial institutions. XRP tokens were pre-mined with a total supply capped at 100 billion tokens. The network is validated by independent validators rather than miners, giving it a more centralised structure.
Price influences: XRP’s price is often affected by adoption among financial institutions, regulatory scrutiny (such as ongoing legal cases), technological developments, and changes in cross-border payment trends.
Our CFD markets: XRP/USD, XRP/EUR, XRP/BTC, and more.

Litecoin (LTC)

Launch: created by Charlie Lee in 2011 as a 'lite' alternative to Bitcoin.
Characteristics: Litecoin shares technical similarities with Bitcoin but provides faster transaction times and lower fees, making it potentially more suitable for regular transactions.
Price influences: adoption as a means of everyday payment, technological upgrades, its performance relative to BTC, and broader crypto market sentiment can influence LTC’s price.
Our CFD markets: LTC/USD, LTC/BTC, LTC/EUR.

Learn more about how to trade Litecoin.

Binance Coin (BNB)

Launch: introduced by Binance exchange initially as an ERC-20 token before migrating to Binance Chain.
Characteristics: BNB is primarily used within the Binance exchange ecosystem to pay trading fees, transaction fees, and for various services. It also supports Binance Smart Chain, facilitating smart contracts and decentralised applications.
Price influences: trading volumes on Binance exchange, regulatory challenges faced by the exchange, competition from other trading platforms, and demand for Binance Smart Chain services can all affect BNB’s price.
Our CFD markets: BNB/USD.

Cardano (ADA)

Launch: founded by Ethereum co-founder Charles Hoskinson and launched in 2017.
Characteristics: Cardano aims to provide a secure, scalable blockchain environment for decentralised applications and smart contracts. ADA, its cryptocurrency, is central to transactions and staking within its proof-of-stake (PoS) consensus mechanism.
Price influences: price movement in ADA can be influenced by technological developments, adoption of Cardano-based applications, scalability upgrades, academic research backing, competition with other smart-contract platforms, and overall market sentiment.
Our CFD markets: ADA/USD, ADA/BTC.

Cryptocurrency trading example

Bitcoin CFD trade

Example one: Going long (buy)

Let’s say you want to trade bitcoin CFDs and the current price is $40,000. At Capital.com, our minimum trade size for cryptocurrency CFDs is typically 0.01 of the asset’s price. With BTC at 40,000, each CFD would therefore represent 400 (40,000 x 0.01).

You think that BTC will rise. You open a long CFD position on BTC/USD by

buying 10 contracts. The total position size is $4,000 (10 x 400). With a 50% margin requirement, your initial deposit (margin) is 2,000.

A few hours later, the BTC/USD price rises by 300 points to a price of 40,300 and you close your position. You’ve made a profit of $30 (300 / 100 x 10 contracts), minus the spread cost and any additional fees.

However, had the price moved against you and dropped by 300 points to $39,700, closing the position would result in a $30 loss (300 / 100 x 10 contracts), plus the spread and any additional fees.

Example two: Going short (sell)

Now, let’s say you think bitcoin’s price will fall from the same initial price of 40,000. You open a short CFD position by selling 10 contracts, again worth $4,000 in total. The required margin is still $2,000 (50%).

Over a few hours, the price rises by 300 points to a price of 40,300 and you close the position. You’ve made a loss of $30 (-$300/100 X 10), plus the spread cost and any additional fees.

Conversely, had the price moved in your favour and dropped by 300 points to 39,700. Closing your position would result in a $30 profit, minus the spread and fees.

How to trade cryptocurrencies with Capital.com

Whether you’re looking to trade a highly liquid cryptocurrency like bitcoin to diversify your exposure, or you have specialist insight into a smaller crypto market, you can trade cryptocurrency CFDs with Capital.com by following these steps:

1. Open a trading accountSign up with Capital.com and verify your account.
2. Select your crypto CFD marketChoose a cryptocurrency CFD to trade based on your knowledge, strategy, and risk appetite – whether a major crypto like bitcoin or ether, or a lesser-known coin.
3. Decide your position sizeSelect the size of your trade, considering your available margin, trading strategy, and risk management approach.
4. Apply risk management toolsConsider adding a stop-loss order or take-profit to help limit potential losses and lock in gains. Stop-losses are not guaranteed. Guaranteed stop-losses (GSLOs) incur a fee when activated.
5. Open your tradeDecide whether you want to buy (go long) if you expect prices to rise, or sell (go short) if you anticipate a price fall.
6. Monitor your positionFollow your open trade by tracking market news, fundamental developments, or technical indicators that could impact your chosen CFD’s underlying market price.
7. Close your tradeWhen ready, close your position to lock in profits or limit further losses.

