How To Buy And Sell Cryptocurrencies?

Many investors are wondering how to buy and sell cryptocurrencies, as these are relatively new assets and more traditional investors still have many questions about cryptocurrencies. In this post, we will look at the different alternatives investors have available to trade cryptocurrencies.

How To Buy And Sell Cryptocurrencies?

There are essentially two alternatives: either through exchanges, where it is possible to buy cryptocurrencies directly or through CFD brokers, where with CFDs it is possible to trade cryptocurrencies as an underlying asset.

We will focus on three exchanges which are Bitpanda, Coinbase, and Kraken and in the final part, we will talk about some CFD brokers with which it is possible to trade cryptocurrencies and also short cryptocurrencies.

Bitpanda

Bitpanda is an Austrian exchange founded in 2014 and has more than 1M users. Bitpanda has a wide range of cryptocurrencies, in its catalog, we find more than 30 different cryptocurrencies, and also offers the possibility to trade precious metals such as gold, silver, platinum, and palladium.

This catalog of precious metals is curious, as it is not typical for a cryptocurrency exchange to add this kind of service for its users. It is also curious because it offers users the ability to own these precious metals in digitized form. In this post, they explain how they store digitized gold and other precious metals.

Bitpanda’s qualities can be summed up in a mix of competitive commissions, free and quality training for its users, and a wide range of cryptocurrencies, as well as offering the possibility to trade precious metals. If you want to know more about this exchange, we recommend reading the Bitpanda review.

Coinbase

In addition to having its own platform, we can also trade through GDAX, which is a platform with advanced charts and orders that allows you to trade Ethereum, Bitcoin, and Litecoin.

If we look at some screens of the Coinbase exchange, the functionalities are simpler and, by selecting the currency we want to trade, we only have to indicate the amount in USD or EUR we want to buy Bitcoin (BTC), Ethereum (ETH) or Litecoin (LTC). The cryptocurrencies would be stored in the wallet and we could exchange them whenever we wanted. We can see all the basic information about the transaction.

If we access Coinbase Pro, we see that it is a more advanced platform through which we can see candlestick charts, which are widely used on stock exchanges. In the left column, we can choose advanced order types (not only market and/or limit) but also stop orders, to limit losses.

Coinbase Pro

Coinbase Pro is an advanced platform that Coinbase owns and in which we can enter advanced orders such as Stop Loss, to limit the possible losses of a trade that goes against us, limit orders that allow us to choose the price at which we want to enter, as long as it reaches the level we have indicated and the market order, which is what is being crossed at the moment.

As you can see below, you can select the three types of orders mentioned above:

• In the market order, we only have to indicate the amount, in EUR, or USD… that we want to buy in cryptocurrencies (Bitcoin, Ethereum, or Litecoin) and send the order.
• In the limit order, in addition to the amount to invest, we must include the limit price, which is the price at which, when the price of the cryptocurrency we are about to buy arrives, our order will be executed. For example, if Bitcoin is trading at €3,100 and we want to buy 1 Bitcoin at €3,000, we can add a limit order at €3,000 (or USD) and wait for Bitcoin to reach this level.

If we lower the “Advanced” box, we find different options for the orders we place:

• Good Til Cancelled: order active until it is canceled (the price reaches the indicated value or is canceled manually).
• Good Til Time: Select a date until which the order will remain active. After this date, the order is canceled.
• Immediate or Cancel: If the order is not filled immediately, it will be canceled. This is to avoid surprises in the purchase price.
• Fill or Kill: This order will be canceled if it is not executed immediately and in full.

Stop orders are used to limit possible losses automatically and without having to constantly monitor the market. To this end, we add the price (stop) at which we want a limit order to be triggered, which we also need to determine.

Kraken

The Kraken platform also has advanced charts, where we can see the depth of the market (orders in the market), we can include advanced orders like in GDAX and track our trades and the evolution of our profit/loss.

Placing an order to buy cryptocurrencies through Kraken is simple, just add the number of cryptocurrencies (it’s fractional) to invest.

If you look at the right side, you can add leverage to increase your cryptocurrency exposure. It also has the advanced order types and cancels functions we commented on in the case of GDAX, in that respect, they are quite similar.

Overall, Kraken and Coinbase offer a very similar services, with advanced platforms and order types with special features, as can be seen in some stock brokers. These are intuitive and simple platforms that offer an advanced service for trading the main cryptocurrencies.

The benefits of Kraken can be summed up in the widest range of cryptocurrencies available for trading.

Can We Go Short On Cryptocurrencies?

Can we go short on cryptocurrencies? This is also a very common question. Some CFD brokers allow you to trade CFDs on major cryptocurrencies. In this way, we do not own the cryptocurrencies, but by buying the CFD we are simply replicating their evolution. The advantages of CFDs are that they allow us to trade as if they were another asset, with advanced charts, order types, etc., and above all, we can be bearish (short), i.e. earn if cryptocurrencies fall in price.

Here are some of the CFD brokers that offer cryptocurrencies: eToro, XTB, Pepperstone or ActivTrades

How Cryptocurrencies Are Taxed

It is good to know that the sale of cryptocurrencies does not generate taxable income. However, under one condition: the total value of the assets held must not exceed €51,645.69 for at least seven continuous working days. Therefore, once this threshold is exceeded, the speculative aim of the taxpayer would prevail and the capital gains would no longer be exempt from taxation.

Now, faced with the question: how to buy and sell cryptocurrencies? To trade Bitcoin, we must open an account on one of the platforms that allow us to do so, either through Coinbase, GDAX, Kraken, Bitstamp, Bitfinex…

In short, there are many platforms, and being something relatively new we have no opinion on which ones are better or worse or if the customer service is good or bad.

We have seen comments about Coinbase and Kraken on the Rankin forums. But we only know that they are used to convert currencies (euros, dollars…) into cryptocurrencies (Bitcoin, Ether, etc.).

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