Crypto Binary Options
With digital assets experiencing substantial price action in recent years, investors are turning to binary options to speculate on their future value. In this guide to cryptocurrency binary options trading, we explain how contracts work, popular tokens, the best time to trade and more. We also list the top crypto binary options brokers in 2024.
Top Crypto Binary Options Brokers for United States
How Crypto Binary Options Work
Binary options are a derivative product, meaning traders can speculate on coins like Bitcoin and Ethereum without owning the underlying token. Importantly, binaries are a high-risk/high-reward form of trading where the investor makes a straightforward prediction on the price of an asset.
In its simplest form, a trader decides whether the value of a digital asset, such as Dogecoin, will rise or fall after a set period has passed, known as the expiry. When that time has elapsed, the binary options contract automatically closes and the trader either gets their stake back plus the payout or loses their initial investment. Crypto binary options can have expiry times ranging from 30 seconds to one minute, one day, a week or longer.
Types of Binaries
The best crypto binary options brokers and exchanges offer a selection of contract options:
- High/Low (Up/Down) – High/low contracts are the simplest option. All a trader has to do is decide whether the value of a crypto asset will be higher or lower than its current value at the expiry.
- Touch/No Touch (One Touch) – A trader predicts whether a crypto asset will reach a set target price. If it hits that price (or misses it) within the expiry time, they win the option. Contracts close as soon as the crypto coin hits the target price.
- In/Out (Boundary or Range) – An investor defines a range around the current market price with an upper and lower value. They then predict whether the value will be within this channel at the expiry.
- Ladder – A ladder contract allows traders to choose multiple target prices. Investors predict whether the crypto asset will be trading above or below each of these prices at the expiry time, with the payout increasing further from the current value.
Examples
The best way to understand how crypto binary options work is by looking at examples…
High/Low
Let’s start with a simple up/down contract where an investor speculates on the value of Cardano (ADA). ADA is currently trading at $0.5101 but the trader believes that after one hour the value will have dropped, so they purchase a high/low contract with an expiry time of 60 minutes.
The trader invests $100 in the contract and the broker offers a 70% payout. This means that if the value of Cardano does fall, the trader will receive their $100 stake plus $70 in profit. However, if the price remains the same or rises, the trader will lose their $100 investment. Fortunately, after an hour has passed, the value of Cardano has dropped to $0.4967 and the trader’s account is credited with $170 ($100 stake + $70 profit).
Touch/No-Touch
Let’s also look at a touch/no-touch example…
The current market value of Ethereum against Bitcoin is 0.066984. However, an investor believes that at some point within the next day, the value will hit 0.067200. With this in mind, the investor bets $100 on a one-touch binary option where the broker offers a payout of 60%.
Within just five hours, the value of Ethereum against Bitcoin jumps to 0.067296. As a result, the investor is paid their $100 investment as well as $60 in profit. Note, even if after 24 hours the value has dropped back down to 0.066984, the trader still wins the bet as the price was ‘touched’ within the one-day expiry.
Benefits
Cryptocurrency binary options offer several advantages for investors:
- The digital currency sector has seen significant growth in recent years, providing plenty of opportunities for retail traders
- Binary options are straightforward derivative products, popular with beginners
- There is a long list of supported brokers and platforms
- Losses are known upfront
- High payouts
Drawbacks
Downsides to trading crypto binary options include:
- Short expiry times can result in mounting losses
- Binary options are restricted in some countries
- Cryptocurrencies are volatile and risky
Comparing Crypto Binary Options Exchanges
Consider the following elements when comparing the top trading brokers and platforms:
Digital Assets & Payouts
The best brokers allow you to speculate on a selection of the top coins like Bitcoin, Litecoin and Ethereum, as well as emerging tokens like Dogecoin and Solana. Along with a good range of coins, you should also compare average payouts. This will indicate how much money you stand to make. Raceoption, for example, offers payouts up to 90%. Note, ladder options tend to offer the highest payouts.
Minimum Deposit & Fees
The minimum deposit at a crypto binary options broker dictates how much capital you have to put down before you can start trading. Lower minimum deposits are popular with beginners, providing smaller minimum order sizes and less risk for new starters. Alpari, for example, has a minimum deposit of just $5.
It is also worth looking out for any deposit and withdrawal fees, plus inactivity penalties. Importantly, the best firms have a transparent pricing schedule with no hidden fees.
Demo Account
Beginners may want to find brokers and exchanges that offer a free demo account. This lets you trade live markets with virtual funds, meaning no risk to your capital. A demo account is the perfect place to get familiar with crypto binary options, learn how an exchange functions and even test out new strategies.
