How to Buy Bitcoin with Leverage

Since its foundation, Bitcoin has been a unique phenomenon that challenges the traditional monetary system and global financial trading. When such instruments exist, investors of all types are looking for different ways to invest in them.

There are so many speculations revolving around Bitcoin – While some argue for a temporary bubble that will not last in the future, others claim that Bitcoin is here to stay and might even hit an unrealistic price of 100,000 per unit. Additionally, Bitcoin’s price might be volatile in the following month, following the Bitcoin Halving event in 2024.

Either way, there is more to Bitcoin than meets the eye. Even those who do not believe in Bitcoin often consider buying it just for the purpose of speculation.

One of Bitcoin’s advantages is the ability to leverage your transaction, which simply gives you the option to trade larger amounts with a smaller capital. Trading bitcoin using leverage can be done through one of the crypto exchanges or a CFD broker. Let’s explore it.

What is Bitcoin leverage, and how does it work?

The simple explanation of leverage trading, also known as margin trading, is the ability to open a financial transaction with a larger amount of capital than you actually own. Basically, you borrow a certain amount of money from the exchange or your broker in order to get a larger amount of capital. However, there’s a catch – using leverage can increase your risk and the potential to lose your investment in the same way it increases your possibility of making a large profit. It can be used to your benefit as long as you leverage your position in a smart way.

For example, if you invest 1000 USD without leveraging your position, you can get 0.09871688BTC if the Bitcoin price is at $10129.45. If Bitcoin goes to $15,000, you could earn $480.75, which is an increase of 48.75%. It’s not bad, and with the high volatility of bitcoin, this scenario is more than possible.

If you decide to buy (or short) bitcoin using a leverage ratio of 1:50, with the same amount of investment of $1000, then your capital is equivalent to $50,000. Therefore, you can own 4.93584390BTC, and if the price rises to $15,000, you can earn $24,037.66! The catch? If Bitcoin’s price falls to 9927, you will lose your initial investment of $1000.

So, using leverage can be extremely tempting, however, some rules you should have before you start your first transaction. First, you’d better have a very large cash cushion. In the above example, if you had a balance in your account of $10,000, then your stop-loss is at 8100.

Secondly, match the amount of your investment to a rational leverage ratio. If you would take a leverage ratio of 1:20, 1:10, you can lower your risk. A high leverage ratio can be useful for day traders that decide to close the position at the end of the trading day.

Trading Bitcoin with Leverage via a crypto exchange

The first option is to trade Bitcoin through one of the crypto exchanges. We recommend Binance or Bitmex. Binance is the largest crypto exchange in the world and is much easier to use (relatively) than other crypto exchanges. Binance also provides a wider range of crypto pairs and a leverage ratio of 1:20 for bitcoin trading.  

Another crypto exchange that is offering bitcoin trading with leverage is Bitmex, which provides a higher leverage ratio than Binance of 1:100.

Trading Bitcoin using leverage via a CFD broker

Another way to trade Bitcoin using leverage is to open an account with a CFD broker. If you are not familiar with CFD’s we recommend reading this guide about CFDs. There are many brokers that provide bitcoin trading with leverage. We recommend AvaTrade, which is a reputable and regulated broker, offering a leverage ratio of up to 1:20 for bitcoin trading.

Note that residents in the United States cannot trade CFDs so the only option to buy bitcoin with leverage is through a crypto exchange or bitcoin futures.

What’s the difference between buying Bitcoin through a crypto exchange and a CFD broker?

When you buy Bitcoin through one of the crypto exchanges like Binance, you physically purchase a digital coin, which can be used as a payment method for goods and services. When you buy bitcoin through a CFD broker like AvaTrade, you purchase a contract that allows you to speculate the price of the digital coin but not to physically hold and use bitcoin.

Best brokers and exchanges to trade Bitcoin with leverage

There are many options to buy bitcoin using leverage through crypto exchanges and CFD brokers. A high leverage ratio should not be the only consideration, but a secure and safe exchange/broker should also be considered, as well as low trading fees. Those include:

5 Best crypto exchanges to trade Bitcoin with leverage:

5 Best CFD brokers to trade Bitcoin with leverage:

Risk warning: Risk Disclaimer: 80.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.