Wrapped Bitcoin Trading – Tutorial and Brokers
Wrapped Bitcoin (wBTC) emerged as a market-leading crypto token in 2021. The digital asset allows Bitcoin holders to gain access to Ethereum’s growing DeFi ecosystem. Our review explains how Wrapped Bitcoin works, where to buy and sell it, plus our top day trading tips. We also list the best wBTC brokers and exchanges below.
Wrapped Bitcoin Brokers
#1 - OKX
Why We Chose OKX
OKX continues to offer a superb selection of 400+ tokens including Bitcoin and Ripple. You can buy and sell tokens or trade cryptos on margin via derivatives, including perpetual swaps, options and futures. OKX stands out for its low fees, extensive range of tokens and speedy crypto transactions.
"OKX is a top pick for crypto traders looking for emerging coins and crypto projects to invest in. Traders can also make use of the broker's copy trading service and automated bots."
- DayTrading Review Team
- Coins: BTC, XCH, ETH, OKB, OKT, LTC, DOT, ADA, DOGE, XRP, USDT, ICP, BCH, LINK, XLM, ETC, MATIC, THETA, UNI, TRX, EOS, FIL, XMR, NEO, USDC, AAVE, SHIB, LUNA, KSM, BSC, ATOM, IOTA, ALGO, XTZ, CRO, MKR, BTT, CEL, LEO, WBTC and many more
- Crypto Mining: Yes
- Auto Market Maker: No
- Crypto Spread: Variable
- Crypto Lending: Yes
- Crypto Staking: No
- Platforms: AlgoTrader
- Minimum Deposit: 10 USDT
- Regulator: VARA
About OKX
OKX is a respected cryptocurrency firm, established in 2017, that offers a large suite of products, from mining pools to NFTs. Traders can access over 400 crypto tokens via OTC trading and derivatives. With an excellent web platform, developer tools and dynamic charts, OKX is a popular choice for technical traders.
Pros
- Traders can access historical market data for spot and futures combining OHLC data, aggregate trades and trading history
- Active traders can expect competitive maker and taker fees, from 0.02% and 0.05%, respectively
- You can access a wide range of trading products, including futures, options and perpetual swaps via a mobile app or desktop platform
Cons
- The quality of customer support was inconsistent based on testing
- The firm offers limited regulatory oversight, though this is common among crypto brokers
- The broker's platform and features may be complex for novices
#2 - CEX.IO
Why We Chose CEX.IO
CEX.IO offers hundreds of popular cryptocurrencies including big names like Bitcoin, Ethereum and Litecoin. The trading platform is well-designed with sophisticated charting and analysis tools, including 50+ in-built indicators. Traders can also reduce their monthly volumes through the tiered pricing structure.
"CEX.IO continues to serve a range of crypto investors looking to buy, sell, trade, hold and earn with low fees. The tiered pricing structure will appeal to active traders while rookie investors will enjoy the straightforward platform interface and excellent education."
- DayTrading Review Team
- Coins: ZRX, 1INCH, AAVE, BTC, BCH, ADA, LINK, COMP, ATOM, DAI, DOGE, ETH, GUSD, ICP, LTC, LRC, MATIC, MKR, DOT, SHIB, SOL, XLM, SUSHI, SNX, USDT, XTZ, USDC, UNI, WBTC, ZIL
- Crypto Mining: Yes
- Auto Market Maker: No
- Crypto Spread: 0.15% maker & 0.25% taker (Standard)
- Crypto Lending: Yes
- Crypto Staking: Yes
- Platforms: TradingView
- Minimum Deposit: $20
- Regulator: GFSC
About CEX.IO
CEX.IO is one-stop-shop for crypto investors where you can buy and sell popular digital tokens, speculate on prices with margin trading and earn rewards through staking. Since it launched in 2013, more than five million traders have deposited over $7.5 billion. CEX.IO is registered with the FinCEN in the US and the GFSC in the EU.
Pros
- There's a wide range of global payment methods available including PayPal
- CEX.IO has remained a trusted crypto exchange since its launch, with 5+ million users
- Crypto leverage is available up to 1:3
Cons
- Deposit and withdrawal fees are relatively high, including 0.3% + $25 for SWIFT withdrawals
- The Exchange Plus platform delivers a cluttered interface compared to competitor platforms
- It's a shame that there's no demo account for traders looking to practice strategies
#3 - Uphold
Why We Chose Uphold
You can buy and sell 250+ crypto assets with fiat currencies or in crypto pairs using the straightforward mobile app or through Uphold's browser-based account homepage. This is significantly more than many rivals. You can also earn up to 16% APY by staking one or more out of 32 valid tokens, or send tokens to an external wallet.
