How to Invest in Bitcoin 
Our Guide on how to invest in Bitcoin effectively and conveniently
Published: 4 January 2021 by Andrew
Is it still worth it if you invest in bitcoin? How do you invest in this cryptocurrency?
The purpose of today’s post is to give answers to these questions. The reality is that yes, investing in Bitcoin is an extremely profitable investment even today. Only you need to understand how to do it in the best possible way and without making mistakes (which can cost al lot).
In this article we will explain what are the options that really work to invest in Bitcoin, such as eToro.
There are various cryptocurrency platforms that work, safe and reliable, how come we quote eToro right away?
Because eToro is the only platform that also allows you to copy, in a completely automatic way, what the best cryptocurrency investors in the world do.
In this way, even a beginner can immediately get the same results as an expert, from day one. And if he wants, he can also learn how to invest in cryptocurrencies, by observing live what the best in the world do.You can sign up for free on eToro by clicking here
Alternative to Invest in Bitcoin
If you want to invest in Bitcoin you have two main alternatives:
- Buy Cryptocurrencies directly with exchanges
- Invest in CFDs on Cryptocurrencies with the best online brokers (recommended option) such as eToro (official website)
On the surface, the conditions of cryptocurrency trading of both alternatives may seem similar but … there are differences that should not be underestimated.
A CFD (contract for difference) is a financial contract that takes on the same value as another security, called the underlying. The CFD on Bitcoin, therefore, has the same value as Bitcoin and allows you to obtain substantial advantages when investing.
So let’s try to understand what are the similarities, and therefore the differences!
Bitcoin Trading Analysis
Let’s start with the only common element: the analysis methods on Bitcoin.
It doesn’t matter if you are trading a cryptocurrency on an exchange, or if you are trading a CFD contract on Bitcoin instead: in both cases you will use the same analysis methods to try to get your desired results.
In other words, the same news that will raise Bitcoin’s price on an exchange will raise the price of BTC’s CFD contract on the contracts for difference trading platform.
In fact, remember that investing in Bitcoin with CFDs does NOT mean buying the cryptocurrency directly, but simply opening a position with a contract on Bitcoin.
In other words, you will not have to face the risks and costs related to direct purchase in Bitcoin, but you will be able to become the owner of a tool whose value depends on the value of Bitcoin.
To understand how it works, the best thing you can do is read our reviews on the trading platforms and also open a demo account with eToro (here on the official website) or a demo account with ForexTB (here on the official website).
In this way you will be able to touch the characteristics of each form of trading for yourself and, consequently, realize what the specificities of this operation are without taking any risks. The capital that you will use in the demo account will not be represented by your real funds, but by a plafond of virtual money that your broker will have made available to you just to let you test your services in maximum security.
Long and Short positions: investing in Bitcoin with a Bullish and Bearish market
In short, it is possible to make money from trading with CFDs on cryptocurrencies by purchasing a contract when prices are rising, so as to profit from selling at a high price after buying at a low price. However, it is also possible, with the same simplicity, to sell high and to buy low, when prices are falling, in an operation known as short selling.
In other words, those who want to invest in cryptocurrencies can profit from both the rise and fall of prices, and doing it with the best brokers in circulation is certainly the easiest thing you can do!
For the record, you can also achieve the same goal with exchanges. Just a pity that, in summary, it is terribly more complicated, and you will have to act very differently.
In other words, in order to make a short selling with an exchange, you will have to buy a cryptocurrency, keep it in your exchange while it gains value, then use it to buy an Altcoin with which it is coupled when the prices are about to turn direction. So, you will have to keep the altcoin in your wallet until it gains a value of your interest (that is, which you deem satisfactory) and then resell it for the original cryptocurrency.
This is a much more complex procedure than that of brokers such as ForexTB and eToro, and which we therefore advise against applying. In fact, keep in mind that every step of the above transaction involves costs, and therefore the commissions that the exchange will charge you could harm the overall convenience of the investment.
Let’s take an example. Let’s assume that you want to profit from the pairing of Binance Coin with Bitcoin (BNB / BTC). Using the procedure described above you should buy Bitcoin from a third party or even on the exchagen Binance, using a stablecoin. If BNB / BTC prices are falling, you will need to keep your BTC in the wallet.
When the pair drops, then your BTCs would be worth more than when you bought them. You can then use them to buy BNB and hope that BNB goes up in value. When BNB goes up enough – let’s assume, towards a good level of resistance – you can sell it in exchange for BTC and repeat the process again. This way you will benefit from a falling price scenario.
Too complicated? That’s it!
On the other hand, in order to trade bearish with CFD brokers, it will be sufficient to act in the same way that you would follow to trade in a bullish scenario, with the only difference that you will have to open a short position, and not a long one.
So assuming that you want to invest in Bitcoin with eToro, what you will need to do is:
- Open here a trading account with eToro for free
- Make a first deposit using the payment instrument you prefer
- Open a short position (sell / bear), indicating how much you want to invest, any leverage and stop loss – take profits that will allow you to better manage the risk
- Confirm the operation!
