If you’re based in Australia and wish to trade cryptocurrencies from the comfort of your home, you’ll be pleased to know that there are plenty of regulated brokers active in the online space. With that said, the likes of Bitcoin and Ethereum operate in a highly speculative trading scene, so it’s crucial that you understand the risks before you begin cryptocurrency trading in Australia.
In this guide, we explore the ins and outs of cryptocurrency trading in Australia. Not only do we explain how the process works for first-timers, but we also show you the best cryptocurrency trading sites and provide a step-by-step guide on how to trade cryptocurrency in Australia.
How to Start Trading Cryptocurrency in Australia in 3 Quick Steps
Don’t have time to read our guide all of the way through? Below you will find three quick-fire steps to start buying and selling cryptocurrencies right now.
Step 1: Open a Trading Account
Open a trading account with a broker that offers crypto trading.
Step 2: Deposit Funds
Fund your brokerage account using a credit or debit card, bank transfer, or e-wallet.
Step 3: Trade Cryptocurrency
Decide how much money you want to invest, set up the trade, and place an order.
Step 1: How to Pick a Cryptocurrency Trading Platform in Australia
If you want to trade cryptocurrencies in Australia, you will need to use an online broker. The role of the cryptocurrency broker is to facilitate your buy and sell orders by matching your positions with other traders. For example, if you decide to place a $1,000 buy order on BTC/USD, somebody else needs to take the other side of the trade.
The good news is that there are now hundreds of cryptocurrency trading platforms that accept Australian residents. However, knowing which provider to go with can be challenging. As such, below you will find a list of the best Australia cryptocurrency trading sites of 2020.
1. eToro - Best Cryptocurrency Trading Platform for Beginners
If you're looking for the best all-around cryptocurrency trading site that ticks most boxes, look no further than eToro. This broker, which is regulated by ASIC, CySEC, and the FCA, lists an array of cryptocurrency trading pairs. This includes crypto-to-fiat pairs like BTC/USD and ETH/USD, as well as crypto cross-pairs like BTC/ETH. eToro does not charge any trading commissions other than the spread.
This allows you to buy and sell your chosen cryptocurrency pair without paying a lot of fees. eToro also tops our list because it gives you the option of traditional ownership or CFD trading. If opting for the latter, this means that you will be able to trade cryptocurrencies with leverage. You will also have the option of short-selling a cryptocurrency if you think its value is likely to go down. You can trade cryptocurrencies on eToro with 0% commission and very competitive spreads.
As a social trading platform, eToro allows you to engage with other traders and offers a range of excellent tools. For example, the CopyTrader tool allows you to instantly copy the portfolios and future trades of any of eToro's 12 million users! It even offers a cryptocurrency wallet in which you can securely store your coins.
In terms of getting started, opening an account at eToro takes just minutes. You will need to meet a USD $200 (approx AUD $300) minimum deposit, which you can do with an Australian debit/credit card, e-wallet, or bank account. Once your account had been funded, your balance will be converted to US dollars. This ensures that you have unfettered access to the global cryptocurrency markets, most of which are denominated in USD.
- 0% commission cryptocurrency trading
- Regulated in Australia by ASIC
- Wide range of cyrptocurrencies
- Social trading tools
- Cryptocurrency wallet
- $5,000 minimum for Copy Portfolios
2. Plus500 - ASIC Regulated Broker in Australia
Plus500 is a UK-based CFD broker that accepts Australian traders. In fact, on top of its FCA and CySEC licenses, the broker is also regulated by ASIC. As a CFD broker, you will have the option of going long or short on your chosen cryptocurrency, as well as apply leverage. Plus500 limits this to 2x on cryptocurrencies, so if you have a higher appetite for risk, you might need to go elsewhere.
What we really like about Plus500 is that it does not charge any trading commissions other than the spread. The platform also offers a mobile trading app that is compatible with iOS and Android devices, so you can trade cryptocurrencies on the move.
Minimum deposits start at USD $100 (approx AUD $150), and supported payment methods include debit/credit cards, Paypal, or a bank transfer. Finally, Plus500 offers its own proprietary trading platform that is tailored to the newbie investor.