"Uphold remains a top choice for crypto investors looking for a one-stop-shop solution to accessing the markets. There are over 250 tokens to buy, sell and trade through flexible platform options."
- DayTrading Review Team
- Coins: BTC, BTCO, AAVE, ALCX, DYDX, INH, XYO, API3, GHST, LSK, AUDIO, GLMR, NMR, CAKE, GODS, REQ, CHR, TRB, DAO, ROOK, XRP, ETH, BAT, ADA, ALGO, ATOM, AVAX, AXS, BCH, BAL, BTG, CSPR, COMP, CRV, DASH, DCR, DGB, DOGE, DOT, EGLD and many more
- Crypto Mining: No
- Auto Market Maker: No
- Crypto Spread: Up to 1.5%
- Crypto Lending: No
- Crypto Staking: Yes
- Platforms: Desktop Platform, Mobile App
- Minimum Deposit: $0
About Uphold
Uphold is a digital asset platform offering a range of services, from crypto trading and staking to payment cards that provides rewards and easy multi-currency payments. The company was established in 2015 and has enabled $4+ billion in transactions. Uphold is now active in 180+ countries and deals in 200+ crypto and fiat currencies.
Pros
- Crypto staking is available on 30+ tokens with above-average rates up to 16%
- Uphold continues to remain ahead of the industry, often being one of the first platforms to list new crypto tokens
- The proprietary app is extremely easy to use with a slick design and navigation
Cons
- The charting analysis features on the platform trail specialist exchanges
- Customer service is slow based on tests, with limited contact options
- There is a 2.49% fee if you want to use debit or credit cards
#4 - Kucoin
Why We Chose Kucoin
With well over 1000 crypto assets available, Kucoin offers a great degree of flexibility. It is excellent to see an extensive range of tokens, as this allows traders to search for lesser-known tokens with a high upside. The crypto futures and perpetual swaps are also good additions to the roster, tradeable with 1:10 leverage.
"Users who want to make automated crypto trades on a wide range of digital currencies should Kucoin. The brand is also good for crypto staking and mining."
- DayTrading Review Team
- Coins: ETH, BTC, VRA, LUNA, KCS, XRP, LTC, ALGO, TEL, DOT, ADA, XMR, AVAX, FTM, VET, XLM, LINK, MATIC, ONE, TRX, HBAR, ICP, CRO, EOS, DOGE, WBTC, ATOM, XDC, DAG, COTI, BCH, EGLD, XTZ, KSM, ETC, KDA, MANA, XYO, OMG, BNB and many more
- Crypto Mining: Yes
- Auto Market Maker: No
- Crypto Spread: Variable
- Crypto Lending: Yes
- Crypto Staking: No
- Platforms: Own
- Minimum Deposit: $0
About Kucoin
Kucoin is a crypto exchange that offers trading on 1000+ tokens as well as leveraged trading opportunities via futures and perpetual swaps. This exchange has a slick trading platform that supports robots, allowing traders to implement automated strategies. Other attractive features include a demo account, flexible funding methods and DeFi features like staking and mining.
Pros
- Good customer service
- Good range of DeFi products as well as Web3 features including an NFT marketplace
- Wide list of tokens with 1000+ cryptos including many low-market-cap tokens
Cons
- The proprietary platform can feel complex compared to better-known terminals
- Fiat withdrawals are not possible
- Like many crypto firms, Kucoin is unregulated
#5 - Gemini
Why We Chose Gemini
Gemini offers a relatively small range of 110+ cryptocurrencies on its exchange, which is anchored by the native Gemini Dollar stablecoin, as well as perpetual swap derivatives. The powerful ActiveTrader platform is optimized for online trading, delivering a wide range of technical indicators and up to 7 time frames.
"Gemini’s ActiveTrader platform and TradingView integration make it a good choice for serious crypto traders seeking a reliable charting environment, though we were disappointed by some unnecessary fees and previous security breaches."
