Spread Betting: Crypto Speculation Without Crypto?
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Online sports betting company Bovada has issued a series of odds where you can bet for (or against) Bitcoin (BTC) coming back from its recent slump. Spread betting has become an integral part of Wall Street, but can it get the same kind of foothold in crypto? Yes, is almost certainly the simple answer.
CMC Markets has offered spread betting since March, IG Cryptocurrency is another big name in the spread betting business; and there is a cottage industry growing around this new form of gambling on trades, rather than traditional trading.
The Answer to High Transaction Prices?
High transaction prices are a real problem and simply betting on the outcomes, rather than actually investing in crypto itself, could be a way round that. This year the transaction fees are coming down, with Binance slashing withdrawal fees by 50% in March, thanks largely to the widespread adoption of SegWit.
That kicked off a price war and most of the major exchanges slashed their fees. Not everyone followed that lead, though, and the transaction fees have scared away potential investors and even turned wins into losses for new investors that don’t know the ropes.
Spread Betting Has More To Offer Crypto
So, in principle, spread betting could be a far more effective tool for cryptocurrency than it is for the stock market. It comes with its own unique set of pitfalls, though. The initial bet is a leveraged product, which means that the winnings can be spectacular based on a small deposit, if the market moves in your favor. If it moves against you, the losses can be crippling.
Standard stop-loss orders and other markers effectively work like stop orders with cryptocurrency, so there are ways and means to limit exposure. Spread betting could well find a place alongside cryptocurrency investment and exchanges as a stand-alone industry, then, if it can infiltrate the community with the right kind of bets.
What Cryto Spread Bets Are Available?
Bets issued by Bovada include basics like:
- Will a Bitcoin (BTC) soft fork include Schnorr Signatures before January 1 2019?
- Will Bitcoin Cash (BCH) trade under $500 USD at some point before
January 1, 2019? - Will Bitcoin Gold (BTG) trade again over $150 USD at some point before
January 1, 2019? - Will Bitcoin Gold (BTG) trade over $400 USD at some point before
January 1, 2019? - Will Bitcoin (BTC) trade under $5,500 USD at some point before January
1, 2019? - Will Ethereum (ETH) trade over $1,000 USD at some point before January
1, 2019?
These are speculative assumptions. They’re the questions you see each and every day on the forums, but they come with a spread betting system that has been perfected over the ages in sports and the stock market.
That simplifies the world of cryptocurrency, to an extent. It could also be a gateway drug for would-be investors that want to bet on the market from a safe distance.
Not Everybody Trusts Crypto
Most people still don’t trust cryptocurrency, or even understand what it is. So, effectively betting on the market is an option for those that are still negotiating the minefield of cryptocurrency exchanges.
It can help hone instincts and strategies and in some ways it’s a training ground for future investors. From an industry standpoint it may seem a distraction, but it could prove to be a blessing down the road.
That’s because this is money that could be invested in the market and it’s going into fiat currency. In a way, this is recentralizing money generated by the crypto market. That’s counterproductive, but if it opens up the market to speculative investors then the pros could outweigh the cons.
This Money Will Come Back
Inevitably the spread betting firms will have to move on to the blockchain, or face extinction as the new breed of blockchain-based tech firms take their place. Bovada added Bitcoin payment this month, but it’s fair to say that its focus is on betting rather than the underlying technology.
So, in the end, spread betting on cryptocurrency could be as natural as buying coins and investing in ICOs, especially if the industry cannot fix the transaction charges issue once and for all. It may not offer the same moonshot opportunities as some ICOs, but conversely, the chances that your bookie has an exit scam planned are relatively slim.
It’s just one example of the support cast of industries that will spring up as crypto finally crosses over into the mainstream.
And at least in these scenarios, nobody dies.
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