People are increasingly showing interest in cryptocurrency trading, incentivized by the bearish sentiment in the market. When prices fall, it’s generally not a good idea to buy and hold, given valuations might continue their slump, trapping buyers at higher levels.
Right now there is a run on crypto, keeping Bitcoin and other major altcoins under heavy pressure. High inflation, rising interest rates, and a low appetite for riskier assets no longer favor crypto buying, so it might be a better idea to switch to trading, an approach that allows you to sell-short, even if you don’t hold the underlying instruments.
This can be done in Canada as well, but there is limited knowledge in the Great White North about how crypto trading works. Well, we’re here to help. Here are some common questions regarding digital assets, and their answers.
Alt-text: crypto trading in Canada
Is crypto trading allowed in Canada?
Although cryptocurrencies are not yet considered legal tender in Canada, these assets are legal and any citizen is free to buy or sell them at their own risk. There is a legal framework for declaring losses or gains from crypto transactions, so this asset class is like stocks or any other traditional instruments you might already be accustomed to.
Right now, the general attitude towards crypto is very open-minded, even as a payment method to increase security. A business can choose to accept compensation in cryptocurrencies, in case there is strong demand from its customers. Crypto trading can be done using various providers that happen to cover these assets.
Are there any reliable providers operating in the country?
In case you are interested in trading cryptocurrencies, it is first necessary to look for a reliable brokerage or provider of financial services – one which allows you to trade Bitcoin and other altcoins. Thankfully, brands like Coinberry Canada are offering their services to Canadian citizens, covering an array of instruments linked to crypto.
Alt-text: trade crypto with a reliable platform
It is recommended to work with a company that has a local presence because that way there is compliance with particularities of regulation. Also, the provider is able to understand better the needs of customers and ensure personalized support whenever it’s necessary.
What about the costs involved?
According to experts working at Coinberry Canada, cryptocurrency trading has become increasingly popular thanks to the low costs involved, on top of the short-term approach. Nobody knows whether crypto can recover before 2023 or later, which is why a conservative mindset seems appropriate.
When you are trading Bitcoin and altcoins, the usual cost involved is the spread, as long as you hold the position open for less than a day. The spread fluctuates based on market volatility and liquidity, but there usually isn’t a long list of fees applicable each time you make a move.
Hopefully, these answers can help offer more insights into crypto trading for Canadian residents. You’ll find plenty of details online, if you want to start this venture well-informed. Most of your effort should be geared towards developing a successful trading strategy, as the market is now very challenging.