- DayTrading Review Team
- Coins: BTC, ETH, XRP, ADA, DOGE, DOT, BCH, LTC, UNI, LINK, FIL, XLM, WBTC, EOS, SOL, AAV, XTZ, ATOM, MKR, DAI, COMP, ZEC, ENJ, GRT, SNX, BAT, MANA, YFI, UMA, ZRX, OMG, BNT, REN, CRV, 1INCH, LRC, KNC, STORJ, GNT, SKL and many more
- Crypto Mining: No
- Auto Market Maker: No
- Crypto Spread: Transaction fee from $0.99
- Crypto Lending: Yes
- Crypto Staking: Yes
- Platforms: ActiveTrader, AlgoTrader, TradingView
- Minimum Deposit: $0
- Regulator: NYDFS, MAS, FCA
About Gemini
Gemini is a cryptocurrency exchange set up in 2014 by the Winklevoss brothers, known for their early involvement in Facebook. The exchange is among the world’s 20 largest and most popular. Gemini clients can trade and stake 110+ cryptocurrencies, with derivatives trading available in some jurisdictions, an advanced proprietary platform and additional features including an NFT marketplace.
Pros
- The TradingView integration delivers top-quality tools, including backtesting and algo trading capabilities
- Crypto perpetual futures are available in many jurisdictions with up to 1:100 leverage
- The exchange ensures high security standards with 2FA a requirement for all crypto investors
Cons
- There is no practice profile or demo account for prospective traders
- Some larger coins by market cap are not available to buy through Gemini
- The 'convenience fee' for using the mobile app seems arbitrary and makes it inefficient to use this feature
Wrapped BTC Explained
Wrapped tokens are assets pegged to the value of a specific cryptocurrency. In this case, Wrapped BTC is an ERC-20 version of Bitcoin, which is pegged to BTC on a 1:1 basis.
wBTC offers a solution to blockchain interoperability, where users are unable to interact with other networks. Wrapped Bitcoin connects Bitcoin holders to the Ether network without the need to exchange tokens. Benefits of the Ethereum ecosystem include exclusive wallets, yield farming, governance tokens, dapps and smart contracts.
The wBTC project was started as a joint venture by BitGo, Ren and Kyber. Its source code was released on GitHub in November 2018. The wBTC project then launched officially in January 2019. It is currently controlled by the wBTC DAO, which consists of more than 30 members. BitGo also launched wBTC onto the Tron blockchain.
Today, Wrapped BTC has a market capitalisation of over $6,000,000,000 and a maximum total supply of 181,663.42419722 tokens.
How Does Wrapped BTC Work?
The Wrapped Bitcoin ecosystem consists of four main players; custodians, merchants, users and DAO members. For every 1 wBTC token, there is 1 Bitcoin held by a custodian called BitGo who controls the keys to mint new tokens. A proof of reserve system also verifies the 1:1 backing between minted wBTC and Bitcoin.
To get Wrapped Bitcoin tokens, the user must request them from a merchant through a centralised exchange. Users can also swap ETH for wBTC on a decentralised exchange. The custodian then mints the number of wBTC requested and sends it to the merchant’s Ethereum address. Wrapped Bitcoin DAO members govern custodians, merchants and users.
The key advantage of Wrapped Bitcoin is the ability to convert wBTC to BTC or vice versa at any time with relative speed and low cost. This can be done through a number of networks, including the Binance Smart Chain (BSC). The ERC-20 protocol that underpins Wrapped BTC is a technical standard for every smart contract on the Ethereum blockchain. This is what makes wBTC compatible with Ether.
Wrapped Bitcoin Chart
Benefits Of Trading Wrapped BTC
- Integration – By integrating yourself into the ETH network, you gain access to the largest ecosystem in the crypto market as well as exclusive wallets, dapps and games.
- Liquidity – Wrapped Bitcoin brings the liquidity of Bitcoin to the Ethereum ecosystem. Also, the market liquidity of wBTC is greater vs alternatives like RenBTC. This reduces volatility levels that could otherwise cause price instability, meaning buy or sell orders are easier and safer.
- Speed – wBTC transactions are authorised much quicker than Bitcoin transactions. The Ethereum blockchain adds a new block every 15 minutes vs Bitcoin’s 10 minutes. As a result, moving wBTC between ETH wallets and exchanges is much more efficient.
- DeFi – Bitcoin holders typically struggle to seamlessly participate in DeFi projects. Without Wrapped Bitcoin, more time and money is needed to change Bitcoin into Ethereum.
- Accessibility – Anyone can start day trading Wrapped Bitcoin 24/7, 365 days a year. As long as you have an internet connection, you can start buying it on leading exchanges including Binance, Coinbase and Gemini.
- Rewards – Users can pick up rewards and airdrops by staking Wrapped Bitcoin and earn through yield farming – lending the crypto.
