Bitcoin spread betting: Here’s everything you need to know
Crypto trading often feels like gambling – volatile markets, high stakes, and emotional swings. But Bitcoin spread betting takes it a step further. You’re not buying or selling actual BTC; you’re betting on its price direction, much like placing a wager on a roulette spin.
The appeal? In some countries, you can profit from Bitcoin gambling without paying tax, since it’s treated as betting, not investing, though the loopholes are closing now.
It’s fast but high-risk. If you know what you’re doing and live where it’s legal. In this guide, we break down exactly how it works, where it’s allowed, and whether it’s worth the risk.
What is Bitcoin spread betting?
Bitcoin spread betting is a way to speculate on the price of Bitcoin without actually buying or selling the cryptocurrency. You simply take a position on whether you think the price will go up or down, and if your prediction is correct, you will make a profit.
You don’t own the BTC. You simply bet on the movement of the market.
With this strategy, a derivatives contract is used, which allows you to bet on the price without taking physical possession. It’s much like the crash casino game; it goes up and up until it falters.
The obvious advantage here is you don’t have to worry about storing or safeguarding your Bitcoin, as you would if you owned the cryptocurrency outright.
And since it’s considered crypto gambling, you don’t owe taxes (unless you owe gambling taxes).
How spread betting on cryptocurrency can make you money?
The basic premise of spread betting is not that much different than actual gambling.
You have an event you’re betting on (the price of Bitcoin) and a “stake” (the amount of money you’re willing to risk). If the event happens the way you predicted, you win the bet and earn a profit. If it doesn’t, you lose your stake.
Say the crypto moves three points. You gain or lose a multiple of three.
What does this mean? We’re talking about a leveraged bet.
This is what makes spread betting on cryptocurrency an exciting option for many traders. You really only need to deposit a tiny fraction of the trade value to participate in spread betting.
The benefit of leverage
With just a small amount, you can control a much larger position and make a significant profit.
And, while this can give you some handsome gains, it also means your losses can add up just as quickly if you’re wrong about the market.
Is spread betting on Bitcoin legal?
Quick answer: it depends.
The legality of Bitcoin spread betting depends entirely on your location. In the UK, retail traders have been banned from spread betting on crypto since 2021, and the FCA prohibits the sale of crypto derivatives to retail clients.
The US, Japan, and Australia also outlaw crypto spread betting. However, some EU countries still permit it, and professional clients in certain regions may retain access.
It’s more or less considered crypto gambling, but with a financial instrument.
Bitcoin spread betting: Pros & cons
Bitcoin spread betting can be a fast, flexible way to speculate on BTC’s price without owning any coins. But while the potential upside is appealing, the risks are equally serious, especially with leverage involved.
Pros
- Tax advantages in some countries where profits are treated as gambling winnings
- No need to own Bitcoin or worry about wallets and security
- Leverage potential allows large exposure from a small deposit
- Profit from any direction: you can bet onthe price going up or down
Cons
❌ Unregulated brokers can expose you to fraud or unfair practices
❌ Even a 5% correction can wipe you out with leverage
❌ Not legal in many major markets
And, of course, you don’t have to think about setting up a Bitcoin wallet or dealing with the complexities of buying and selling Bitcoin directly. The spread bet exposes you to the potential gains from major market swings without the hassle of actually owning any Bitcoin.
Final thoughts
Bitcoin spread betting takes crypto speculation and cranks it up a notch.
It’s gambling on Bitcoin’s price without owning a single sat. In some countries, that means it’s even tax-free.
Sounds great? Sure, but here’s the catch: the risks are massive.
Leverage and BTC volatility don’t play nice, and it’s not even legal in major markets like the UK. So, unless you’re based somewhere that allows it, this isn’t an option. And even if it is, proceed with caution: always use a licensed broker, understand the rules, and don’t stake more than you can afford to lose.
If that sounds like too much, stick to safer ways to play the crypto game, like standard crypto games.