- Regulated by ASIC
- 0% trading commissions
- Mobile app available
- No educational material
4. AvaTrade - Trade Crypto CFDs with 1:2 Leverage
AvaTrade is a traditional online brokerage site that recently entered the cryptocurrency trading space. The platform is regulated in several jurisdictions, including Australia, Japan, Canada, and Ireland. You will be trading cryptocurrency CFDs at AvaTrade, so both short-selling and leverage is available at the click of a button.
One of the stand-out selling points of the broker is that it offers highly competitive fees. This includes spreads that start at just 0.9 pips. In terms of getting started, AvaTrade requires a minimum deposit of USD $100 (approx AUD $150), and it supports Australian debit/credit cards and a bank transfer. It offers a smaller range of cryptocurrencies than the other brokers on this list, with seven currently available.
- Advanced trading tools
- Regulated and trusted broker
- Both MT4 and MT5 supported
- No fundamental research features
- Smaller range of cryptocurrencies
5. IG - Established Broker With Competitive Fees
If you're looking to use an old-school online broker with a long-standing reputation, it might be worth exploring the merits of IG. Launched in 1974 and based in the UK, this broker offers cryptocurrency trading facilities to more than 100 nations, including Australia. It also holds a license with ASIC, so your funds are safe at all times. You will get to trade cryptocurrencies like Bitcoin and Ethereum against the US dollar, and all pairs come in the form of CFDs.
Once again, this means that you can trade with leverage and short-sell your chosen digital currency. IG offers commission-free trades and super-low spreads, although you will need to pay a 1% and 0.5% deposit fee if using Visa and MasterCard, respectively. Minimum deposits start at USD $250 (approx AUD $380), and opening an account takes minutes. Finally, you will have the choice of MT4 or IG's proprietary platform, as well as a range of useful educational resources, insights and tools.
- Spreads from 0.6 pips
- Supports MT4
- Excellent research department
- 1% fee when using Visa and 0.5% via MasterCard
- Spreads on some crypto pairs are somewhat expensive
Step 2: Learn How the Cryptocurrency Market Works in Australia
So now that you have a selection of platforms to choose from, we now need to explore how the markets actually work. This is crucial, as cryptocurrencies operate in a highly volatile marketplace, so you need to know what you are doing before risking capital.
Below we break down some of the many things that you need to consider before trading cryptocurrencies online in Australia.
What is Cryptocurrency and How do you Trade it?
In its most basic form, a ‘cryptocurrency’ is a digital currency that allows you to send and receive funds without needing a third-party. Instead, transactions are facilitated by the underlying ‘blockchain’, which is the technology that powers cryptocurrencies like Bitcoin and Ethereum.
The blockchain protocol ensures that cryptocurrencies operate in a decentralized nature, meaning that no single person or authority controls the network. Best of all, each and every transaction that occurs on the blockchain is publicly viewable and cannot be changed or altered once it has been confirmed.
When it comes to trading cryptocurrencies, this operates much like the traditional forex trading industry. That is to say, you will either be trading a cryptocurrency with a ‘fiat’ currency like AUD, USD, or GBP – or alongside another digital currency like Ethereum or Ripple. Either way, you will be speculating on the future value of the currency pair, much like you would when trading forex.
In order to clear the mist, check out the example below of how a cryptocurrency trade might work in practice.
- You want to trade Bitcoin against the US dollar which is denominated as BTC/USD
- BTC/USD is currently priced at $10,000
- You think that BTC will increase against USD, so you place a ‘buy order’ worth $500
- A few days later, BTC/USD increases to $12,000 representing an increase of 20%
- You decide to cash out your gains by placing a ‘sell order’
- On a stake of $500, your 20% gain amounts to a profit of $100
As you can see from the above, the process of cryptocurrency trading is no different from trading a major forex pair like GBP/USD or EUR/USD. You can trade cryptocurrencies like Bitcoin against fiat countries, as well as against other cryptocurrencies, such as BTC/ETH.
When you trade cryptocurrencies, you can either buy or sell the underlying assets, or trade contracts for difference (CFDs). CFD trading means you speculate on the price without owning any actual cryptocurrencies. This allows leveraged trading, which means you borrow capital from the broker to make larger trades.
