Cryptocurrencies have experienced a rollercoaster ride since their introduction, with early investors enjoying significant gains, while those who bought at the peak in late 2021 likely suffering substantial losses. The investment merits and viability of digital coins have been hotly debated in the investment industry, with prominent investors like Warren Buffett dismissing cryptocurrencies as essentially worthless.
The collapse of crypto exchange FTX in 2022 resulted in charges against many of its executives, leading to doubts about the survival of cryptocurrencies as an investment. However, the volatility of Bitcoin and other popular coins can also make them attractive for trading, offering potential profit opportunities for some traders.
While some traders prefer to own cryptocurrencies directly, others turn to the futures market. Futures can be an even more appealing way to capitalize on the volatility of digital currencies like Bitcoin, as they allow traders to use leverage to amplify their gains (but also magnify their losses). However, futures trading also involves higher risks in exchange for the potential for higher rewards.
Where you can buy and sell cryptocurrencies
Traditional brokers have the advantage of offering a wide range of investment options, including stocks, bonds, and other securities. However, they typically do not allow direct trading of Bitcoin and other cryptocurrencies, only futures. On the other hand, crypto exchanges are specialized platforms that focus solely on digital currencies, allowing users to own and trade various cryptocurrencies directly, not just Bitcoin or its futures as offered by traditional brokers. Additionally, popular payment services like Cash App and PayPal have also ventured into cryptocurrency trading, allowing U.S. users to buy and sell cryptocurrencies.
Here are some of the best options for cryptocurrency trading, including both traditional online brokers and specialized cryptocurrency exchanges. It may also be worth considering which brokers offer attractive bonuses for opening an account to potentially earn extra benefits.
Overview: Best brokers for cryptocurrency trading in April 2023
Robinhood
Robinhood is a top choice for purchasing cryptocurrencies directly, offering the added benefit of commission-free trading with $0 per trade. However, it’s important to note that Robinhood charges a spread markup on trades. In addition to cryptocurrencies, Robinhood also allows for stock and ETF trades at the same low cost. The user-friendly and intuitive app makes trading on Robinhood simple, although those seeking advanced trading features may find it lacking in that aspect.
Commission: $0
Account minimum: $0
Interactive Brokers
Interactive Brokers offers the opportunity to trade four cryptocurrencies, including Bitcoin and Ethereum, through Paxos Trust Company, with some of the lowest commissions in the market. Customers also have access to 24/7 crypto trading through a dedicated app with Paxos. Additionally, Interactive Brokers allows for the purchase of Bitcoin and Ethereum futures, rather than owning the currencies directly. Notably, Bitcoin futures can be bought on the Chicago Mercantile Exchange, with contracts costing $5 for five coins per contract, while Ethereum contracts are available for $3 at 50 coins per contract. Furthermore, Interactive Brokers provides a wide range of investment offerings, enabling customers to buy almost anything that trades on an exchange.
Commission: 0.12-0.18 percent of trade value; $5 per Bitcoin futures contract
Account minimum: $0
Webull
While Webull may not be as well-known as its competitor, the commission-free trading app Robinhood, it offers investors a solid offering that includes cryptocurrency trading. With no commissions on crypto trades (or stocks and ETFs), Webull does charge a spread markup of 100 basis points (1 percent of the price) on both sides of a trade. Several cryptocurrencies, including Bitcoin, Ethereum, and Cardano, are available for trading on Webull. Additionally, Webull provides charting tools and an impressive mobile app, making it a broker worth considering for cryptocurrency traders.
Commission: $0
Account minimum: $1 to trade crypto
TradeStation
At this broker, traders have multiple options for cryptocurrency trading. TradeStation Crypto offers direct currency trading with commission-based pricing, which varies based on your 30-day crypto trading volume and whether your order is directly marketable. Typically, pricing ranges from 0.025 percent to 0.6 percent of your order. In addition, traders can also buy and sell Bitcoin futures and benefit from substantial volume trading discounts.
Commission: 0.025-0.6 percent
Account minimum: $0, but futures margin depends on contract
Binance.US
Binance is a specialized trading platform that offers a wide range of digital currencies for buying and selling, including popular coins like Bitcoin and Ethereum, as well as smaller, lesser-known coins. In total, you can access around 130 cryptocurrencies on Binance. The commission structure at Binance is competitive, with fees starting at 0.45 percent of your trade value and decreasing based on your trading volume over the past 30 days, making it more cost-effective for frequent traders.
However, Binance’s financial practices have faced scrutiny in 2022 following the collapse of FTX. The accounting firm previously used by Binance to verify its reserves has halted its work for all crypto clients, and the Securities and Exchange Commission has issued warnings about crypto firm audits. Furthermore, according to the Wall Street Journal, none of the big four accounting firms are willing to work with Binance, further raising concerns about its financial practices.
Commission: 0.45 percent of the transaction value or less
Account minimum: $0
Coinbase
Coinbase is a dedicated platform focused on cryptocurrency trading, offering direct trading of over 200 digital currencies, including popular coins like Bitcoin, Ethereum, Solana, and Tether. Additionally, Coinbase provides a vault feature that allows you to store your coins with time-delayed withdrawals for added security.
However, it’s worth noting that Coinbase has a relatively steep commission structure. It charges a spread markup of around 0.5 percent and adds transaction fees based on the transaction size and funding source. However, Coinbase’s Advanced Trade platform may offer more cost-effective options for trading.
Commission: 0.05 percent on Advanced Trade
Account minimum: $0
Kraken
Kraken is a cryptocurrency exchange that offers trading in a wide range of digital currencies, including popular coins like Bitcoin and Ethereum, as well as emerging ones like Cardano and Solana. Trading fees on Kraken are tiered, with a standard fee of 1.5 percent (or 0.9 percent for stablecoins), along with additional fees if you use a card or fund your account through a bank.
For more active traders, Kraken also offers a premium tier called Kraken Pro, where the fee range decreases to 0.16 percent to 0.26 percent, allowing for potentially lower trading costs. However, it’s worth noting that Kraken is not currently available to residents of New York and Washington state.
Commission: 1.5 percent, or 0.9 percent for stablecoins (lower with Kraken Pro)
Account minimum: $1
Charles Schwab
Charles Schwab is consistently recognized as one of Bankrate’s top broker picks, and it provides investors with the option to trade Bitcoin futures. With no minimum account requirement, Schwab offers flexibility for traders. However, trading futures contracts will require maintaining a minimum margin to keep them open. Schwab also offers an attractive commission rate of $2.25 per contract, and for high-volume traders, there may be a welcome bonus available as well.
Commission: $2.25 per contract
Account minimum: $0, futures margin depends on contract
TD Ameritrade
TD Ameritrade is a leading full-service broker that provides access to a wide range of traditional investment products, including stocks and bonds, and has expanded its offerings to include Bitcoin futures. However, TD Ameritrade does not support direct trading of digital currencies. To trade Bitcoin futures, you will need to meet the account minimum requirements. It’s worth noting that Charles Schwab has acquired TD Ameritrade, and the two companies will eventually be integrated.
Commission: $2.25 per contract
Account minimum: $1,500 for futures
Conclusion
When choosing a broker, it’s crucial to carefully assess your individual needs. For novice cryptocurrency traders, it’s important to determine whether you prefer to own the virtual currency directly or trade futures, which come with higher potential rewards but also higher risks.
Additionally, you should consider whether you want to trade beyond just Bitcoin, as many traditional brokers may have restrictions in place. If you’re interested in a broader range of cryptocurrencies, you may find that a cryptocurrency exchange offers more options for trading various digital currencies.