- What is cryptocurrency CFD trading?
- Why is cryptocurrency CFD trading so popular?
- Is cryptocurrency CFD trading right for me?
- What affects the price of cryptocurrencies?
- Cryptocurrency volatility
- Cryptocurrency forking policy
What is cryptocurrency CFD trading?
Cryptocurrencies are an emerging type of currency market first made popular by Bitcoin. There are dozens of cryptocurrencies (also known simply as ‘cryptos’) available but most traders are interested in the leading coin like Bitcoin, Ethereum, Litecoin, Ripple, and Bitcoin Cash.
Cryptocurrencies are ‘mined’ by people who have substantial computer processing power, and they receive the virtual coins in return for leasing that power. Unlike traditional currencies, the supply of cryptocurrencies is controlled and most have a maximum total supply – once that is reached, no new coins will be produced (minted).
Cryptocurrencies are increasingly becoming more mainstream and it is now possible to trade the price of the leading cryptos against other currencies like the US dollar. Like other currencies, cryptos have an exchange rate that fluctuates.
Why is cryptocurrency CFD trading so popular?
Crypto CFD trading has become popular because of the massive press coverage Bitcoin and Ethereum have generated. In addition, cryptos are not subject to the same dynamics as conventional currencies.
Cryptos have no central bank regulating how much of a currency is in circulation. They are not tied to a particular interest rate and it is not possible for a central bank to ‘print’ more coins. The traditional forces that influence other currencies – e.g. economic factors like inflation data – generally don’t affect cryptos.
Like other currencies, the value of cryptos is measured by what they are worth against different currencies. This means you can go long or short on a particular cryptocurrency CFD against the US dollar, British pound or Euro.
Key factors about cryptocurrencies
They are decentralised
Cryptos are not regulated by any government or central bank and are therefore free from direct interference. Instead, they operate using a worldwide network of encrypted peer-to-peer transactions, usually based on blockchain technology (cryptocurrencies take their name from their encrypted nature). This lack of regulation makes trading cryptos inherently risky.
They are virtually immune to fraud
The transparent and distributed structure of blockchain technology makes it very difficult to manipulate.
A blockchain is essentially a public digital ledger that records transactions. Transactions are made up of blocks and after a certain number of transactions, a new block is permanently added to the chain.
Since the ledger is open to everyone on the network and no entity is in control, any hacking attempt is almost impossible.
There is a limited offer
In the case of Bitcoin, it was created so that only 21 million Bitcoins existed. The reasoning behind this was to limit the supply so that Bitcoins would eventually rise in value.
You can learn more about the daily happenings in the cryptocurrency world in our news and analysis section.
You can mine them
Bitcoin mining is what powers its blockchain ledger. Powerful computers solve a computational puzzle that verifies transactions and adds them to the blockchain. When this happens, a new Bitcoin is dug up.
As a reward, miners are rewarded with a new Bitcoin and transaction fees.
Although almost 90% of Bitcoins have been issued, it is estimated that the final Bitcoin will be mined in the year 2140. This is because the computational puzzle to release them is becoming increasingly difficult.
You can store them in a wallet
Cryptocurrencies such as Bitcoin are stored in virtual wallets, or e-wallets. Transactions occur using public and private keys.
- The private key allows you to send currency from that wallet
- The public key is used to share with others so they can send you cryptocurrency
They can be extremely volatile
Cryptocurrencies are prone to massive ups and downs in value.
For example, Bitcoin reached a record high above $120,000 in early October 2025, only to suffer extensive decline in the following weeks and drop to $85,000 by the second half of November, which led the cryptocurrency market to fall together.
Some see them as "digital gold"
Cryptocurrencies are sometimes seen as a method of storing value with foreign workers choosing to use cryptocurrency to send money to their home country.
Is cryptocurrency CFD trading right for me?
Cryptocurrencies are a new and rapidly evolving market. Several key factors make them attractive as a potential trading opportunity:
- Go long and short: you can take advantage of both rising and falling cryptocurrency prices
- Trade without owning: you can trade the price of cryptocurrencies without having to buy them yourself
- Volatility: cryptocurrencies can be much more volatile than ‘normal’ currencies
- Range: the price band within which a cryptocurrency’s price can trade
- 24 hours: With FOREX.com, you can trade crypto CFDs 24/7, from 8pm Saturday until 9am the following Saturday
- Leveraged trading: leverage can be used to enhance profits – and losses – from cryptocurrency CFD trades
The characteristics of the leading currencies differ in a number of key ways:
- Anonymity: this varies between cryptos but has always been one of their main attractions
- Use by consumers/banks: some cryptos have more use outside their own networks, becoming more like fiat currencies
- Utility: cryptocurrencies have been invented for different reasons, but for the main part, they were either intended to make financial transactions easier or to support the development of alternative finance and data networks
- Supply of coins in circulation: some cryptos may reach a point where no more are produced while others have a potentially unlimited supply
What affects the price of cryptocurrencies?
A variety of factors can affect the price of a cryptocurrency. They are often sensitive to news stories - for example, the prospect of further regulation or news that attacks the credibility of a currency. In addition, they are more heavily influenced by market sentiment than other asset classes.
Cryptocurrency volatility
Traders can use CFDs to trade cryptocurrency markets without having to buy ‘coins’ or ‘tokens’, which can be a lengthy process. Buying physical cryptocurrencies requires the submission of applications to specialist crypto platforms, which can take days or weeks to execute a trade. A crypto CFD works in the same way as a CFD for other asset classes, such as FX and stocks - you trade the value of the crypto of your choice against a fiat currency like the US dollar.
Cryptocurrencies can see very sudden swings in price, for example, from news regarding possible further regulation of this market. That is why it important that you protect your profits and manage risk smartly with stop losses and take profit orders.
Another aspect of cryptocurrency trading to be aware of is ‘forking’. A ‘hard fork’ is when the software supporting a cryptocurrency needs to be updated, or when the community disagrees on its future direction. Traders are protected from most of the risks involved when a cryptocurrency forks though it can still lead to sudden and unexpected price movements.
As with any CFD trade, it is important to manage your margin and the amount of leverage you are using as it is possible to lose more money that you have allocated to the trade at first.
Cryptocurrency forking policy
If the current cryptocurrency splits into two, new cryptocurrencies are created; this is known as a hard fork. We will generally follow the cryptocurrency that has the majority consensus of cryptocurrency users and will therefore use this as the basis for our prices. In addition, we will also consider the approach adopted by the exchanges we deal with, which will help determine the action we take.
We reserve the right to determine which cryptocurrency unit has the majority consensus behind them.
As the hard fork results in a second cryptocurrency, we reserve the right to create an equivalent position on client accounts to reflect this. However, this action is taken at our absolute discretion, and we have no obligation to do so.
If the second cryptocurrency is tradeable on major exchanges, which may or may not include the exchanges we deal with, we may choose to represent that value, but have no obligation to do so. We may do this by making the product available to close based on the valuation, or by booking a cash adjustment on client accounts.
If, within a reasonable timeframe, the second cryptocurrency does not become tradeable, then we may void positions that had previously been created at no value on client accounts.
Over periods of substantial price volatility around fork events, and we may take any action as we consider necessary in accordance with our terms and conditions including suspending trading throughout if we deem not to have reliable prices from the underlying market.
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