What Regulations are in Place for Cryptocurrency Trading in Australia?
Cryptocurrency regulations in Australia are somewhat progressive, insofar that buying, selling, owning, and trading digital coins is perfectly legal. This is also the case with cryptocurrency mining. With that said, the industry is heavily regulated. For example, any cryptocurrency exchanges or brokers that wish to operate in Australia must comply with anti-money laundering laws.
This means that platforms must identify each and every user that attempts to purchase digital currencies in exchange for the Australian dollar. The actual trading of cryptocurrencies is governed by ASIC, which ensures that retail traders are protected from losing huge sums of money.
ASIC does not impose any restrictions on leverage even when trading cryptocurrencies. It is also important to note that cryptocurrency profits are subject to capital gains tax in Australia. This is based on gains that you make when you exchange the digital currency back to fiat currency.
What Risks are Involved with Cryptocurrency Trading in Australia?
There are two risks in particular that you need to take into account when trading cryptocurrencies in Australia. Firstly, and much like any other trading sector, there is always the risk that you will lose money. After all, most newbie traders end up making losses when they first start out, so it’s crucial that you have a firm understanding of the risks.
Secondly, you also face the risk of using a cryptocurrency trading site that subsequently runs into financial difficulties. Alternatively, the platform could encounter an external hack, which is exactly what happened to NZ-based Cryptopia last year.
With this in mind, you should only use a cryptocurrency trading site if the platform is regulated by a tier-one licensing body. This should include the likes of ASIC, or the UK’s FCA. The main safeguard that this presents is the segregation of client funds, meaning that the broker must keep your balance separate from its own working capital.
What Makes a Successful Cryptocurrency Trade?
In terms of making money as a cryptocurrency trader, this can come in many forms. If you’re just starting out, you might decide to utilize a ‘buy and hold’ cryptocurrency trading strategy. As the name suggests, you will buy Bitcoin or another cryptocurrency, holding on to your investment for a number of years, and then hope to sell the coins back to AUD at a much higher price.
Alternatively, you might decide to employ a conventional short-term trading strategy. This is where you buy and sell cryptocurrency trading pairs on a shorter-term basis. For example, you might buy ETH/USD at $200, and then hope to sell it a few hours later at gains of 1-2%. A day trading strategy will also allow you to short-sell cryptocurrencies and apply leverage.
Ultimately, the way you make money in the cryptocurrency trading arena is no different from trading other asset classes. Whether that’s gold, oil, stocks, indices, or interest rates, you hope to buy or sell the asset at a more favourable price than you originally paid!
What Analysis Techniques Can be Used For Cryptocurrency Trading?
If you’re looking to get your cryptocurrency trading endeavours off on the right foot, it’s super important that you learn the ins and outs of analysis. This mainly centres on technical analysis and fundamental analysis, which we explain in more detail below.
- Technical Analysis: This refers to the process of reading price charts. The idea is that you will be analyzing historical pricing trends of your chosen cryptocurrency trading pair. Then, you will need to ascertain how these historical trends relate to the current price of the pair. Technical analysis is supported by a range of indicators and chart reading tools, which you should attempt to learn before risking your own capital. This includes the likes of the RSI (Relative Strength Index), MACD, and Bollinger Bands.
- Fundamental Analysis: While technical analysis focuses exclusively on the charts, its fundamental counterpart is interested in real-world news events. As and when a new development occurs, you will then need to assess how the news will impact the future price of the cryptocurrency. For example, if the US government introduced legislation that governs Bitcoin, this would typically be perceived as positive news. As such, the price of Bitcoin might increase.
Step 3: Choose a Cryptocurrency Trading Strategy
So now that we’ve explained the ins and outs of how cryptocurrency trading works in Australia, we now need to discuss some of the many cryptocurrency trading strategies that you might consider using.
Day Trading
As the name suggests, day trading is an cryptocurrency trading strategy that involves buying and selling cryptocurrencies on a short-term basis. In fact, the trader will rarely keep a position open overnight. This allows the trader to profit from low pricing movements that occur throughout the day. While some positions might be kept for a number of hours, others might be closed in a matter of minutes.