When you trade cryptocurrencies with us, you use contracts for difference (CFDs). CFDs are derivatives that allow you to speculate on rising or falling prices without owning the underlying asset. CFDs are traded on margin. This means leverage amplifies your profits, but also your losses, making leveraged trading risky.

What are the costs involved in cryptocurrency trading?

As with all of our CFD markets, when you trade cryptocurrencies with us, you’ll pay a spread – this is the difference between the buy price and the sell price of the market. The spread applies both when you open and close a trade. The buy and sell prices appear as follows:

You may also pay additional fees, for example if you use a guaranteed stop-loss that’s activated, or if you hold a trade overnight. As with all Capital.com instruments, you won’t pay any commission when trading cryptocurrency CFDs.

It’s always advisable to check the cost of trading before you open a position. You can find full details on our charges and fees page.

Why trade CFDs with Capital.com?

At Capital.com, we’re proud to have received multiple awards¹ from industry-leading authorities and maintain an 'Excellent' rating on Trustpilot.. Here are some of the reasons that 740,000+ traders worldwide choose us:

Intuitive platform: clear user-friendly interface across desktop, tablets, and mobile apps.
Fast execution: averaging just 0.025 seconds per trade².
Quick withdrawals: 99.39% of withdrawals are processed within a single business day².
Advanced tools: Multiple chart types and 100+ technical analysis tools.
Educational resources: including: courses, videos and webinars, in-app economic calendar, and more.
24/7 support

Learn how to get started with cryptocurrency CFD trading on our platform.

¹Awards include ‘Best Trading Account’ from Good Money Awards (March 2025) and ‘Best in Class for Ease of Use’ from ForexBrokers.com (January 2025).

²Capital.com Group server data, 2024.

FAQ

What is crypto CFD trading?

Crypto CFD trading involves speculating on the price movements of cryptocurrencies – such as bitcoin – using contracts for difference (CFDs). This approach enables you to take positions on whether the price of a cryptocurrency will rise or fall, without owning the underlying asset. You can use leverage to access larger positions with a comparatively small deposit (known as margin). However, while leverage can increase potential profits, it also amplifies losses, meaning you could lose your initial deposit. Trading on margin is risky. Never trade with more than you can afford to lose.

How do you trade cryptocurrency CFDs?

Trading cryptocurrency CFDs requires a sound understanding of both the underlying assets and the technology behind them, as well as a clearly defined strategy. Your strategy might include decisions about trading time frames, the use of technical and fundamental analysis, and a robust approach to risk management. Given the volatility in cryptocurrency markets, it is important to assess your stop-loss orders, set risk/reward ratios, and consider your overall risk tolerance before trading.

How can you learn to trade cryptocurrency CFDs?

To learn cryptocurrency CFD trading, start by familiarising yourself with how CFDs work, the unique characteristics of digital assets, and the trading platforms available. Many brokers offer demo accounts, which allow you to practise trading with virtual funds and test strategies without financial risk. It’s also useful to follow reputable market news sources, enrol in educational courses, and participate in trading communities to stay up to date with the latest market trends and insights. Reviewing case studies and historic price charts can further help you recognise patterns, while using a demo account to backtest and refine your trading strategies with virtual funds.

How does cryptocurrency CFD trading work?

Cryptocurrency CFD trading works by opening a leveraged position – either buy (long) or sell (short) – on the price of a cryptocurrency. The process involves more than just placing a trade. It also requires comprehensive preparation, including asset research, risk assessment, and both technical and fundamental analysis. Risk management should be an ongoing consideration, both before and after executing any trade.

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