Easier, isn’t it?
Scrolling through the differences between trading with exchanges and trading with CFD brokers, we cannot help but briefly dwell on margin trading.
In fact, most exchanges DO NOT offer margin trading, i.e. trading with leverage. Therefore, the trader will be required to find and use the entire capital to start trading on the exchange platforms, for his favorite cryptocurrency.
Although it is true that some exchange platforms are starting to change their services to include such an opportunity, in reality most of the trading on the exchanges is not done in the margin, and also the platforms that include leverage do it in a complex and quite expensive manner.
Remember, however, that the use of leverage has its disadvantages and advantages.
The advantage is certainly that the non-use of leverage helps to reduce the risk to which a cryptocurrency trader is exposed, in a highly volatile context such as that which cryptocurrencies present. The disadvantage is that the trader renounces looking for maxi profits, such as those he could get with the use of leverage.
However, our suggestion is not to overdo it.
In your early stages of exploring online trading with cryptocurrencies, avoid using leverage or do it with great caution.
Security and continuity of service
You may know that the governments of many countries around the world have not hidden their open hostility to cryptocurrencies and to exchanges where cryptocurrency trading can be done.
If you want an example of what we say, just take a look at what happened to Libra, Facebook’s cryptocurrency project. Started with great ambitions, today he has faced a series of hostilities that have led to a step backwards.
In short, to limit exchange operations, many central banks have issued very strict guidelines, making life very difficult for these operators.
This is also the reason why most cryptocurrency exchanges cannot accept deposits or withdrawals made in foreign currency, being therefore limited to having to record transactions on their cryptocurrency registers.
On the contrary, the CFD brokers that will allow you to carry out cryptocurrency transactions are regulated entities, with integrated payment gateways that include banking instruments and other payment methods that are transparent and safe. As such, deposit and withdrawal transactions can be made in Fiat currencies.
Invest in Bitcoin: negotiable assets
On cryptocurrency exchange platforms, the trader can trade cryptocurrencies directly. Therefore, every deposit, withdrawal or trading transaction (such as buying or selling) involves the exchange of actual digital currencies.
On the cryptocurrency CFD platforms, however, the trader does not need to have the actual digital currencies in order to trade, because with derivative instruments these are not really exchanged. Rather, what is offered to traders are contracts based on price differences between entering and leaving the market. In other words, traders trade “contracts” on cryptocurrencies, not the cryptocurrencies themselves.
This feature opens the door to numerous consequences. For example, using CFD brokers:
- The costs determined to own cryptocurrencies must not be faced
- There is no risk deriving from holding cryptocurrencies in their wallets
- You can easily invest in bullish or bearish markets
- You can better personalize your contract for difference, using for example a more or less strong leverage effect
As a consequence of the last point of our short list, the fact that cryptocurrencies are traded on the exchange platforms directly means that the traders on the exchanges must have a cryptocurrency wallet / portfolio in which they will carry out the transaction.
This is required for deposits and withdrawals. On the contrary, those who operate on trading platforms of brokers who offer cryptocurrency CFDs do not need wallets, as there are no cryptocurrencies to hold, deposit or withdraw.
How to invest in Bitcoin conclusion
Now that we’ve identified the similarities and differences between cryptocurrency exchanges and CFD brokers on Bitcoin and other cryptocurrencies, you should have figured out which is the most convenient choice: use a good CFD broker!
eToro, in particular, is one of the most interesting, reliable, innovative and effective trading platforms that we have had the opportunity to experience in the last 5 years.
Global leader in copytrading, it offers the ability to invest in Bitcoin and all major cryptocurrencies with extraordinary ease. You can open a demo account to be able to easily understand what it is: you will discover in this way that to be able to orient yourself efficiently in the eToro trading software you will only need a few minutes!
Click here to sign up for free on eToro
Remembering that you can learn more about eToro by taking a look at our review, we can only conclude by pointing out how the same benefits of reliability, simplicity and transparency can also be obtained with ForexTB (official website), another broker at the top in the international arena.
ForexTB also offers you a nice demo account that will allow you to be able to trade safely on your platform without risking your own capital, but using the broker’s virtual credit limit.
If you want to know more about this operator, we remind you that on our site you can find an excellent overview of all the features of ForexTB, with a complete review on a broker that is rapidly climbing the preferences of European investors in Bitcoin, in other cryptocurrencies and, in general, in thousands of financial assets negotiable with its platform.
Click here to sign up for free on ForexTB
Below, complete summary of the best platforms to invest in Bitcoin:
Min. Deposit: 50€
Min. Deposit: 100€
Min. Deposit: 50€
Min. Deposit: 250€
Min. Deposit: 100€
72.30% of retail CFD accounts lose money
Min. Deposit: 250€
For years, Bitcoin has been a volatile but extremely profitable investment if you choose the right entry Timing.
Exchanges are very popular but do not have official authorizations and allow you to earn only in the event of an increase.
Surely CFD Brokers: they are free, regulated and also allow you to Sell Short.
Relying on a qualified operator and investing in it a percentage not exceeding 20% of our capital.