Scalping
In a nutshell, scalping refers to a trading strategy that seeks ultra-small, but frequent profits. The main concept is that the trader will look to make gains from small pricing movements of a particular cryptocurrency pair. Potential gains and losses are often a small fraction of a percentage point, so it’s crucial that scalping is performed at a low-spread broker.
Scaping is most conducive when a cryptocurrency pair is trading within a certain range. For example, let’s say that BTC/USD has been trading between $8,000 and $8,400 for a number of days. Without no signs of a breakout, this would allow the scalper to set up low-risk positions to profit from the trend.
Swing Trading
Swing trading is a medium-term investment strategy that involves keeping a position open for a number of days or weeks. The idea is to trade a trend on the back of both technical and fundamental analysis. For example, let’s suppose that Bitcoin recently broke the physiological zone of $10,000.
With investor sentiment extremely high, Bitcoin continues an upward trajectory for the next few weeks. An experienced swing trader would look to jump on the bandwagon and exit their position before the trend begins to reverse.
Holding
As we briefly noted earlier, a ‘buy and hold’ strategy involves purchasing a cryptocurrency and holding on to the investment for a number of months or years. This particular strategy is best suited for those of you that believe in the long-term future of cryptocurrencies like Bitcoin and Ethereum. Sure, the markets will always go through ups and downs, but by holding onto your coins in the long run, you stand the best chance possible of riding out the waves.
This is an example of a strategy which involves fundamental as well as technical analysis.
Bitcoin Breakout
A break out cryptocurrency trading strategy will see the trader ‘pounce’ when a breakout is imminent. For example, let’s suppose that Bitcoin forms a tight trading range of $8,880 – $9,200 over the course of seven days. In the vast majority of cases, this typically indicates that a breakout is likely. This means that a major move to either the upside or downside is in the making.
A seasoned investor would recognize this and place sensible orders at both ends of the range. In layman’s terms, this means that the trader will cover both directions of the breakout by placing stop-loss and limit orders just above and below the range, subsequently resulting in a low-risk/high-return opportunity.
Step 4: Open a Cryptocurrency Trade
So now that we have covered the many cryptocurrency trading strategies that you have at your disposal, the final section of our in-depth guide is going to look at the process of placing a trade. The step-by-step guidelines outlined below are based on our pick for Australia’s best cryptocurrency trading platform of 2020, eToro, although the process remains largely the same regardless of which platform you use.
Create an Account and Verify your Identity
To get the ball rolling you will need to head over to the eToro homepage and open an account. As is the case with all ASIC brokers, you will need to provide some personal information.
This includes your:
- Full Name
- Home Address
- Date of Birth
- Australian Tax Identification Number
- Employment Status
- Net Income
- Net Assets
- Contact Details
eToro will also need you to verify your identity. This is to ensure the broker complies with anti-money laundering laws, so you won’t be able to withdraw any funds out until you upload the required documents. This includes government-issued ID such as your Australian passport or driver’s license and proof of residency via a utility bill or recent bank account statement
In most cases, eToro will be able to verify your documents in a matter of minutes. In doing so, all account restrictions will be lifted.
Deposit Funds
Before you can begin cryptocurrency trading in Australia, you’ll need to deposit some funds into your broker account. As we noted earlier, you will need to meet a USD $200 minimum deposit on eToro, which amounts to about AUD $300.
Supported payment methods include:
- Debit Cards
- Credit Cards
- Paypal
- Skrill
- Neteller
- Bank Wire
Deposits are fee-free at eToro, and all payment methods are credited instantly apart from the bank account option. Take note, your deposit will be converted to US dollars, which comes at an approximate conversion fee of 0.5%.
Trade Cryptocurrency
Now that your eToro account has been funded, you are ready to place your first cryptocurrency trade! Firstly, click on the ‘Trade Markets’ button on the left-hand side of the page, before clicking on ‘crypto’. This will then list all of the supported crypto-to-fiat and crypto-to-crypto pairs that you can trade.
In our example, we are going to trade BTC/USD, which is the most active pair in the cryptocurrency space. Here’s what you need to do to get your cryptocurrency trade placed:
- Buy/Sell: First, decide whether you want to go long or short on your chosen cryptocurrency pair. Going long means you think the pair will increase in value, so you’ll need to opt for a ‘buy order’. If you think the pair will decrease in value, place a ‘sell order’.
