Markets.com has become the latest broker to start offering trading in bitcoin today. Similar to their other offerings of non-forex products, bitcoin trading is being provided in the form of a contract for difference (CFD). The launch occurs after eToro began to offer bitcoin as part of its stock offering last month and comes as many brokers have been investigating the potential of offering it, as client demand has risen for the volatile digital currency.
Like other CFDs, the bitcoin CFD at Markets.com is a synthetic instrument that tracks prices of trading at MtGox with no actual bitcoins being purchased or sold. Although no longer the largest exchange by volume, MtGox appears to have become the main source for pricing CFD as IT people in the brokerage industry have noted to Forex Magnates of its stability versus other firms. When launching a free bitcoin feed for MetaTrader 4 brokers earlier this month, Timur Latypoff, CEO of TLTL, also informed us that MtGox remains the most well-known bitcoin exchange and one that both brokers and customers recognize.
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In terms of trading conditions, the CFD comes with a weekly expiration, as all open orders will be closed at market prices at the end of each Friday. However, the product does offer leverage trading of 5:1 as well as the ability to go both long and short. Similar to major currencies, as it is available for opening and closing orders 24 hours a day between Monday and Friday. Based on current trading of its platform, spreads are being fixed at $12.00 which at current prices are around 1.5%. This compares to leading bitcoin exchanges whose fees are in the range of 0.1% to 0.5%. In terms of comparison, the Markets.com bitcoin CFD is similar to AvaTrade’s weekly product which also utilizes a weekly expiration and ability to short, but has greater leverage of 10:1.
The bitcoin CFD launch by Markets.com has occurred shortly after broker technology provider, Leverate, announced that it was creating a bitcoin feed for its clients. As a broker customer of Leverate, using their Sirix web and mobile platforms, Markets.com may be the first firm to be using the new feed to power their bitcoin CFD. While Markets.com representatives couldn’t comment on the source of the feed for the bitcoin CFD, it’s worth noting that Leverate is also using pricing from MtGox. Overall, while bitcoin CFDs are still in their infancy, ability to offer the product has become easier with both the above mentioned Leverate and TLTL, as well as Gold-I having created feeds for MetaTrader 4 integration.