Can you profit from spread betting in crypto?

Spread betting is a popular way to trade the crypto market. This beginner-friendly explains whether crypto spread betting is profitable and how you can make money from it.
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Updated: Sep 9, 2022

There are lots of different ways you can trade the cryptocurrency market and spread betting is one of the most used in certain parts of the world. This page explains what spread betting in crypto is, how it works, and whether you can profit from it.  

Is cryptocurrency spread betting profitable?

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Whether or not you’re profitable will largely depend on your trading capabilities rather than the method you’re using to trade. Using spread betting as your method to trade crypto is a good choice for traders located in countries where it’s legal. 

Rules relating to crypto are different around the world but in the United Kingdom and Europe, where spread betting is legal, profits generated from it are tax free. This means you will be able to keep what you make and not have to worry about your profits being eaten into from taxes. 

Another benefit of using spread betting is that you won’t actually own any cryptocurrency while trading it. If for example you trade Bitcoin on an exchange, you may need to use a wallet to store your coins and have other fees when buying or selling. With spread betting the only costs you have is the spread (the difference between the buy and sell price). 

Using cryptocurrency spread betting is profitable and has lots of advantages over other types of trading. Costs are generally cheaper, taxes are zero, and leverage is easily accessible. One of the downsides to it is prices can be different to that of exchanges and the choice of coins available to trade is usually much lower. 

How to profit from spread betting in the cryptocurrency market?

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To profit from spread betting in the crypto market you need to follow a few rules and most importantly understand how it works. You’ll need a broker to spread bet on crypto before you can start. Below are three key components to help you understand a spread betting trade.  

  • Points. In spread betting, price changes are referred to as points. In the Bitcoin market for example, every dollar move equates to 1 point. Profit and loss is easy to calculate using a simple formula: Profit or loss = (closing trade price – opening price) x stake.   
  • Stake. When you make a spread bet trade, the amount you are prepared to risk is known as the stake. For example, if you think the price will move up you may stake £5 per point. Every point the market moves up will equate to £5. If Bitcoins price moves up 100 points, you will make £500. If it moves down by 10, you’ll lose £50. 
  • Leverage. Spread betting is a leveraged product which means you can trade a larger position without having to pay the full value of your trade. To use leverage you open a trade on margin, which is a small deposit and a fraction of the position’s total value. When using leverage, it is possible to lose more money that you initially deposit. 

Opening a spread bet trade to profit is easy and can be completed in just a few steps.

  • First you’ll have to decide on the direction you believe a coin is going to move.
  • Usually spread betting traders use technical analysis to help determine direction.
  • Next you need to allocate your stake and risk, followed by placing your trade.
  • Finally you can calculate your profit or loss using the formula we mentioned above. 

Will a specific broker help me profit from spread betting in crypto?

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Not all brokers let you use spread betting in crypto so you’ll need to make sure you find one that does. It will certainly help if you use a trustworthy regulated broker. Some brokers can make it difficult to profit, even if you have a proven strategy. It is always recommended to choose a spread betting broker that is regulated.

What is spread betting in crypto and will I profit from it?

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It’s a way to speculate on the price of a cryptocurrency using a tax efficient derivative contract. Spread betting is popular in the UK and parts of Europe, where it offers an alternative way to trade crypto. Just note that it is illegal in some countries, so you can only take this approach if spread betting is allowed where you live.

Spread betting in its simplest form is a bet made by a trader. A trader using this method makes a decision as to whether they believe the price of a particular coin will rise or fall. It is possible to go long (buy) and short (sell) using spread bet contracts. One thing to note is that unlike other types of trading, when using spread betting you do not actually own any coins.

It is possible to profit from spread betting in crypto although whether or not you do will depend on your trading skills more than the method you use to trade. All types of cryptocurrency trading is difficult, although if you prepare well and have the right knowledge then it certainly is possible. If you are new to trading then we have lots of helpful guides here on Invezz where you can learn more about crypto and spread betting.

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Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.
James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.