Best Bitcoin Brokers in South Africa 2023

Bitcoin is the world’s largest cryptocurrency by market cap, and it was launched in 2009 by Satoshi Nakamoto. Bitcoin is decentralised across the peer to peer network so nobody controls it, but everybody can take part in the network to make peer-to-peer transactions.

The transaction record of Bitcoin is stored in the form of Blocks in Blockchain maintained by Bitcoin publicly, allowing everyone in the network to see the public key of the owner and the details of the transaction.

Cryptocurrencies are digital stores of value, which are used as a medium of exchange for decentralised financial transactions. The word “Crypto” refers to the encryption technique used by the Cryptocurrencies to secure those transactions, control the creation of new currency and verify those transactions.

Due to the growing popularity of Bitcoin, and its volatile price movements, many new & experienced traders trade it as a speculative instrument. So many CFD brokers like Plus500, Hotforex, FXTM; and crypto exchanges have started to offer trading on various cryptocurrencies.

A Contract for Differences (CFD) is an arrangement that allows traders to trade the underlying asset without actually owning the asset. In other words, traders can speculate on an instrument’s price movements, anticipating a rise or fall on its price and take a speculative bet.

For example: If the trader thinks the Bitcoin’s price will rise against USD, he would place a Buy order – if it rises as expected, he can sell the Bitcoin CFD later for a higher price and profit from the ‘difference’.

Conversely, if the trader thinks the Bitcoin’s price is going to fall against the US Dollar, he would open a sell position – if the price goes down as expected, he must place an offsetting Buy order to exit the trade and book a profit.

Cryptocurrency CFDs are where the underlying asset of the CFD would be a Cryptocurrency like Bitcoin. Just like trading any other CFDs, you can trade & speculate on the price of Bitcoin against USD Dollar by using Bitcoin CFDs.

All this is done without physically exchanging your currency for BTC which is done in case of buying Bitcoin with an Exchange & storing them in digital wallets.

The main advantage of trading Bitcoin as a CFD, is that you don’t have to worry about the security of any wallet, and in most cases the trading fees with regulated Bitcoin CFD brokers is much lower compared to an exchange.

Although the negative side is that you won’t actually own bitcoin(s).

Moreover, remember that CFDs are complex financial products and are not intended for beginners, and you risk losing your invested capital. Even experienced traders lose, so you must invest wisely & with right knowledge of this asset.

To trade Bitcoin CFDs, you need to open an account with a regulated CFD broker that offers Cryptocurrencies to trade.

We suggest you demo trade first and when you are familiar with the trading environment, and have a working trading strategy, only then put your money with the brokers who are regulated with SA’s regulator Financial Sector Conduct Authority (FSCA) or with global regulators like FCA, ASIC and CySEC.

There are some good FCA, ASIC & FSCA regulated brokers that offer bitcoin CFD trading. With these brokers, Bitcoin can be traded as a CFD against major currencies like the US Dollar (USD) or Euro (EUR), in the form of pairs like BTC/USD, BTCEUR or in some cases against other Cryptocurrencies like BTC/ETH (Bitcoin against Ethereum) with Plus500 broker.

Trading on Bitcoin & other Cryptocurrency CFDs is available on weekdays or 24×7, depending on your broker.

Also, many bitcoin brokers give traders access to using leverage, which can be from 1:2 to 1:10 at a maximum. But due to the volatile nature of Cryptocurrencies, brokers tend to offer lower margin/leverage as compared to other assets like Forex or CFDs on Indices, metals etc.

Remember that while using leverage has a potential to increase your profit if you are right, but it can also magnify the losses if the speculation goes wrong. You can even lose your entire trading capital.

So, it is important to never use higher than 1:2 leverage while trading Bitcoin CFDs or any other Crypto CFDs. It is best to avoid using any leverage, as your losses will be magnified.

Let’s look at a simple example, if the BTCUSD is at $20,000, and you decide to go long (we are simply taking a hypothetical case here, and ignoring any fees for the moment). You place 1 Lot Long order (which should be equivalent to 1 Bitcoin Long) at $20,000, you will be required to have $20,000 in your account. But you decide to use 1:10 leverage, thereby requiring you to only have 10% margin requirement.

Let’s say the bitcoin goes down by 10% to $18,000, you will then have lost 10% of $20,000 i.e. $2000, which is your entire capital. You should understand from this example, how the leverage can magnify your loss if you are wrong.

You must adjust your leverage according to the Implied Volatility of that instrument. You can use Historical Daily range (if you are an intraday trader), or similar tools, to adjust your positing sizing, stop loss, and margin.

For traders who want to trade Bitcoin as a CFD instruments, there are brokers like Tickmill HotForex & Exness. These brokers offer CFD trading on Cryptos & are regulated for offering CFDs or derivatives.

Exness has a typical spread of 272.6 pips for BTCUSD CFD. HotForex SA has a typical spread of 26 & Tickmill has spread of 80 for 1 lot.

Some of the regulated CFD brokers offer trading on BTCUSD & similar crosses. These include HotForex, Exness, Tickmill & IC Markets.

It is important to note that by trading CFDs, you are trading a derivative. You are only speculating on the price of Bitcoin against US Dollar (or any other currency for example). If you are Short BTCUSD, and it goes down, then you will profit from that drop (minus the broker fees). But if you are wrong, then you will make a loss. It is important to note that your loss can be unlimited when trading CFDs.

Trading bitcoin as a CFD instrument is highly risky for retail traders as it involves leverage or margin trading. For example, HotForex offers a leverage of upto 1:10 on Crypto CFDs. With crypto CFDs like BTCUSD CFD, you are speculating on the value of Bitcoin, and you can go Long or Short. You don’t own Bitcoin while trading CFDs.

Due to the risky nature of Bitcoin & leveraged CFDs, retail traders should not trade this instrument. Only professional traders who understand the risks & have strategies to manage their risk should trade CFDs on cryptos.