Risks Of Trading Wrapped BTC
- Leveraged trading – Many exchanges offer leveraged trading on crypto-assets like Wrapped Bitcoin. But whilst margin trading can increase potential profits, it can also lead to large losses. As a result, using leverage with this crypto is not for the risk averse.
- Fees – To wrap or unwrap wBTC to BTC, most merchants charge a trading fee. For example, Coinlist charges a flat fee of 0.25%. While this is relatively inexpensive, costs can add up if you’re making a large number of transactions.
- Centralisation – BitGo, the custodian controlling the minting of wBTC is a centralised company. They can freeze accounts and prevent the redemption of Bitcoin. Whilst more decentralised wrapped Bitcoin protocols are gaining traction i.e. RenBTC and TBTC, they aren’t as trusted in the market yet. In the meantime, this arguably undermines the principle of decentralisation, which forms the basis of the blockchain industry.
How To Buy & Sell Wrapped BTC
1. Choose A Broker
To buy Wrapped Bitcoin, you will need to open an account with a crypto exchange that supports wBTC. You can find the token on major exchanges such as Binance, Coinbase and Gemini. On the other hand, if you already own ETH tokens, you can use a decentralised exchange like Uniswap to convert them for wBTC.
Finding the right exchange will depend on your needs, but it’s worth considering the fee structure and trading platform available, alongside any mobile investing applications.
2. Open A Wallet
Transferring your wBTC tokens to a digital wallet is important to keep your funds safe. Keeping your tokens on the exchange you purchased them on means you don’t own the private keys. Furthermore, should the platform be compromised, you might risk losing your crypto.
The best wallets to store Wrapped Bitcoin on include KeepKey (hardware wallet) and Argent (software wallet).
3. Buy Or Sell
Now that you’ve set up a brokerage account and opened a wallet, it’s time to buy Wrapped Bitcoin. Firstly, you will need to place an order on the exchange. If you choose a market order, you can buy Wrapped Bitcoin instantly at the market price. If you wish to buy Wrapped Bitcoin at a specific price, set a limit order.
You can also explore trading Wrapped Bitcoin pairs i.e. wBTC/USD, wBTC/digg and wBTC/badger.
4. Trading Strategies
When day trading Wrapped Bitcoin, it’s important to follow a strategy. You can conduct technical analysis on price charts to inform predictions. Forecasts and market outlooks can also be influenced by news announcements. Major events can trigger spikes, generating trading opportunities.
As wBTC is pegged 1:1 to Bitcoin, it’s worth following trends that could impact the value of BTC. As the price of Bitcoin rises, so too will the value of wBTC.
Final Word On Trading Wrapped Bitcoin
Wrapped Bitcoin offers a creative solution to the interoperability of the BTC blockchain. It has opened the door for Bitcoin holders to engage in the Ethereum DeFi ecosystem. And with the token now available at leading crypto exchanges, it’s easier than ever to start trading Wrapped Bitcoin.
FAQ
What Is Wrapped BTC?
Wrapped Bitcoin is an ERC-20 version of Bitcoin compatible with the Ethereum blockchain. Each wBTC is pegged to Bitcoin on a 1:1 basis. wBTC allows Bitcoin holders to interact with Ethereum’s growing DeFi system, without the traditional costs associated with exchanging BTC for ETH.
Is Trading Wrapped BTC Safe?
The concept of wBTC may appear relatively safe as the technology that underpins it is secure, however trading any crypto is risky. Price volatility, wallet hacks and regulation from governments could all impact the future value of Wrapped Bitcoin. As a result, it’s important to take a careful approach to risk management.
Where Can I Buy Wrapped BTC?
You can buy Wrapped Bitcoin through a merchant on a centralised exchange or a decentralised exchange via peer-to-peer transactions. Centralised exchanges include Coinbase and Binance.
Is Wrapped Bitcoin A Good Investment?
If you’re a Bitcoin holder that wishes to engage with Ethereum’s DeFi ecosystem, then wBTC could be a good investment. You can benefit from Bitcoin’s liquidity and market value, giving you the best of both blockchains. Also, by investing in Wrapped Bitcoin, you can earn variable interest on your crypto savings, though the tax and APY will depend on your jurisdiction.
Who Created Wrapped Bitcoin?
The Wrapped Bitcoin protocol was initially developed by BitGo Inc, Kyber Network and Ren. They released the wBTC whitepaper in January 2019. Shortly after, the token was launched through merchants to facilitate Bitcoin to wBTC conversions. Currently, the Wrapped Bitcoin protocol is controlled by the network’s DAO.