Broker of the month: ETX Capital, read our expert and client reviews here
Spread betting is all about having a punt on something with our the risk of actually owning it.
So IG, the largest spread betting broker at the moment takes on the risk of hedging and buying and selling actual bitcoin, and Ethereum whilst traders can just bet on the price.
What this means for crypto currency investors is that if you want to invest in crypto currencies like bitcoin and Ethereum because you think they are going to go through the roof is that you can avoid capital gains tax on any profits you make if you do it through a spread bet.
Obviously spread betting is more risky that just going and buying some bitcoin, putting it on a USB drive and then leaving it in your sock draw. But it doesn’t have to be.
Whilst you can trade Bitcoin and Ethereum on margin, which makes it very easy to get carried away. For example you can buy £5,000 worth of crypto currencies with only £500 on account meaning you’re leveraged up.
But what happens if the bottom falls out and the currencies goes to zero and is suddenly worthless?
It means that you have lost £5,000 when you only have £500 on account so you are in negative equity of £4,500.
However, long term investments shouldn’t be leveraged so if you want to buy into Bitcoin or Ethereum and avoid any potential capital gains tax, put a spread bet on but make sure you deposit the entire value of the contract in your account. Maybe use a different account from your usual one (you can compare bitcoin, ethereum and cryptocurrencies here) and site back.
Probably a trade like buying an option, you’ll either lose everything or make a packet. Who knows!
Featured Spread Betting Brokers
|IG||ETX Capital||City Index|
|Best for experienced traders with large range of markets and tight spreads and cryptocurrencies||Best for traders with large accounts. A solid all rounder with institutional pedigree.||Best for traders with large accounts. A solid all rounder with institutional pedigree.|
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