Pocket Option offers a popular demo account with $10,000 in virtual money.
Regulation
The broker or exchange you choose to trade crypto binary options with should be regulated by a top-tier authority, such as the Australian Securities and Investments Commission (ASIC).
Firms regulated by the Financial Conduct Authority (FCA) in the UK, as well as EU authorities, are not permitted to market and sell binary options to local residents. Traders in these regions will need to open an account with a trusted, off-shore provider.
Mobile App
A mobile app will allow you to monitor the crypto markets and purchase contracts on the go. When comparing applications, check that it is compatible with your mobile device, supports push notifications and features intuitive charts and indicators. This will ensure you have all the tools you need to trade crypto binary options successfully.
BinaryCent offers a free mobile app that is compatible with both iOS and Android devices.
Bonuses
Some crypto binary options exchanges offer welcome bonuses to draw in new traders. This can be a great way to boost initial investment capital. However, bonuses and promos are not always as straightforward as they seem. They can include conditions such as a minimum trading turnover before profits can be withdrawn. Also, bonus profits may have to be kept in accounts for a minimum of 30 days before they can be removed. With this in mind, always read the terms and conditions before signing up for an offer.
Customer Support
Crypto binary options can be traded 24 hours a day, 7 days a week, so the top brokers offer around the clock support. Issues can occur at any time and it is frustrating encountering a problem on Saturday morning but not being able to contact the support team until Monday.
The best exchanges offer support via live chat, telephone, email and social media channels. It is also worth looking at customer reviews and ratings to see how responsive and helpful customer service representatives are.
Getting Started
This guide can help you get started trading crypto binary options in a few straightforward steps:
- Research the cryptocurrency market. Start by looking into various coins and checking historical price data. This shows when surges and crashes have typically occurred and could be used to inform future predictions. Keep an eye on the news and current events too. When Elon Musk announced he was going to buy Twitter in April 2022, Dogecoin surged 40% due to previous tweets linking the coin and the billionaire.
- Sign up for an account with your chosen broker and complete the necessary verification steps. This could involve uploading proof of identity and address in line with Know Your Customer (KYC) protocols.
- Deposit funds into your account through your preferred payment method. You will have to meet a minimum deposit requirement at most brokers. Also check for any third-party payment fees.
- On the crypto exchange, select the coin you want to trade and the type of binary options contract you would like to use. Beginners may prefer to go for a simple high/low contract while experienced traders may opt for a ladder option.
- Next, make your prediction. If you have gone for a high/low option, simply decide whether the value of the coin will rise or fall. Those who have opted for a one-touch, ladder or boundary option will have to specify target prices. Remember, you also need to decide how long you want the expiry time to be. Popular timings range from one and two minutes to an hour or a day.
- Decide how much you want to stake. We recommend placing no more than 1% of your total funds on any single contract. This will help protect your capital should you experience several losses.
- With the position opened, all you have to do is wait for the contract to expire. If it finishes ‘in the money’, your account will be credited with your winnings. If your prediction is incorrect, you will lose your stake.
Bottom Line on Crypto Binary Options
Crypto binary options are attractive to both new and experienced traders. They combine the popularity and volatility of cryptocurrencies with the easy-to-understand nature of binary options. Traders can speculate on the price movements of different digital assets like Bitcoin, Cardano and Shiba Inu. Use our trading tutorial to get started today.
FAQ
Are Crypto Binary Options Profitable?
There is potential to make profits from crypto binary options. Some brokers, such as Raceoption, offer payouts upwards of 90%. However, there is no guarantee of returns and many investors lose money.
Can I Trade Crypto Binary Options On Weekends?
Yes, you can trade crypto binary options on the weekend. Most cryptocurrencies can be traded 24/7 so many brokerages and exchanges are open at all times.
What Crypto Coins Can I Trade Binary Options On?
You can trade binary options on most popular crypto coins. The top exchanges offer binary options contracts on Bitcoin, Ethereum, Solana, Cardano, Dogecoin, Ethereum and many more.
What Is The Best Time Frame For Crypto Binary Options?
There is no one size fits all expiry time for crypto binary options. Shorter time frames such as one or five minutes allow you to place more trades but are unpredictable. On the other hand, one hour, one day or longer expiry times are less risky but you have to wait longer to realize profits.
Which Is The Best Crypto Binary Options Broker?
When looking at exchanges, compare each option against key criteria. Things to think about are the range of crypto assets available, the types of binary contracts they offer, and typical payouts. Use our comparison guide to find the best broker for your needs.