Spot trade
A spot trade in cryptocurrency refers to the purchase or sale of a digital asset for immediate delivery and settlement. In a spot market, transactions are executed "on the spot," meaning the trade is settled and the ownership of the asset is transferred instantly or within a very short time frame, typically within 1-2 days. The price at which the transaction occurs is the spot price, which is the current market price of the asset.
For example:
Buying Bitcoin: If you buy 1 Bitcoin at the spot price of $30,000, you would immediately own that Bitcoin and pay the current market price.
Selling Bitcoin: If you sell 1 Bitcoin at $30,000, you would receive the amount in your chosen fiat currency or stablecoin equivalent immediately.
Spot trading is simple and transparent, making it popular for individuals who want to buy or sell cryptocurrencies without engaging in more complex financial instruments like futures or derivatives. The key features are:
- Instant settlement No waiting for contracts to expire.
- Direct ownership You immediately own the cryptocurrency once the transaction is complete.
- Market-driven prices Trades happen at the current market value (spot price).