Austria-based fintech Bitpanda has announced including CFDs in its product range. Contracts for Difference, or CFDs, are a financial product that enables speculative trading with borrowed capital.

CFDs for trading cryptocurrencies such as Bitcoin, Ethereum, or Solana are available on the company's investment platform under the name "Bitpanda Leverage". These products essentially make it possible to bet on rising or falling prices, also known as going "long" or "short". In practice, this means that if the Bitcoin price rises by 10%, for example, the price of a Bitcoin short CFD with a single leverage falls by 10%.

A Bitcoin long CFD with a double leverage, on the other hand, would rise by 20%. Bitpanda points out the risk associated with CFDs According to the Bitpanda press release, CFDs are a complex financial instrument and carry a high risk of losing money. The vast majority of retail accounts lose money on this trade.

Therefore, Bitpanda stresses that investors should consider whether they understand how CFDs work and whether they could afford to risk their money. A Bitpanda representative describes the product offering as a new way to trade the crypto markets in the short term. Bitpanda had already made the new CFD products available to a limited number of customers at the end of 2022.

Now they are being rolled out to all traders on the Bitpanda app. Possible losses limited to initial stake One of the risks of CFDs is that in the worst case, price losses can even exceed the original investment and users not only lose their invested capital but even have to pay an additional amount. This is the so-called obligation to make additional payments (Nachschusspflicht).

In Germany, the financial regulator already banned one of these obligations for CFDs in 2017. However, this is not relevant for Bitpanda Leverage. A so-called margin close-out control is implemented in the products, which means that a long or short position is automatically closed as soon as losses reach 50% of the original margin.

A negative balance control ensures that potential losses on a position are limited to the amount originally invested. Regarding the fee structure, Bitpanda announced that it would not charge any direct purchase fees. However, a 1% exit fee is charged when closing long leverage positions.

If positions are held overnight, a daily management fee of 0. 1% on the leverage amount is due. .