A new way of trading cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Cardano (ADA) is now available in the US. Coming courtesy of European online brokerage eToro, this platform provides trading options for 13 digital tokens. Currently available in 32 states, eToro Exchange US went live in 2018 and is now seen as a viable alternative to traditional cryptocurrency exchanges.
Trading Crypto at eToro USA
The major difference between eToro in Europe and the US is the fact the former offers contracts for difference (CFD). As noted in our basics of trading guide, CFDs aren’t a risk-free way of trading. However, they are flexible. In the same way that you can speculate on upward or downward movements in the forex market, eToro Europe allows you to take either side of a cryptocurrency’s price movements.
Due to local regulations, eToro USA only allows investors to purchase the underlying assets. That means they own the tokens and can only make a profit if the sell price is higher than their buy price. Therefore, in this instance, eToro Exchange US provides a slightly different way of trading cryptos than its European counterpart.
eToro Exchange vs. US Online Crypto Exchanges
How does eToro US stack up against its peers in the American market…
eToro USA Pros
Regulated: Like any official online trading site, eToro Exchange is regulated. For those used to trading forex et al, this will be seen as a standard. However, crypto exchanges aren’t subject to the same requirements (yet). Therefore, by holding financial licences, including FCA, CySEC and ones in the US, eToro provides a secure way to trade.
Simple Trading for Novices: eToro Exchange has built its reputation on the social trading model. Instead of novices using a trading mentor, they can log in to eToro US and follow experts. In short, the follow feature takes an expert’s trades and copies them to a user’s account at a price point they can afford.
Performance Tracking: To make the social trading feature more effective, eToro provides performance data. Put simply, users can scroll through a database of stats and pick out the most successful traders in the field they’re interested in.
Consumer-Friendly Interface: When you first get started in trading, there are plenty of lessons to learn. However, if you don’t know how to navigate a site, you can’t put your knowledge into practice. With that in mind, eToro USA has been refined over the years to the point that it’s perfect for newbies.
A New Way to Trade: The final reason eToro stands out as a viable way for US traders to embrace the crypto revolution is eToroX. A new blockchain-based exchange, this platform is the sister site of eToro USA and provides a secure way to trade cryptos using stable coins (i.e. tokens linked to a fiat currency).
eToro USA Cons
Fewer Coins to Invest In: eToro USA currently offers trading options for 13 cryptocurrencies. Although that’s a fair number, it’s far lower than virtually every crypto exchange out there. For example, Binance has the highest liquidity and spreads more than 100 tokens.
Trading Can be Limited: At present, only high-volume traders can access the eToroX wallet. Therefore, as a newbie, you won’t be able to take full advantage of the “holistic” approach eToro US can offer those interested in buying, selling and storing digital tokens via a single site.
Payments Could Exclude Novices: Although it recently changed the minimum deposit, eToro still insists you credit your account with at least $500. That may be more than novices are willing to spend. At standard crypto exchange, the minimum deposit is typically $1.
Higher Fees: Read through any guide to trading forex and spreads will always be part of the discussion. At eToro USA, spreads (trading fees) for assets such as Cardano (ADA) will top 2.9%. At a crypto exchange such as Binance, you’ll pay around 0.1% per trade.
Time is Precious: If you buy digital tokens from a crypto exchange, you can keep them there indefinitely. In fact, many traders use exchanges as an online wallet as there is no pressure to stay active. At eToro Exchange, inactive accounts are charged a fee. Basically, if you don’t use your account within a year, you’ll be charged $10 a month.