Bitcoin cfd
Family I · Instruments
Not to be confused with cfd, cfd trading, cfd analysis.
Bitcoin CFD is a derivative contract between a buyer and a seller that pays the difference between the bitcoin price at entry and at exit, without either party holding or transferring the underlying coins. The reference price is typically taken from one or more spot exchanges, and the contract is margined in a fiat currency or in crypto depending on the venue. Because no coins change hands, the position is a price exposure rather than ownership of bitcoin.
How the exposure is created
A bitcoin CFD is quoted as a bid and an ask around an index price. Going long means agreeing to pay the difference if the index falls and to receive it if the index rises; going short reverses that. The position is opened with margin, so the notional exposure is a multiple of the cash committed.
Financing is charged or paid on the notional value while the position is held, and the rate is set by the venue rather than by the bitcoin network. Settlement is in cash, so the contract never appears on the bitcoin blockchain and no private key is involved.
Worked example
Points that vary by venue and jurisdiction
- Margin requirements, leverage caps and whether retail clients may hold the contract at all differ by regulator and by firm.
- The reference index, its constituent exchanges and any averaging window are set by the provider.
- Financing rates, trading hours and whether the contract tracks spot or a dated futures price are venue-specific.
- Tax treatment of a cash-settled derivative differs from that of holding the coin itself.
Often confused with
- cfd
- A cfd is the general contract type, of which the bitcoin version is one underlying among many; the visible sign is whether the contract names bitcoin as its reference asset.
- cfd trading
- cfd trading is the activity of buying and selling such contracts, whereas bitcoin cfd is the instrument being traded; the visible sign is whether the term describes an action or a contract.
- cfd analysis
- cfd analysis is the study of price behaviour and contract terms, not a tradable instrument; the visible sign is whether the phrase refers to research rather than to a position.