By
Bhushan Akolkar
April 23rd, 2024
eToro allows its users to either trade cryptoasset prices using CFDs or simply trade the purchased cryptoassets, depending on your short- or long-term ambitions.
World’s leading social platform eToro offers its users two approaches of gaining profit on cryptocurrency trading – trading cryptoasset prices using CFDs and simply trading cryptoassets. The first one is suitable for those, who don’t own any investment assets yet, while the second one would be rather beneficial for those, who do and want to take advantage of crypto crosses, such as Ethereum vs Bitcoin.
After the launch of eToro’s bitcoin market in 2013, the platform’s users got the ability to open and close positions on the price of Bitcoin via a Contract For Difference (CFD). CFD represents itself a form of derivative trading, which allows investors to take a position on a range of financial instruments without owning the underlying asset, so that to be able to go long or short with leverage.
CFDs owners have an opportunity to increase the potential profits they can make against the initial outlay, in exchange for increasing the risk, although bigger losses are also possible here. This makes the approach perfectly suitable for short-term traders.
Now the platform allows for trading not only Bitcoin, but also many other cryptoassets, but only eToro’s platinum clients can enjoy the ability of trading CFD leverage positions. eToro has CFD markets for all 12 of the cryptos, which are currently offered within the platform. Such top-cryptoassets as Ethereum, XRP, stellar, NEO, Ethereum Classic, Dash, and Litecoin are in the list.
At the top of all these, the platform provides its users with the ability to follow the best-performing crypto traders on eToro and copy their trades. According to the new regulation outlined by the European Securities and Markets Authority (ESMA) in August 2018, less experienced investors should be protected from incurring heavy losses on complex financial instruments. With Negative Balance Protection, investors using CFDs cannot lose more than they have invested.
Since the launch of the bitcoin market, which has already been mentioned above, eToro has expanded its cryptoasset trading capabilities greately. Having analyzed customers’ requests related to buying and selling the world’s top-cryptoassets, the eToro team upgraded its platform in September 2017, so that users could purchase all cryptoassets outright, directly from the platform. And in 2018, it became possible to convert customers’ positions from CFD to the underlying asset.
In comparison to trading CFDs, buying the assets gives traders total control over the purchased tokens. This means a full ownership, which allows not only to trade the asset against its fluctuations in price, but also to transfer it to an online wallet or ledger hard drive, exchange it for other cryptos, or even use it to pay for goods and services.
The platform’s high-quality security system guarantees the token owners that their assets are in total safety. All cryptos purchased on eToro are held in the platform’s so-called cold storage (offline) facilities. Soon, digital wallets will be also available on the platform.
However, despite all the benefits of buying the assets against trading CFDs, all trading features related to CFD markets will not suit here. There is no leverage, either, using this approach, which makes it more suitable for longer-term investors.
Users are able to invest in the eToro Crypto CopyPortfolio, which is effectively a portfolio of real cryptocurrencies combined in one investment strategy. Among the cryptoassets available for trading on eToro are: Bitcoin, Ethereum, XRP, Bitcoin Cash, EOS, Litecoin, Stellar, Cardano, Ethereum Classic, Dash, Iota, and NEO.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Cryptocurrencies can fluctuate widely in prices and are therefore not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. The content is intended for information and educational purposes only and should not be considered investment advice or an investment recommendation. Your capital is at risk.