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Cryptocurrency trading has evolved to include a range of methods that cater to different objectives and levels of experience. Traders can gain price exposure through spot trading, perpetual futures, and contracts for difference (CFDs), depending on whether they want to hold actual digital assets or trade on price movements using leverage.
Among them, spot trading (Axi’s upcoming “Buy Crypto” product) is the most straightforward and transparent way to participate in the crypto market. Spot trading enables direct exposure to the actual coins, allowing traders to hold assets for the long term, making it the foundation of all crypto trading activity.
Spot crypto trading refers to the direct purchase or sale of digital assets for immediate settlement. When you buy Bitcoin (BTC), Ether (ETH), or another cryptocurrency on the spot market, your exchange balance reflects ownership of the underlying asset, not a derivative or contract that tracks its value.
While centralised exchanges hold the asset on your behalf, you can withdraw it to your personal wallet at any time, for full custody and control.
In simple terms, spot trading allows you to buy or sell cryptocurrencies at their current market price. The aim is to purchase coins when prices are low and sell them later at a higher price to generate profit. Because cryptocurrencies are volatile by nature, they offer traders frequent opportunities to enter and exit the market, benefiting from both short-term uptrends and longer-term investment strategies.
As a general rule, similar to stock markets, the lower the market capitalisation of a cryptocurrency, the greater its potential volatility. Since Bitcoin often leads the overall market direction, many altcoins tend to follow its price movements, frequently exhibiting exaggerated or amplified reactions. Traders sometimes take advantage of this dynamic by trading altcoins as a form of “leveraged bitcoin”, aiming for higher potential returns compared to BTC's more moderate price swings.
Unlike traditional stock markets, which operate during fixed hours, the crypto market is open 24 hours a day, seven days a week. This allows traders to react instantly to news and market developments that influence prices.
While spot trading focuses on ownership, both perpetual futures and CFDs are derivative instruments, meaning they track the price of an underlying asset without requiring traders to hold it directly. These derivatives allow traders to take long and short positions, often involving leverage that enables them to amplify their exposure with smaller capital.
Below is a summary of key distinctions:
|
Feature |
Spot |
Perps |
CFDs |
|
Expiration |
None |
None |
None |
|
Two-way trading (Long / Short) |
No |
Yes |
Yes |
|
Charges |
0.8% commission |
Maker 0.025% / Taker 0.035% + Funding fee |
Overnight finance |
|
Max. leverage |
1:1 |
125:1 (Axi) |
200:1 (Axi) |
|
Liquidation risk |
No |
Yes |
Yes |
|
Ownership |
Yes |
No |
No |
Note: The maximum leverage figures and specific fee structures shown above are based on the offerings available on the Axi Trading Platform.
Spot trading offers the most transparent and least complex approach. It is typically chosen by those who want to buy and hold crypto assets or participate in decentralised applications that require real token ownership.
As spot traders own the actual assets they buy, choosing how to store them is an important decision. There are two main approaches: self-custody and custodial wallets.
Self-custody means maintaining direct control of your digital assets through private keys or seed phrases using a dedicated wallet. These can be software-based (e.g., mobile or desktop wallets), hardware devices, or even printed keys (paper wallets). This approach offers maximum control and privacy but also requires strict security discipline.
Custodial wallets, on the other hand, are managed by trusted third parties such as trading platforms. They streamline the process by taking care of security and key management on behalf of users.
Choosing between self-custody and a custodial wallet depends on individual preferences for security, convenience, and control.
|
Advantages |
Disadvantages |
|
Direct ownership and complete control over assets |
Responsibility for securing private keys |
|
No third-party access to funds or data |
Requires technical knowledge |
|
Eliminates risk of custodial hacks |
Risk of loss due to human error |
|
Usually no wallet fees |
Irrecoverable loss if keys are misplaced |
|
Aligns with crypto’s decentralised ethos |
Lack of diversification options |
Given the volatility of cryptocurrency markets, recognising and aligning with market cycles can significantly influence trading outcomes.
The Bitcoin cycle, for example, is closely tied to its halving events, which occur roughly every four years and reduce the mining reward, slashing it in half, influencing supply.
During certain phases, the market can experience altcoin seasons, where altcoins outperform bitcoin as traders shift capital in search of higher returns.
Spot traders who understand these cycles can time their entries and exits more effectively, accumulating positions during downturns and working toward potential returns during bull runs.
Beyond technical charts, understanding altcoin fundamentals helps spot traders identify promising assets and make informed decisions about which projects to invest in.
Spot traders evaluate project performance by checking if development milestones and product launches are being met.
They look at funding and partnerships, knowing that strong financial backing or strategic alliances can boost confidence.
They also assess the team and reputation because management changes or controversies can impact short-term sentiment.
Crucially, they analyse tokenomics, which involves mechanisms like token burns or staking incentives that influence supply and demand.
Finally, market sentiment is monitored, as social media activity and news coverage often drive price momentum.
Buying and selling in the spot market might be more straightforward than trading derivative instruments but still requires a clear strategy to help support consistency and manage risk.
Here are four beginner-friendly approaches that lend themselves particularly well to trading spot crypto:
Spot trading grants actual ownership of the digital assets you purchase. Once a trade is settled, the crypto belongs entirely to you, meaning you can transfer it to a personal wallet, use it in decentralised applications, stake it for rewards, or simply invest in it for the long term. This direct control over your assets sets spot crypto trading apart from derivative products, where you only hold exposure to price movements rather than the underlying asset itself.
Because spot trades are settled immediately and involve no leverage or borrowing, there’s no risk of liquidation. This makes spot markets a more straightforward and lower-risk way to gain exposure to crypto compared to margin or futures trading.
Axi offers flexible crypto trading options, enabling you to buy and hold directly with spot or trade price movements through CFDs and perpetual futures.
For spot traders, Axi provides key advantages:
By trading with Axi, you also join a global community supported by expert insights and professional educational resources.
Spot crypto trading represents the most direct way to participate in the digital asset market. It combines simplicity, true ownership, and transparency, making it ideal for traders seeking a clear, long-term approach.
With a deeper understanding of market cycles, custody options, and platform features, traders can confidently navigate the evolving world of cryptocurrencies and make informed investment decisions.
FAQ
Spot trading refers to buying or selling cryptocurrencies at their current market price for immediate settlement. You’re trading the actual digital asset, not a derivative or contract, and you take ownership of the crypto as soon as the trade is executed.
Spot trading uses only your own capital, so there’s no borrowing or leverage involved. This eliminates the risk of liquidation and helps traders avoid the amplified losses that can occur with margin positions.
You can choose self-custody, where you hold your private keys and manage your own security, or a custodial wallet, where a platform like Axi manages storage and protection on your behalf.
Because it allows them to accumulate and directly own digital assets over time, without worrying about funding fees or expiring contracts. It’s ideal for those who see crypto as a long-term investment rather than a short-term speculation.