- Stake: You then need to enter the amount that you wish to stake on the trade. Everything at eToro is denominated in US dollars, so enter your stake in USD. In our example, we are placing a $2,000 buy order.
- Market/Limit Order: Next, you need to specify whether you want to place a ‘market’ or ‘limit’ order. If it’s the former, this means that you are happy to take the next available price. If you want to enter the market when the pair hits a specific price, opt for a limit order.
- Stop-Loss: Regardless of the cryptocurrency trading strategy that you decide to deploy, you should always install a stop-loss order. This will mitigate your losses if and when a trade goes against you. Simply enter the price that you the trade to be closed at, and eToro will exit the position if the price is triggered.
- Take-Profit: You should also consider setting up a take-profit order, which works the same as a stop-loss but in reverse. In other words, you get to specify the price in which you want the position closed when you reach a pre-defined profit target.
To complete the order process, click on a ‘buy’ or sell’ – depending on which way you think the markets will go.
Pros and Cons of Cryptocurrency Trading
Pros
- Cryptocurrency markets operate 24 hours per day, 7 days per week
- Heaps of ASIC-regulated brokers now supporting cryptocurrencies
- Volatility of cryptocurrencies presents many trading opportunities
- Fees and commissions are now becoming very competitive
- Deposit and withdraw funds with an Australian debit/credit card or e-wallet
- Dozens of crypto-to-crypto and crypto-to-fiat pairs to choose from
- Ability to apply leverage and short-sell your chosen cryptocurrency
Cons
- Highly volatile market is risky to trade
- Regulation is still in its infancy
- Lots of scam brokers active in the market
Conclusion
Cryptocurrencies now operate in a multi-billion dollar trading arena. While much of the industry is dominated by Bitcoin, it is also possible to trade heaps of other digital currencies. This includes the likes of Ethereum, Ripple, EOS, and Bitcoin Cash.
The good news is that cryptocurrency trading in Australia is now offered by a number of ASIC-regulated brokers. Not only does this ensure that your investment is safeguarded, but you can easily deposit funds with a debit/credit card, e-wallet, or bank account.
If you are looking to get your new-found cryptocurrency trading career started today, we would suggest exploring the merits of our top-rated broker eToro, our pick for Australia’s best cryptocurrency trading platform. Simply click the link below to sign up and trade cryptocurrencies today.
eToro: Trade Cryptocurrency With 0% Commission
- Buy and sell cryptocurrencies with no commission
- Buy underlying assets or trade CFDs
- Social and copy trading tools
- ASIC regulated
References
To ensure we bring you the most reliable and accurate information possible, our writers use primary sources to support their content. These include studies, government resources and commentary from industry experts.
Moneysmart.gov.au. “Cryptocurrencies and ICOs, https://moneysmart.gov.au/investment-warnings/cryptocurrencies-and-icos“, Accessed June 4, 2020.
Comply Advantage. “Cryptocurrency Regulations in Australia, https://complyadvantage.com/knowledgebase/crypto-regulations/cryptocurrency-regulations-australia“, Accessed June 4, 2020.
FAQs
What time do the cryptocurrency trading markets open?
Unless traditional asset classes like stocks, gold, and oil, the cryptocurrency trading arena operates on a 24/7 basis. With that said, trading activity slows down over the weekend, as does volatility.
What is the most popular cryptocurrency trading pair?
The vast bulk of the cryptocurrency trading scene is dominated by BTC/USD. The pair typically sees billions of dollars worth of trading activity each and every day, so liquidity is never an issue.
Can I trade cryptocurrencies with leverage in Australia?
Yes, if you're using a CFD broker that supports cryptocurrencies, you should be able to trade with leverage. ASIC does not place any limits on the amount of leverage that you can trade with, although most regulated brokers will cap this to 2x. The likes of FinMaxFX offers 10x to retail traders.
How can I short Bitcoin?
You can short-sell Bitcoin against a major currency like USD or AUD via CFDs on top cryptocurrency brokers like eToro. Just keep an eye on overnight finance fees, as you'll need to pay interest for each day that you keep the position open.